HAI Convention News

Gulf operators face unexpected challenges after Katrina, Rita

 - March 14, 2007, 12:04 PM

For many residents of the Gulf Coast stretching between the Florida Panhandle and Galveston, Texas, the sound of helicopter rotors overhead serve as a frequent reminder of the importance of oil exploration to the region’s ecomony.

Dozens of operators in the Gulf own or lease a combined fleet of more than 600 helicopters, providing daily transport service for companies engaged in the business of pumping oil from the nation’s richest energy basin.

Three major operators–Petroleum Helicopters Inc. (PHI), Air Logistics and Era Helicopters–service the vast majority of the helicopter contracts in the region, with smaller firms taking on whatever remaining contracts are available. Even in an average year, the scope of Gulf helicopter operations is impressive–more than 2.5 million passengers carried on more than one million flights, in support of an industry that supplies nearly one quarter of the oil used in the U.S.

“The Gulf of Mexico can’t operate without helicopters. If you had to do everything by boat, it would take six times as long, if not longer, to get the same work done,” said Evergreen Helicopters vice president for operations Dan Blanchard.

The first full year following the devastation wrought by Hurricanes Katrina and Rita saw helicopter operations in the Gulf of Mexico booming. One industry executive claimed a near-100-percent utilization rate for his fleet last year, saying, “If you had a helicopter that wasn’t flying, it must have been broken.”

Spurred by the urgency to restore the offshore oil platforms ravaged by the 2005 storms, helicopter operators faced unique challenges meeting increased customer demand. “The major helicopter operators have all had problems finding equipment and personnel,” said Neill Osborne, Era Helicopters president and COO. “I think that’s pretty much leveling off now, but for a period of time there was not enough equipment to go around to satisfy the need of the oil companies.”

While many Gulf Coast businesses suffered in the wake of the storms, clearly the helicopter industry there reaped immediate benefits. Patrick Graves, Gulf Coast director of operations at Air Logistics, said the phone calls started and they didn’t stop coming. “We had customers we had never heard from before calling up and looking for helicopters,” he recalled. “We were being reliably told by these customers that the operators they historically worked with couldn’t supply them with helicopters because they didn’t have them.” Operators with smaller Gulf fleets such as Evergreen felt the demand explosion even more acutely. “We got to the point that we were running out of aircraft and pilots at the end of the year and we’re still not caught up,” said Evergreen’s Blanchard.

Faced with a surge in demand after the hurricanes, helicopter operators sought ways to increase their capacity. Era managed to supplement its fleet by persuading manufacturers to rearrange delivery schedules–a temporary fix that provided the company with new aircraft earlier than planned. Other operators were forced to transfer company equipment from areas outside the Gulf Coast, import short-term leased helicopters to handle the overflow or else turn customers away. Adding to the chaos, many helicopter operators themselves did not escape the wrath of the storms unscathed, a situation which impacted their operations last year. “We lost two operations bases,” said Jim Shugart, Era’s vice president and general manager. “One of them was under 11 feet of water in Venice [La.]. In Cameron [La.] there was nothing but sidewalk left.”

While Katrina attracted more national news coverage due to the devastation in New Orleans, it wasn’t the worse of the storms for the petroleum industry, according to Air Logistics’ Graves. “Katrina itself, while it did have a major impact on the Gulf of Mexico, it was nowhere near the order of magnitude of Rita. If you pull up any of the track maps you can see that Rita came right through the central Gulf of Mexico as a magnitude Category 4 or 5 storm that did tremendous damage to properties offshore, and luckily went in around Cameron, Louisiana, and didn’t have as much impact or loss of life as Katrina did.” Rita’s destruction in the Gulf caused plenty of lingering logistics snags for operators. “Early in ’06 it was rebuilding, getting our infrastructure back to support the offshore role, which in a lot of cases had to pull back 30 to 50 miles from the Gulf Coast heliports,” said Era’s Shugart. “When we lost the Cameron base we started operating out of Lake Charles [La.] with our customers, because their ports, their shore bases along the Gulf Coast, were as devastated as our bases.”

Hurricanes Not the Only Challenge
Besides recovering from the storms of late 2005, operators still faced their usual challenges of staffing, safety (see sidebar) and supplying and maintaining infrastructure unique to the Gulf.

When it comes to rating the challenges in operating a Gulf Coast helicopter service, staffing is a key concern for most operators. “A significant portion of the pilots at my organization are reaching retirement age,” said Air Logistics’ Graves. When it comes to replacing aging pilots with younger aviators, Graves said he’s not just looking for a good stick handler with the requisite flight hours. “When I talk about experience I’m not talking about experience in flying the helicopter, I’m talking about a [pilot’s] experience in our industry because it is different than most places. The way we operate, the majority of our helicopters will leave a shore base and not see that shore base for three or four days. [The pilots are] out there living with the customers; [they are] the ultimate customer service rep.”

Air Logistics is one of the few major operators working with a union staff, which involves extra considerations when hiring pilots. “The days of bargaining for your abilities, we don’t have the ability to do that here at Air Logistics,” said Graves. “You come with a certain level of experience, we can pay up to a certain level of experience and it is what it is at that point. If you have 20 years of experience in the Gulf of Mexico, I can’t pay you as a 20-year pilot. I can’t recognize probably the full extent of your past history in the Gulf of Mexico. There are certain constraints in our union contract that we can hire only up to a certain level.”

PHI, another union operator, recently ended a rancorous labor dispute which reached a head when nearly half of its pilots went on strike in September, in protest of two-and-a-half years of unsuccessful labor negotiations. Under an agreement with the union, brokered by a federal judge, PHI agreed to phase in its remaining striking pilots over the next few months. Nonetheless, the strike injured the company and is being blamed for a fourth-quarter loss.

Era, whose pilots are not unionized, has a different set of labor concerns. Even without constraints on whom the company hires, it still treads carefully when considering new pilots. “We want to be careful and protective of our younger guys,” said Era’s Osborne. “We don’t want to attract so many highly experienced guys that the lesser experienced pilots feel that their opportunities are restricted. As the senior guys phase out, then our younger guys will step right in and they will be reaching that experience level where they can comfortably captain a transport aircraft.”

For the Gulf helicopter industry in general, a perennial headache remains the lack of standardized communications and weather reporting systems. Each operator maintains its own specialized systems, which in the end turns out to be a source of wasteful repetition. “We’ve made major capital investments in equipment, but guess what? It works only for Air Logistics,” said Graves. “So when PHI is flying next to me, they have to have their own VHF radio network, their own satellite tracking equipment, their own weather, so we have multiple redundancies here in the Gulf of Mexico. It’s a horrible situation.”

But help for Gulf Coast operators could be on the horizon. The FAA plans to award a contract in July for a Gulf-wide automatic dependent surveillance-broadcast (ADS-B) system.

The Gulf ADS-B system will include a Flight Information Services-Broadcast (FIS-B) component, providing pilots with up-to-the-minute weather data. The major benefit of ADS-B is that it would provide ATC and pilots with radar-like coverage of air traffic over a vast expanse of water where radar is unavailable. The FAA expects the system to be operational by 2010 with full coverage by 2020.