HAI Convention News

Air Methods Expands Tour Ops and Adds Jets

 - February 22, 2014, 9:30 AM
Helicopter and fixed-wing EMS continue to be the core of Air Methods’s business. The company transported 114,000 patients in 2012.

Air Methods, the largest helicopter EMS operator in the U.S., is expanding its international operations, growing its heli-tourism division and has expanded its fixed-wing operations into jet ambulances.

The company is also posting higher per-patient transport revenues, paying down helicopter leases and converting select hospital-based programs to community-based ones as a way of increasing revenues. Air Methods CEO Aaron Todd also believes that the company will benefit from the federal Affordable Care Act (ACA) as it is implemented because more customers will be carrying private insurance or be covered by Medicaid or Medicare. Provisions of the ACA could increase revenues by up to $20 million, the company estimates. Currently, 13 percent of its transports are not paid for by insurance.

Air Methods also continues on its well-worn path of acquisitions to increase its growth. These include the purchase of Mercy Air Services, San Bernardino, Calif. (1997); ARCH Air Medical, St. Louis (2000); Rocky Mountain Helicopters (RMH), Provo, Utah (2012); CJ Systems Aviation Group, West Mifflin, Pa. (2007); and OmniFlight (2011). Air Methods also acquired helicopter MRO United Rotorcraft (Booth No. 611) in 2011 to complement its existing products division.

Through its acquisition of Las Vegas-based Sundance Helicopters in 2012 and Blue Hawaiian Helicopters in late 2013, Air Methods has quickly become a major player in the air tourism business, with 46 Airbus EC130 and AS350 helicopters and operations from this sector projected to generate $100 million in revenue in 2014, according to the company. This would give Air Methods 20 percent of the national market.

In a lesser-noticed transaction also last year, Air Methods acquired Florida-based American Jets, an international, long-range air ambulance provider that operates four Learjets–a 23, two 35s and one 36–and employs 33.

However, despite its diversification into air tourism, helicopter and fixed-wing EMS continue to be the core of Air Methods’s business. In 2012, the company transported 114,000 patients, accounting for $802 million in revenue and healthy profits. Per-patient revenues have been on a steady climb since 2008.

Air Methods also is exporting its model. In 2011, it entered into a joint venture with two Turkish entities to form Helistar in Ankara. Earlier this year, Air Methods announced that it would provide two Bell 407s to Haiti Air Ambulance. With regard to Haiti and even spreading operations into other parts of the region, Air Methods CEO Aaron Todd cautioned that such operations “need a benefactor for long-term stability.” The first two years of Haiti Air Ambulance are being funded with $8 million in private donations.

Overall, “we have a strong cash flow business” at Air Methods, Todd told AIN. He said he expects to see a continued push to efficiencies including lease buy-outs to take advantage of accelerated depreciation provisions in the tax law and the “migration of the industry to single-engine platforms. There are still certain pockets of the country where twin-engine aircraft are appropriate or mandated by certain regulations or preferences.” However, Todd said, there are limits to the physical helicopter downsizing and he doubts that new smaller multirole helicopters, such as the under-development Bell SLS, would be appropriate for the company’s HEMS missions. “That is not on our radar screen as a solution,” he said. The mainstays of the company’s fleet continue to be the Bell 407, Airbus EC130 and AS350, he added, but the company is taking a harder look at fixed-wing solutions and synergies with its HEMS operations. “It’s not a core company strategy, but it is a secondary growth pillar,” he said. Air Methods already operates a fleet of Pilatus PC-12s in the intermountain Western U.S. where patients need to be transported longer distances than helicopters allow.

Todd said that he is optimistic that the Affordable Care Act will have a benign impact on the company’s business. “We transport patients regardless of their ability to pay, but anything that would improve their status as an insured or entitled patient under Medicare of Medicaid would be a net positive for us. You’ll see an immediate impact on the previously uninsured, who are entitled to Medicaid expansion for the states that are participating in that. Questions remain as to how the impact of the law will [affect] the overall affordability of health care as private plans in conformance with the act become more expensive.”

He said Air Methods is beginning to fill its HEMS pilot pipeline with pilots from Sundance. When the Las Vegas company was acquired, Todd said one of the benefits would be the ability to tap into a pilot talent pool that could be promoted to air-medical operations. Air-tour pilots build turbine time quickly, flying on average four times as many hours per month as their air-medical counterparts. “In every one of our new-hire air-medical classes we have several pilots who have come through the tour operator,” Todd said. “We are going to continue to make that a more seamless process for our aviation professionals and it will be a positive force.”

Todd said Air Methods will “absolutely” continue to evaluate other air-tour operators for acquisition going forward, “domestically and perhaps even internationally.” In the case of the Sundance and Blue Hawaiian acquisitions, Todd said Air Methods “did not generate the interest, but the interest was certainly there” on the part of the owners of both acquired companies. “They were interested in teaming with us for the financial stability; we brought capital to the table to help them achieve their growth objectives, andwe are a publicly traded company.”

While not revealing any future plans, Todd said Alaska, the Pacific Northwest and even the U.S. northeast coast are good potential markets for growth of Air Methods’s air-tourism business. “We’re happy to look at any markets that make sense, but our focus is tourism” as opposed to Part 135 charter operations, he said. “You never say never, but our focus is on operations that involve tourism as a core component.”

Turning to the products division, Todd said that United Rotorcraft still has a substantial backlog of contracts involving the medevac modifications of Sikorsky Black Hawks for the U.S. Department of Defense and that in-house demand to modify Air Methods’s own helicopters “would increase in the years ahead” as its fleet is refreshed. “We see [United Rotorcraft] as a very important part of our core services.”

With regard to the FAA, Todd said that the HEMS community as a whole desires a “greater uniformity between the [FAA] FSDOs and the application of standards around STCs [supplemental type certificates] or field installations to get aircraft updated and ready for service on a more expedited basis. Some of the new technology–such as the new avionics suites with synthetic vision and night-vision goggles–centered around safety has a steep learning curve for both the operators and the FAA. There is progress being made but there is a long way to go so that everyone knows what the requirements are relative to certification and training before operators incur substantial investment. These technologies have and will continue to dramatically improve the safety margins for HEMS operations. When you see the approval process for these technologies being unduly slowed by bureaucracy, you hope that it is something that is short-lived and can be quickly resolved.”



Air Methods misleads the public into thinking the hospital who has the logo painted on the helicopter is the operator who is liable for a crash, which is not true. The public trusts the local hospital but does not know that the hospital is not legally liable for any FAA vilolations or crashes. Hospitals mislead the public by using the old CAB Blanket Waiver to avoind being responsible for a crash. After the Calgon Air crash, the FAA required the public to be told that the Major Airline partner was not responsible for the operation of the contract carrier. Hospitals should be required to obtain their own Part 135 Air CArrier Certificate since hospitals actually bill the patient in the hospital name. Attorneys are not allowed to let a non attorney use their law license so why should a hospital be allowed to use the Air CArrier Certificate of Air Methods to charlge patients for a flight on a hopsital aircraft? I was fired as an pilot for Carolinas Healthcare in Charlotte NC because I objected to being scheduled by hospital employed dispatchers to fly for 30 hours with a rest break although the FAA required a rest break after 14 hours. The hospital did not care about violating FAA rules since the hospital did not have an FAA Part 135 Certificate to lose if the FAA discovered the violations that earned the hospital more profit by not having to hire enough pilots to comply with the FAA rest rules. The public shgould be told in BOLD PRINT that Air Methods is legally responsible for a crash and that the hospital that is charging the patient does not have a license that is required of all other Part 135 Charter Flight companies. 

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