PAUL LEWIS / WASHINGTON DC
After 11 September, the civil helicopter industry may benefit from the heightened security environment
The catastrophic events of 11 September have reverberated across the entire aerospace industry - and the civil rotorcraft sector has proven no exception. Orders and deliveries of new machines have taken a hit as users struggle to get back in the air in the face of diminishing demand and rocketing insurance rates. At the same time, helicopter manufacturers and operators alike are expecting fresh opportunities to emerge in the form of new spending on national defence and general law enforcement.
"It has been a horrible year, with the economy contracting and a reduction in discriminatory spending," says Helicopter Association International (HAI) president Roy Resavage. The hope now is that slumps in those sectors historically more exposed to the economic cycle, such as tourism and corporate flying, will be offset by "non elastic demand" in areas like emergency medevac services (EMS) and law enforcement. Particular attention is being paid to the new US Homeland Security Office, along with other US agencies, such as the Federal Emergency Management Agency, the US Border Patrol and the Department of Energy.
"We want to be working with all the federal authorities and we've just started talking. We think there are things the helicopter community could offer the country, and possibilities that need to be pursued," says Resavage. Among the ideas being tabled are paramilitary patrols of strategic installations like nuclear power plants or reservoirs, as well as developing mechanisms for harnessing some of the country's 11,000 or so commercial machines in times of emergencies. Several major manufacturers are already well positioned to benefit from an increase in spending.
The civil government market has traditionally accounted for 20-24% of Bell's sales by dollar value, with workhorses like the Model 412. The company is hoping that, with the US Army Reserve and National Guard planning to dispose of some 470 UH-1Hs by 2004, there will be more civil openings for its Huey 2 upgrade kit. "Homeland defence offers great opportunities, but we don't expect to see results from that before the end of the second quarter," says Bill Maddox, Bell executive director marketing sales and support.
Security
American Eurocopter, having seen corporate, utility and offshore sectors decline in
the five years up to 2001, is expecting "parapublic" to expand by 9% to 32% of the overall helicopter market. While local sales have been mostly single-turbines, it still plans to push the new EC145, which makes its US debut at this year's Heli-Expo show in Orlando next week. The initial 40 twin-turbine machines were sold to the French Securité Civile and Gendarmerie Nationale, and six more to Germany.
MD Helicopters is also keenly eyeing the emerging homeland security market, with two-thirds of its existing sales being generated by the law enforcement market. Having seen deliveries slump from 41 to 28 in the past year, this sector is critical if the company is to meet its goal of bolstering Explorer and MD500/600 series output to 58 machines by the end of this year. "We've not yet taken any US government orders - but at a municipal level, security awareness has gone up and the willingness to commit money has gone up," says Henk Schaeken, MD Helicopters chief executive.
Other smaller players are hoping that some of the new homeland defence funding will trickle down to the municipal and local law enforcement level. This is where the likes of Enstrom and Robinson have had the most success with their respective piston-powered R44 and F28/280FX offerings in the comparatively low-cost $300,000 price-range. "When you get down to this level, people realise you can get double or triple the amount of aircraft hours on patrol for the money," says Robert Tuttle, Enstrom president.
Other market segments that have proven relatively insulated in times of economic difficulty include fire-fighting and EMS. The latter tends to favour the larger single- and twin-turbine machines that are equipped for instrument flying and de-icing. A Forecast International report warns, however, that "new regulations impacting Medicare-subsidised air-ambulance aircraft in the USA may increase some operators' costs to the point where they cannot make a reasonable profit."
Problems with insurance in the wake of 11 September are particularly acute as the cost of hull-loss and liability cover increase - and, unlike with the airline industry, there are no billion-dollar government hand-outs in the offing. "We're pretty bullish on 2002, but insurance is a dark cloud," says Eric Walden, American Eurocopter vice president sales and marketing. "This is a critical year for the industry, and if rates jump significantly, I think it'll impact on helicopter sales."
The helicopter community is already feeling the pinch in markets, such as sightseeing and offshore support for the oil and gas industry. The former has also come under greater environmental pressure, which the industry has tried to respond to with quieter machines, such as the new Eurocopter EC130 ordered by Hawaii Blue, and the extensively remanufactured five-blade Whisper Jet S-55QT operated by Papillon Grand Canyon Helicopters.
Last June, the International Civil Aviation Organisation agreed to amend Chapter 8 rules to allow lower noise levels for helicopters by 3dB for take-off, 4dB for fly-over and 1dB on approach. While industry has generally welcomed changes to Chapter 8, there is concern about lighter weight helicopters meeting the more complicated Chapter 11 fly-over rules, which are based on sound exposure level rather than effective perceived noise level.
Resavage says: "Problems come with smaller aircraft with power limits. The engine is a relatively noisy emission source, compared to the transmission, rotorhead and tail rotor, things can be done to reduce noise, but its very expensive and not practical to retrofit aircraft."
Slow recovery
Recent low oil prices have affected offshore oil operations, and any recovery will lag behind that of the overall economy. Sikorsky has new products it hopes to have in position by then, including a certified and in-service S-92, and a planned series of incremental avionics, powerplant and aerodynamic improvements to the S-76C+. "Fundamentally, there is not much activity at the moment. But there is a lot of interest, and in 2002/03, we expect a much higher proportion of sales to go offshore," says Tommy Thomason, Sikorsky vice president civil helicopter programmes.
As oil and gas exploration move further out to sea, manufacturers are expecting demand for greater range. The 19-seat S-92 faces strong competition from the improved five-blade EC225 development of AS332 Super Puma, and larger EH Industries EH101. A possible new entrant is the Euromil Mi-38, the first prototype of which is scheduled to fly within the quarter. The 15.6t machine features two Pratt & Whitney Canada PW127T/S turbines, and a Eurocopter-designed cockpit.
Bell and Sikorsky had been hoping that, by now, the helicopter version of the business aircraft fractional ownership model would have taken a firmer hold than it has. Skyhopper in the UK is no longer in business, and, while Sikorsky Shares and HeliFlite are continuing to sell fractional shares in S-76C and Bell 430 helicopters respectively, their availability is confined to the US north-east. The concept has had some success in the densely populated and highly congested S‹o Paulo area of Brazil, where HeliSolutions has sold shares in AS350, Eurocopter EC120 and R44s, and recently added Model 430s to its fleet.
The recent strength of the US dollar has proven a challenge for those manufacturers heavily dependent on the export market, and partly accounts for the drop in last year's shipments, says Frank Robinson, president Robinson Helicopters. The Torrance, California-based company sells approximately two-thirds of its piston machines outside the USA, and recently became the first Western manufacturer to certificate a helicopter locally in Russia.
China is a potentially huge emerging market, with the State Council recently pointing to a 2,000-machine need by 2013, and 10,000 by 2010. Enstrom has been pursuing a joint venture with Wuhan Helicopters for some years, and Sikorsky has just announced plans to partner Shanghai Little Eagle Science & Technology to develop a new 2t, three-seat machine.
China already has an established helicopter industry building on the Harbin Z-9 licence-built version of the Eurocopter AS365. Changhe/Jingdezhen Aircraft just developed the Z-11, closely resembling the AS350, and is now working on a medium-size PWC PT6-67C-powered Z-10.
Source: Flight International