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ON THE WAY UP

The helicopter industry seems to be in for better business in the coming years. Teal Group analysts for one predict sales of 8190 turbine-powered rotorcraft worth 51,7 billion US-Dollars up to 2006.

Looking into the crystal ball predicting helicopter business prospects for the next decade is a notoriously difficult undertaking, as erratic alterations in Allison Engine's yearly forecasts show. Now the well-known Teal Group aerospace market analysis firm is also trying its hand on the subject with its "World Rotorcraft Overview" for the 1997-2006 period.

Teal is a bit more sceptical than Allison when it comes to projected production figures. It predicts just 4635 machines for civil users instead of 6073, and 3555 military machines (3287 according to Allison) for a total of 8190 rotorcraft worth 51,7 billion US-Dollars. Due to the large difference in average unit costs, military business will continue to be much more lucrative for the manufacturers, bringing in 40,8 billion US-Dollars against just 10,9 billion for civil sales.

"The civil market has been flat for some time, and will continue to be flat, with a few cycles", is the Teal view, while on the military side "now at its lowest point in well over a decade", there will be "some growth, but only in the naval/ASW and scout/attack segments". This beckons industry rationalisation: "There are now four big rotorcraft prime contractors, that is Bell, Boeing, Eurocopter and Sikorsky, which we expect to decline to three by the end of our forecast period. Going by the numbers, Sikorsky is the most likely candidate for absorption. Boeing is the most likely buyer", says Richard Aboulafia, lead analyst at Teal.

The numerous mid-size and start-up players will mostly stay independent, but many will associate themselves with the big primes which will use them for market access and dominance. Chances for companies like Hindustan Aeronautics, IPTN, Mitsubishi or other national players to make money in the industry are minimal, Teal predicts. But such small firms, which also include Denel or PZL-Swidnik, will stay on for industrial-political reasons. Concerning the Russian manufacturers Mil and Kamov, their fate is almost impossible to predict.

Although Teal is cautious on the long-term buoyancy of the civil market, there is no denial that this segment is making something of a recovery now. Deliveries in 1996 came to 460 aircraft worth 1,1 billion US-Dollars, the highest level since 1991 and better than most years in the 1980s. According to Teal, the growth is led by three key factors:
   * The strong world economy
   * An upsurge in law-enorcement demand
   * New models, which are stimulating the market.

But there are negative factors as well. Especially in the US, there still is a possibility that the market will be flooded by surplus military machines which are handed over cheaply to government agencies. Also, military R & D money is slashed, thus hampering development of civil derivatives of military models and technologies.

According to Teal, important civil helicopter markets continue to include Emergency Medical Services (EMS), which accounts for 10 to 20 per cent of deliveries. The EMS market is particularly strong in North America. Police departments represent another large market, with law-enorcement sales at between five and 15 per cent market share. While a major growth segment, it is most vulnerable to used ex-military machines, with the Bell OH-58 particularly popular.

With oil around 20 US-Dollars a barrel, Teal sees the offshore market staying very low. Deliveries are down to about 10 per cent of the world helicopter market. On the other hand, coporate travel now accounts for 25 to 30 per cent, while general utility roles (everything from helilogging to crago flying) still are good for 30 to 35 per cent of all civil helicopter sales.

Geographically speaking, Asia, North America and Europe each account for just over a quarter of turbine helicopter sales. The remaining fractions go to Australasia (6-8 %), South America (about 8 %), the Middle East (1-2 %), Africa (1 %) and Central America/Caribbean (1 %). This of course ignores the inventory, where North America still is far ahead with approximately 12200 machines. By comparison Europe has just 4400 helos, including 2860 turbine machines.

Singles still account for the majority of sales, but this could change largely due to government safety regulations concerning operations over built-up areas (cities). Due to larger open spaces, the US accounts for a relatively large percentage of single helicopter sales.

In any case, there is a wide variety of modern models available from the leading manufacturers. Bell has its 206 and 407, while Eurocopters AS 350 family still sells well and the new-generation EC 120 is just coming on line. Boeing is pursuing customers with its NOTAR-equippend MD500/600 series. At the lower end, there is also competition from mini-companies like Enstrom and Schweizer as well as from Robinson with its hugely popular R22 and R44 piston-powered helicopters.

Moving on to the light twins, the EC 135 has notched up some important sales recently, while Bell has just flown its 427 at Mirabel. Boeing is still struggling with the MD Explorer, now offering an upgraded version. Other, slightly heavier contenders include the BK 117, AS 365 Dauphin and Agusta A 109 and at the high end the S-76, which mainly flies on a corporate banner. Kaman also continues to sell small numbers of its K-MAX flying truck.

The commercial market for large helicopters remains very small, with the occasional sale of AS 332 Super Pumas and the emergence of the EH 101 Heliliner and maybe the Sikorsky S-92 now under development (first flight in 1998).

One important question is the impact of the tiltrotor, which will arrive on the scene after 2000 in the form of the Bell/Boeing 609. Over 40 orders are in already, so the optimism of the manufacturers may not be misplaced. Anyway, with relatively modest development costs and possible military applications as well, the 609 is a calculated risk. KARL SCHWARZ