FLUG REVUE February 2003: Helicopter market outlook

CIVIL HELICOPTER MARKET OVERVIEW

By Karl Schwarz

The events of 11 September 2001, with their impact, for example, on the insurance industry, an uncertain economic outlook and a trend to increasingly impose restrictions on operations – one does not have to look far to find reasons for the caution currently being exercised on helicopter purchases. Bill Dane from the Forecast International market research company was therefore expecting that deliveries of civilian rotorcraft would total only 835 aircraft in 2002, a continuation of the steep plunge from 990 units in 2000 and around 870 in 2001. Robinson, with its light piston-engined types, has been especially hard hit.

But Dane does have some consolation for the industry. In its latest market analysis, Forecast International is predicting a slight increase in production over the next few years, reaching 905 helicopters in 2008. Specialists in the company believe there are sales opportunities for 8,642 civil helicopters, worth $16,272 billion between 2002 and 2011. Compared with the last study carried out 12 months ago, they are significantly more cautious. Then they were forecasting 9,261 aircraft worth $18 billion for the next decade up to 2010.

It seems that the prospects for different market segments diverge. Thus, in the USA Forecast International is predicting significantly greater interest in new helicopters for police department use, to replace the completely obsolete and hence expensive to operate rotary wing aircraft inherited from the military.

Again, according to Forecast International, the picture is more favourable in the offshore market, with rising profit margins and the possibility that new offshore oil fields will be developed in the Gulf of Mexico. This would particularly favour sales of larger helicopters.

The manufacturers probably also have reason to be optimistic as regards increased use of helicopters for business travel. Dissatisfaction with what is on offer from the airlines, a need for greater security and attractive models could lead to an upswing in this segment, which at present accounts for only 2% of the total fleet.

On the other hand, the prospects for helicopters used on scheduled services are less positive. Even in the USA, there seems to be no prevailing acceptance of such services, so that activities will continue to be confined to niche markets. A question-mark also hangs over the further development of emergency medical services (air rescue service and air ambulances), at least in the USA, since the rules on the transfer of costs were changed.

All in all, however, the market remains diverse. Customers range from small, one-man operations through to the large companies with a global presence in the offshore business. In line with the different usage profiles, the manufacturers also offer a wide range of types, ranging from 600kg light two-seaters for private flights and training through to the Mil Mi-26, with a 56t take-off weight.

A dozen or so companies are on the market and, despite persistent speculation about consolidation, the trend is primarily towards collaborative programmes, such as, for example, between Bell and AgustaWestland or between Eurocopter and Mil.

Following the introduction of new, light single-engined and twin-engined types such as the A119, Bell 407 and 427, EC 120, EC 130 and EC 135 or MD600 and MD Explorer, product development is currently focused on heavier models such as the Sikorsky S-92, EC 225 and Mil Mi-38. Towards the end of the decade the question will then arise as to when Bell and Agusta will complete development of the BA609 tiltrotor and whether this promising technology will really gain wide acceptance.

With regard to numbers, the BA609 is unlikely to sell in a big way since, according to Forecast International, Robinson is likely to be the market leader in the period 2002 to 2011, followed by Eurocopter, by far the largest manufacturer of turbine-powered types. The brief portraits presented below provide an overview of the main players in the helicopter market.

AgustaWestland
Since the mid-1970s, Agustas presence on the civil market had been limited to producing a series of new variants of the stylish A109. Then in the mid-1990s another derivative of this basic model was developed, the single-engined A119 Koala, deliveries of which commenced in September 2000 following a long development period. At the same time the company has stepped up its involvement in collaborative projects with Bell.

Bell Helicopter
For a long time Bell was the obviously dominant manufacturer on the civil market, but in the last five years it has been overtaken by Eurocopter. The primary reason for its problems is no doubt its strategy of sticking for too long to established, but outdated types. On top of this, the new twin engined 427, which has been available since January 2000, has not lived up to expectations due to technical difficulties. To regain the initiative, we understand that development of a new light, single-engine helicopter that will compete with the EC 120 is to be announced at Heli-Expo 2003.

Bell/Agusta
This joint venture company was established by Bell and Agusta in 1998 and combines under one roof development and marketing of the promising medium-weight AB139 utility helicopter and the revolutionary BA609 tiltrotor. While certification of the AB139 was expected at the end of 2002, the BA609 is advancing only slowly, though ground tests have now begun in Texas. Only when the Bell/Boeing V-22 Osprey is established in service with the armed forces is the company planning to step up work on the civil model. First deliveries are now not expected before 2008.

AB139

Brantly
The cosy B-2B two-seater is still available, even if production is hovering around zero per year.

EH Industries
The EH101 developed by AgustaWestland primarily for military requirements is also suitable for offshore applications; however, it is unlikely to achieve double-digit sales in the civil area.

Enstrom
The Michigan-based company has for some 30 years generally built no more than between five and 10 of its piston- and turbine-powered models 280 and 480, which are mainly sold to private operators. The company's new President, Steven Daniels, appointed in the summer of 2002, has announced ambitious plans to double this number.

EC130

Eurocopter
With a targeted investment programme that has resulted in a complete makeover and expansion of its product portfolio, Eurocopter won the lead in the civil market for turbine helicopters at the end of the 1990s. Above all, the completely new EC 135 (250th delivery in October 2002) and EC 120 (300th delivery in November 2002) models are selling well. In addition, the EC 130 (photo), EC 155 and, following considerable delays, the EC 145, all derivatives of existing types, are also in production. An upgraded version of the Super Puma is now under development as the EC 225 (and EC 725 military version).

HAL
India's Hindustan Aeronautics has a modern design available in its 5.5t ALH, which entered service with the Indian armed forces in 2002. However, international marketing has not yet begun in earnest.

Kaman
The long-established company founded by the helicopter pioneer is today a niche producer. Recently, sales of the unusual K-MAX “flying truck” were stagnant. At least, existing aircraft are marketed under leasing contracts.

Kazan
The Mi-17 production plant in Kazan, Russia is trying to get established with its own designs. Production of the twin-engined Ansat commenced in 2001.

MD Helicopters
In 1999 the Dutch RDM Group took over Boeing's civil helicopter business. The MD 500E, MD 530F, MD 520N, MD 600N and the Explorer are still being produced in Mesa, Arizona. By outsourcing a lot of work to subcontractors, the new owners have been trying to reduce costs.

Mil
The Russian manufacturers continue to play no significant role in the civil market. However, Mil is developing the Mi-38 in partnership with Eurocopter. This is still expected to have its maiden flight in 2003 after lengthy delays. Deliveries could commence in 2005.

Mitsubishi
The eight-seater MH2000, Mitsubishi's attempt at an in-house development, is unlikely to sell outside Japan, especially as the helicopter was grounded for a long time after two crashes.

PZL-Swidnik
With the SW-4, PZL-Swidnik is trying once more to make inroads into the civil market, but the prospects are uncertain.

Robinson
For almost two decades Robinson has been the undisputed king of the piston-engine market. The R22 is by far the most popular entry-level helicopter and is much used for training. Following the introduction of hydraulic controls, the larger R44 has been a best-seller in recent years. The latest version, the more powerful Raven II, has just been certificated in the USA.

Schweizer
Schweizer has been trying to maintain its position in the industry with phased improvements to the tried and tested, but technologically somewhat elderly 300 and 333 models. However, it is only seldom that more than 40 helicopters leave the factory in Elmira, New York per year.

Sikorsky
In the civil sector, for many years Sikorsky had only its S-76 on offer. Produced in only small numbers, this primarily appeals to VIPs. After numerous modifications, deliveries of the large 19-seat S-92 are expected to commence in the first quarter of 2004. FAA certification was achieved in December 2002. Letters of intent have been received for around 15 aircraft.

From page 30 of FLUG REVUE 2/2003

Last updated 15 January 2003

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