Helicopter makers eye surging European market

 - May 17, 2008, 6:05 AM

Helicopter manufacturers are now selling more of their products to business and private customers in Europe than in any other market segment. Company executives appear to be waking up to the benefits of using rotorcraft, while the increasing number of wealthy individuals employing them in emerging countries is adding demand.The reasons the helicopter is being adopted for business use are not new. As Vittorio Morassi, chairman of the European Helicopter Association and CEO of Italy-based operator Air Corporate, observed, “Helicopters give flexibility, comfort, security and privacy.”As an example, he cited the circumstance wherein two industrial groups planning a takeover or merger fly senior management directly to a factory to prevent prying eyes from observing unusual automobile traffic at what may be a sensitive time in negotiations. He also mentioned that, in some areas, helicopters are the only mode of transportation offering suitable speed. This is particularly true in developing countries where road networks often are inferior, he noted, but it also is becoming true in developed countries. “The increasing frequency and size of traffic jams in northern Italy is making helicopters an attractive alternative,” Morassi told EBACE Convention News.Another likely reason for the market growth is that medium-sized companies are following a trend initiated by larger firms that already own or use helicopters. He also indicated that companies are flying rotorcraft in a wider range of applications.“They now use a helicopter to move specialists and technicians–not only top management–from one facility to another,” Morassi said. This is one role in which helicopters complement business jets, and more and more owners now have both types of aircraft in their fleets.So what are customers looking for in business and private helicopters? “Speed comes first for a private customer,” said Scott Fitzgerald, Bell Helicopter’s executive director for Europe, Middle East and Africa. In his view, the next biggest factor is flexibility in the cabin layout. “A corporate helicopter is no longer used to fly execs only; it can have a utility role as well,” Fitzgerald said.Patrice Royer, Eurocopter’s director for market development for business aviation, private and commercial segments, does not quite agree. “Customers first set their sights on a cabin environment where they can ensure continuity with their office and business jet interior,” he said. Typically, they want to use their laptop, listen to music from their own MP3 player and have phone conversations. In modern rotorcraft, the reduced noise and vibration levels help.“Speed is no longer a priority,” Royer argued, countering Fitzgerald’s statement. The idea is to effectively use the flying time, which averages 20 minutes but can be as long as two hours.The taste for lavish interiors with thick carpets is on the decline. Customers prefer barer, albeit styled, cabins, Royer said. For example, in Eurocopter’s Stylence cabins, interior designers left the metal structures of the energy-absorbing seats exposed to enhance the sporty look. Eurocopter marketing people, who have partnered with luxury goods brand Hermès to offer a luxury version of the EC 135 light twin, are now considering extending the partnership to other models.External aesthetics are taken into account, Royer said, acknowledging criticism that Eurocopter has received about its most recent models. “We have listened. Look at our EC 175–it is beautiful,” he said.Morassi sees additional criteria that helicopter buyers look for, such as visibility from the cabin and “open space.” For instance, private and business EC 135 customers typically opt for no more than four of the six passenger seats that they could have in their cabins. The average passenger load carried is, in fact, close to 1.7.Nevertheless, helicopter buyers do not completely disregard cost. “Buyers ask questions about fuel costs, for example,” Morassi noted.According to Royer, Europe accounts for approximately 30 percent of the global business and private helicopter market. Sales figures are skyrocketing, he said, more than doubling from 30 in the region in 2005 to 66 last year.Within this market, the emergence of countries like Russia, Poland and Romania is quite noticeable. In those countries, “companies either had no helicopter or flew old Russian types, which they are replacing,” Royer said. Meanwhile, in Western Europe, Ireland and Spain are reaping the fruits of a booming real estate industry.In addition to corporations, growing numbers of high-net-worth individuals order helicopters. Some of them see helicopters as links between their jets and yachts. Others use them for both business and leisure. For example, they might visit a new seaside resort that they are developing and then fly on to their favorite casino. Some of these individuals are pilots who fly the helicopters themselves, while others hire professional crews. “Some newcomers do not have very consistent criteria of choice, so we guide them,” Royer said.How does the European market differ from the U.S.? Quantity-wise, the U.S. market still is much bigger. “Seventy percent of these business and private activities take place in the U.S.,” Morassi pointed out. There is a qualitative difference, too. Because of more stringent operating rules, single-engine helicopters are far less popular in Europe. “The Bell 429 twin is our response to twin-engine EASA regulation for corporate, EMS and law enforcement operations,” Fitzgerald explained, adding that many Europeans are looking for alternatives to replace their five- to seven-year-old models.The continuing turbulence on the world’s stock markets is now impacting the helicopter, but not necessarily in terms of declining sales. “The credit crunch has an influence,” Fitzgerald said. For instance, some customers who had planned to use a helicopter in a particular region are now asking for it to be delivered to a part of the world where the economy is not slowing. “The industry has gone global, so a company may want to move an asset to where growth is–Asia rather than North America, for instance,” he explained.Another influence on the market has been the ongoing imbalance in currency exchange rates. The weak dollar has spurred sales in non-dollar countries, where customers are experiencing strong buying power for aircraft priced in the U.S. currency. “We have done a study and it shows that the price for a Bell 407 has not changed in euros between 2000 and 2008, despite hikes in the dollar price,” Fitzgerald said.