Paul Lewis/WASHINGTON DC
The concept of fractional ownership has grown to be a phenomenal success with the business jet fraternity, but it is at the embryonic stage in the rotary-wing world. Selling a timeshare in a helicopter presents unique challenges and requires a different approach to the market.
Trail-blazing of the concept in the USA over the past 12 months has fallen to two companies - Sikorsky Aircraft's recently acquired Associated Aircraft Group (AAG) and privately owned HeliFlite. In Europe, it has been pioneered by UK-based Skyhopper.
The Sikorsky Shares launch was based on the offer of quarter shares in a single Sikorsky S-76C+ helicopter operating from Wappingers Falls, New York. In return for a $2 million outlay, investors are allocated 290 flight units a year. Ownership has since been broadened to include one-eighth shares and to ensure availability is backed by two of AAG's charter S-76Bs.
New York model
"What we want to do is demonstrate that fractional ownership works. We believe the New York area is the place for that. We're taking baby steps and so far it's proceeding as well as could be expected - not as wonderful as we first thought it would be, but not a failure," says Tommy Thomason, Sikorsky's vice-president for civil programmes.
Fort Worth, Texas-based HeliFlite got airborne in December, with a new Bell 430 (above). Its fractional offering ranges from a minimum one-sixteenth interest, costing $353,000 in exchange for 62.5h flying a year, to a half share worth $2.8 million and 500h of use. It is backed by a second dry-leased helicopter and a four-year 60% residual value guarantee from Bell.
"Helicopter fractional ownership works the same as with business jets in that you buy as many shares as you need, but one of the unique features is that it's really a regional product. We're not spread out over 48 states, so our core fleet requirements are a little less and our response times are better," says Mark Ozenick, HeliFlite president and chief executive.
Whereas high-speed business jets can be positioned anywhere in North America within a matter of hours, this is obviously not the case with a helicopter. This effectively confines services to within a 135-270km (250-300nm) operating radius of a shareholder's base. In the case of AAG, flying is confined to the north-eastern USA. For HeliFlite, flying is limited to Texas and parts of neighbouring Oklahoma and Louisiana.
It is envisaged that a network of regional operations will extend to other major urban areas and centres of commerce, such as Chicago, Detroit, Los Angeles and West Palm Beach. HeliFlite plans to broaden its coverage by moving to the concentrated and congested US north-eastern corridor, where the range is more suitable to fractional ownership.
Jack Cornett, American Eurocopter director of sales, says the helicopter is such a personal transportation device "that fractional ownership is niche-specific to corporate transport". He cites the difficulty of arranging a programme for an individual who has an aircraft for the Los Angeles area, but who also wants it over the weekend in Montana.
Potential helicopter shareholders can be loosely grouped into different categories. These include large corporations, with their in-house flight departments, and smaller companies, businessmen and entrepreneurs. A third distinct type of investor has also begun to emerge in the form of fractional jet owners.
In the case of the first - already operating their own machines - there could be a need for top-up capacity, or cover for machines down for maintenance, but an unwillingness to pay $8 million for another new twin-turbine helicopter. There are then the smaller companies and individuals wanting the convenience and, in some cases, the security offered by a helicopter, but without the resources to establish a supporting flight department.
Chartering helicopters is one option, but, for those flying more than 100-150h a year, fractional ownership might be financially more attractive. "You get a brand new helicopter, a FlightSafety International-trained crew and a guarantee of no turn-down, plus a level of service and an entity with which you have a relationship that a charter cannot supply," says Thomason.
HeliFlite promotes the its seven-seat Bell 430 as a flying boardroom. Features include an Iridium satellite telephone system for digital voice and data transmissions, PC ports, an in-flight multimedia/video presentation capability and Airshow cabin management system.
"Corporate helicopters are a bit of an enigma," admits Ozenick. "Most individuals have the wrong impression of what a helicopter can do - they think of it as a glass-bubble carnival ride. When they see that it's really an all-weather regional transportation tool, offering a level of safety and comfort on a par with the business jet, they then understand how it can be used."
The concept of helicopter fractional ownership has also begun to catch the attention of fractional-jet operators, which want to extend point-to-point services within cities and to other urban destinations not accessible to fixed-wing aircraft. Helicopter use is likely to be boosted as more corporate jet operators elect to avoid ever-more congested major aviation hubs in favour of smaller, out-of-the way airports.
HeliFlite has been the first company to forge a formal link with the fractional-jet community in the form of a cross-marketing deal with Raytheon Air Travel. The next logical step could be to sell shares in a joint fixed and rotary product. "We may move that way," says Ozenick.
Sikorsky has also acknowledged holding discussions on co-operation with unidentified fractional jet companies (Flight International, 11-17 January).
Issues of public perception aside, helicopter fractional ownership faces formidable infrastructural and regulatory hurdles that must be overcome if the concept is to win wider acceptance. In many cases, these issues are not specific to time sharing, but relate to the commercial helicopter industry as a whole.
Helicopter users are handicapped by a shortage of civil heliports and helipads which has undermined shuttle operators. "This is a tag-on and we've got to solve this problem of heliports and airspace whether there is a fractional business or not," says Thomason.
Then there is the lack of low-level instrument flying rules airspace and restrictions on helicopter approaches, which the industry hopes to see addressed through the use of differential global positioning systems. Finally, there is the continuing debate over whether fractional ownership schemes - fixed or rotary-wing - should be allowed to continue operating under US Federal Aviation Regulation (FAR) Part 91, which governs general aviation, or the more stringent (and costly) Part 135 which covers commercial air transport.
On this and other regulatory and infrastructural matters, operators are looking to the Helicopter Association International (HAI) to make their voices heard. The organisation has been actively engaged in Part 91/135 discussions with the US Federal Aviation Administration and other interested parties. It is also likely to be the subject of some debate at HAI's Heli Expo in Las Vegas on 24-26 January, which will include an executive summary session on fractional ownership.
Despite an initially slow start to fractional helicopter ownership - in no small part due to the concerns already outlined - there are encouraging indications that the concept will develop this year. AAG and HeliFlite plan to add more fractional helicopters and to expand their operations.
Ozenick foresees the business expanding to most major US cities within 10-15 years and widening to include the use of Bell Agusta BA609 tiltrotors. "Helicopter fractional ownership will do nothing but enhance the vertical lift industry and help develop the infrastructure required in the future," he says.
Source: Flight International