Commercial helicopter market growth continues

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

The commercial helicopter market is experiencing an unprecedented period of growth that shows no signs of slowing for the foreseeable future.

This wave of prosperity brings with it bulging orderbooks and lengthening backlogs for the industry's top five airframers - Agusta­Westland, Bell, Eurocopter, Robinson and Sikorsky - thanks to growing global economies and demand for rotorcraft from an increasingly diverse mix of operators.

In its latest annual forecast, Honeywell predicts deliveries of more than 8,000 new turbine helicopters between 2007 and 2017, with 3,500 deliveries between 2007 and 2011 alone, "reflecting industry conditions that have never looked stronger in recent history", it says.

Market leader Eurocopter, like its rivals, is hoping to profit from the projected demand for new helicopters. "The market is doing well, very well," says Philippe Harache, executive vice-president. "Operators around the globe are very active across a growing number of missions our problem is providing enough helicopters to satisfy this demand," he says.

Eurocopter, with a helicopter range spanning the EC120 light single to the EC225 heavy twin, expects the market to continue growing for at least three years. The EADS subsidiary has an order backlog of around 620 aircraft. Last year deliveries exceeded 380 helicopters and are expected to climb year on year by around 20%.

Harache attributes the rising demand to booming global economies coupled with a sea change in the public perception of helicopters. "Over the last decade helicopters have found greater acceptance, driven in part by a quantum leap in technology," he says. These advancements have led to a reduction in operating costs and the overall noise envelope of these aircraft, while simultaneously increasing their efficiency and safety.

"Helicopters have now become part of the community where their role is to save and protect the public," he says. Recent high-profile operations such as the Europe-wide deployment of helicopters to tackle the rampaging fires in Greece have helped to validate this position and justify the demand for public-service helicopters covering emergency medical services (EMS), law enforcement and search and rescue (S&R).

These three segments alone, Honeywell says, are expected to "account for more than 60% of all new civil rotorcraft sales during between 2007 and 2017".

However the thriving oil and gas exploration industry, particularly in Nigeria and Russia, is driving growth for helicopters to service the offshore transportation market. "Oil companies are spending billions on exploration, drilling further away in search of new reserves. There is a huge market here and we are looking to take a large slice of this business with our existing products such as the 407 and 412," says Bob Fitzpatrick, senior vice-president sales and marketing for Bell Helicopter, which manufacturers single- and twin-engine light and medium helicopters.

booming demand

Bell delivered 160 helicopters last year, 30% more than in 2005, and is expecting to deliver 180 aircraft this year - 130 light turbines and 50 medium twins. "The whole industry is booming," Fitzpatrick says. "Airframers are producing around 650 [turbine] helicopters a year, but there is a demand for a least 800 units, double the output in 2003," he says.

Demand for helicopters is permeating the far reaches of the globe, although recent statistics published by Honeywell reveal the demand for helicopter types differs by region. Single-engine helicopters such as the Bell 206/406 series, AgustaWestland A119 Koala and Eurocopter AS350/EC130, which account for 51% of overall sales, have seen the strongest demand in Latin and North America. These continents also represent the largest market for corporate helicopters, accounting for 70% and 57% of the new purchases respectively. Africa, Asia, the Middle East and Oceania meanwhile, "strongly favour twin-engine models with up to 75% share", Honeywell says.

In Europe, where regulations have traditionally limited the appeal of single-engine aircraft, there has also been a huge demand for singles, particularly from private owners, law enforcement and aerial work companies.

"The market is thriving across the board here," says Eurocopter's Harache. This view is supported by Bell's Fitzpatrick who says while France, Germany and the UK are key markets in the region, eastern European countries including the Czech Republic, Poland and Russia are increasing their influence.

For Russia in particular, commercial helicopter fleets are burdened with a huge number of obsolete and fuel-hungry former Soviet-era designs such as the Mil Mi-2 and Mi-8. Although Russia is developing new models including the Kamov Ka-226 and Kazan Ansat light helicopters, neither designs have an operational record, so many of the country's commercial operators are keener on Western-products with a reliable track record. "Local operators are looking for new and used Western-made helicopters, particularly for offshore pipeline patrol, EMS and VIP operators with particular interest in light and medium helicopters," says Fitzpatrick, adding that Bell has recently appointed a dedicated sales representative to exploit this potential.

While the European influence will continue to grow, Asian markets, particularly China and India, are causing a great deal of excitement. Eurocopter forecasts that China will need at least 300 helicopters by 2015, driven mainly by public-sector missions, with total demand exceeding 1,000 aircraft driven by the rapid development of China's economy.

Plans by the Chinese authorities to relax the rules on low-altitude flying, an issue which prevented the growth of the country's helicopter market over the years, will also give the market a boost, airframers believe.

In India demand is driven by homeland security, EMS, law enforcement and corporate/VIP missions, although here as in China airspace regulations are hindering growth.

GLOBal markets

This increasing importance of global markets across a range of operations has lead to a sharp increase in the overall sales and distribution of new helicopters, with international demand overtaking North America - the traditional market leader - for the first time.

"North America has and always will remain a key region, but international markets now account for around 60% of new orders," says Sikorsky vice-president of sales Steve Estill.

Sikorsky's product range is positioned at the top of the market with the 5.5t S-76C++ medium twin and 11.8t S-92 heavy twin, of which it delivered 50 and 36 aircraft last year respectively.

Like its fellow airframers Sikorsky has seen demand from offshore operators soar, with the market now accounting for 40% of its annual S-76 production and 50% of its S-92 output. "Gas and energy companies have kept the demand up and it looks like they will continue to spend on exploration and subsequently new helicopters for the next 10 years at least," Estill says. "We're also beginning to see a secondary market emerging for public and paramilitary applications of helicopters, such as guarding coastal waters, SAR and other maritime and national security duties," he says.

head of state

The Connecticut-based airframer continues to make strides in the corporate and VVIP markets. "Our S-92 is popular for heads of state transportation, particularly in the Middle East, which accounts for around 15% of production," Estill says. "We have sold aircraft to Turkey, Qatar, Bahrain, Saudi Arabia, South Korea, Kuwait and Turkmenistan and have just signed a deal with the Thai government," he says. Corporate and VIP customers account for 7% of S-92 and 20% of S-76 production.

Sikorsky is also among the few companies that support and participate in fractional ownership programmes for helicopters, although attempts to make its 12-year old Sikorsky Shares operation a financial success has been challenging, Estill admits. "It's all about scheduling," he says. "We have four S-76s in our fleet and our service area is limited to the North Eastern USA and Philadelphia." Sikorsky says the programme has gained strong brand awareness and it may now look at awarding a franchise to an operator in the Boston area as well as introducing the S-92 into the fractional programme for the first time.

While sales of aircraft to new owners and operators continue to rise, the ageing fleets of rotorcraft around the globe are also stimulating a healthy replacement market for the airframers. According to Honeywell, the average age of the helicopter fleet in the Western world alone is 28 years old. "Increased flight hours and emergency deployments - especially during the last year in response to worldwide natural disasters and additional need for homeland security - are driving this demand," says Honeywell. Missions with high utilisation rates such as law enforcement, EMS and offshore support are providing opportunities for airframers to sell both aircraft and spares.

chinese collaboration

Eurocopter's Harache says: "New technology is very important to the future growth of the civil market and we will always find new ways to advance our helicopter line." The company, which has launched 15 models in 15 years, is co-developing the 6t EC175 with Harbin of China. This is scheduled for certification and service entry in 2011, to complete against the AW139 and S-67D. In September Eurocopter unveiled a VIP version of its EC135 light twin with a designer cabin and may roll out similar versions across its range.

Other airframers are also expanding and improving their product lines to boost their market share and to meet increasing demands from operators for faster, safer and quieter aircraft. AgustaWestand is developing the A119 Koala Enhanced (Ke), an upgraded version of its utlity single offering an increase in maximum take-off weight and payload. This is scheduled for certification this year.

Sikorsky is developing the S-76D which will replace the C++ when it enters service at the end of 2009. This incorporates a number of improvements including composite main rotor blades with ice protection, Pratt & Whitney Canada PW210S turboshafts and a Thales glass cockpit. Perhaps the biggest challenge for Sikorsky is to penetrate the entry-level market for the first time. "Not having an entry-level product has hindered our progress in emerging markets," Estill says. "However through our acquisition of light helicopter manufacturer Schweizer [in 2004] we are developing the Model 333 turbine single into an affordable helicopter and this should help us to become a stronger player in the police, border control and owner-flyer helicopter markets."

Bell is pressing ahead with development of its 429 light twin, orders for which exceed 190 units. The second of five test aircraft flew last month and certification and service entry are scheduled for 2009, when the Canadian company is set to make a launch decision on a new medium-sized helicopter. Meanwhile, at the top of its range, Bell continues development of the BA609 civil tiltrotor with partner AgustaWestland. This is earmarked for service entry in 2011.

At the bottom end of the market too there is much activity with Robinson - the largest producer of helicopters with more than 800 deliveries of piston-single R22s and R44s scheduled this year - developing a five-seat turbine single called the R66. The aircraft will be pitched, it says, at replacing the ageing Bell 206 fleet.

The Sikorsky S-92 has become popular with VIPs and heads of state