Honeywell Foresees Flat Civil Sales
With a commendable bow toward candor, Honeywell released its civil helicopter market outlook at Heli-Expo by qualifying the results of its survey: “The 2003 market outlook presents a snapshot of the market at a point in time and does not reflect unforeseen events such as an unexpected economic contraction, sharp increases in fuel costs, a fuel crisis, imposition of heavy user fees or other unfavorable regulations/taxes that could affect results in future years. Demand for new helicopters is highly price sensitive. Decisions by aircraft manufacturers to offer discounts or raise prices can significantly influence sales activity on affected models.” In other words: “Here’s the latest data. What happens next is nearly anybody’s guess.”
Unlike the Rolls-Royce study, Honeywell’s focuses mainly on the next five years, although it does make some 10-year predictions. Honeywell foresees deliveries of about 2,600 new helicopters during the five-year period 2003 to 2007, an increase of 100 units, or 4 percent, over the 2,500 shipped during the period 1998 to 2002. The survey reflects a compounded growth rate of 3 percent and estimates total deliveries of 5,400 aircraft through 2012.
Chief market drivers are law enforcement and air medical services operations, which together are expected to account for more than 50 percent of new helicopter applications during the next five years. This data comes from Honeywell’s fifth purchase expectations survey, and was based on responses from 926 chief pilots and flight department managers worldwide during the fourth quarter of last year.
Near-term stability in new turbine helicopter demand will be driven by market interest in new and derivative models entering service, higher purchase expectations for new helicopters used in homeland defense and border patrol roles and stable residual values of used aircraft, according to Honeywell. A modestly favorable outlook for world economic growth is also a contributing factor, although this is certainly threatened by prospects of war in the Middle East.
On the other hand, the survey indicated that the market for new rotorcraft will become significantly weaker; less than 30 percent of the helicopter models operators mentioned for future purchase were for “all-new or derivative aircraft.” This is down from prior surveys, in which 40 to 50 percent of model mentions fell in the new classification. The latest survey also indicates little trade-up expectation. Some 80 percent of new purchases, according to the respondents, will be to replace older aircraft in the same size or capability and price class. In addition, about 10 percent of operators expected to trade down to less expensive and capable models.
Honeywell’s survey also notes that civil turbine-helicopter deliveries declined last year compared with 2001 and are expected to decline modestly this year as well. Furthermore, purchase interest for the latter years of the five-year period are significantly higher than during the first years, indicating there will be no surge in near-term demand.
Operators worldwide continue to express a strong preference for light single-engine helicopters, naming this class 50 percent of the time, up six percentage points from a year ago. North American and Latin American operators both prefer light singles over any other category, although the operators south of the border shifted some interest from light singles to light twins.
Expectations for the future purchase of light-twin helicopters during the next five years fell sharply and unexpectedly, from 30.7 percent in the 2001 survey to 18.6 percent. The sharpest falloff in demand was in Europe, where expectations turned to intermediate twins and light singles.
New intermediate twin-engine helicopters as a class received the second-highest five-year purchase expectation ranking, rising to 28.2 percent of all mentions in the survey, an increase of 4.5 percentage points over the 2001 outlook. North American operators were the least interested in this segment (18 percent) while operators in Asia, Oceana, Africa and the Middle East showed the greatest interest (close to 50 percent).
Although overall interest in heavy-lift helicopters increased from 1.7 percent to 3 percent worldwide, this class continued to show the lowest purchase expectations relative to the other classes. Stronger demand for this class of aircraft, Honeywell noted, often stems from governmental or parapublic sources, which are outside the scope of its survey.