Honeywell has released its annual turbine-powered civil helicopter purchase outlook and the news is good, with civil helicopter deliveries up 24 percent in 2005 and likely to rise again this year.
Looking further ahead, the outlook forecasts deliveries of 2,600 new civil-use helicopters in the five-year period from 2006 to 2010, “driven in part by strong demand for light single- and intermediate twin-engine models offering new technology,” the forecast authors noted.
Other key findings include a projected 15-percent increase in civil helicopter sales from 2006 to 2010 over the previous five-year period from 2001 to 2005, as well as the sale of nearly 6,000 new civil helicopters from 2006 to 2016. Purchase expectations of new helicopters rose about two points over 2005 survey findings.
“Honeywell Aerospace’s survey work has identified engine power, safety/crashworthiness, useful load, aircraft price and direct operating costs as the five primary criteria operators consider when selecting new helicopters,” said John Todd, Honeywell v-p of general aviation and helicopters. The decision to acquire new helicopters is also driven primarily by the age of the current model and the operator’s desire for bigger cabins, more range, more power and better technology.
The near-term increase in demand is also driven by continuing strong worldwide demand for corporate, EMS, law enforcement and utility helicopters, expanding U.S. and Latin American economies and continued economic strength in Asia.
Less Optimism for ‘New’ Helicopters
While overall civil aircraft sales forecasts are up, the 2006 purchase expectations survey of some 1,000 flight departments notes that interest in “all-new or derivative aircraft” fell about 12 percent. Brand-new or significantly enhanced model purchase plans remain down from prior surveys, in which 40 to 50 percent of model mentions usually fell into the “new” classification. This “reflects the relative lack of recent new-model additions to manufacturer offerings, and the fact that new models of five years ago no longer qualify as ‘all new’ today.”
The survey continues to show minimal trade-up expectations among the world operator base. More than 80 percent of new purchases will be made to replace older aircraft in the same size/capability and price class. Only about 16 percent of operators plan to trade up to more expensive and capable machines.
Buyer interest, according to survey findings, nevertheless remains healthy overall, “and there is no indication that demand is likely to decline in the near future.”
For the past five purchase expectation surveys, between 63 and 86 percent of all European purchase expectations have been for twin-engine models. This has been attributed to regulations requiring twin-engine aircraft on flights over congested areas and other use limitations. This long-term trend shifted in this year’s survey, with single-engine models making a major comeback to 48 percent of expected purchases, by comparison with a five-year average of around 30 percent.
Unexpectedly strong demand for the Eurocopter AS 350B3 in Europe appears to have been partially responsible for the shift. Some European operators remarked that operating twin-engine helicopters in Europe is uneconomical. They also stated that they plan to switch back to single-engine aircraft and fly around areas restricted to twin-engine helicopters and work around other limitations.
It isn’t known if this is a short-term aberration or a new trend. In North America, there are no current or pending operational regulations placed on single-engine helicopters.
In Latin America, planned purchases are for single-engine models; in Africa, Asia, the Middle East and Oceania, twin-engine machines are overwhelmingly preferred.
Greatest Demand in North America
North America continues to have the greatest demand for new helicopters, accounting for 43 percent of expected future purchases. Expectations increased in this year’s survey compared to last year’s, with most of the improvement traced to increased purchase plans for law enforcement applications, offsetting reduced expectations for EMS, corporate, offshore oil and television crews.
Survey responses indicate that North America will purchase more light single-engine helicopters than any other region. On average, more than 70 percent of future new rotorcraft purchases are expected to be light singles, and no regulatory activity is on the horizon that might change this forecast.
The expectations survey showed a significant decline in European purchase expectations, slipping from an 18-percent fleet replacement/expansion rate in 2005 to 15 percent in 2006. Declines were concentrated in multi-engine machines, compared with last year’s survey numbers.
Moving further beyond the implementation of the more restrictive single-engine operations regulations in Europe, the spike in planned orders and deliveries of twin-engine helicopters has softened and interest in less costly single-engine models appears to be improving.
Still, 52 percent of five-year planned European purchases are for twin-engine models. Survey responses suggest that about 15 percent of world new turbine-powered helicopter sales will occur in Europe during the forecast period. This is a reduction of about five points from the 2005 survey. The sharp falloff in European expectations may be partly due to a lagging negative effect of new, costly regulations on operators.
Aircraft age, cabin size and comfort, range, speed, new technology, versatility and the need for two engines were most frequently mentioned as specific reasons for planning a new helicopter purchase for use in Europe. The corporate-use category was most frequently mentioned by European respondents, followed by utility, law enforcement and EMS.
Expectations High in Rest of World
On the basis of the percentage of the fleet to be replaced or expanded, Asia, Africa, the Middle East and Oceania together have maintained consistently high purchase expectations for the last four years.
Operators in these regions expect to purchase helicopters equal to 20 percent of their current fleets during the next five years for replacement and fleet expansion. This is compared with 15 percent in Europe, 42 percent in Latin America and 21 percent in North America.
Approximately 77 percent of future demand in these regions is expected to be for multi-engine helicopters. Operators cited aircraft age, fleet standardization, cabin size/comfort, hot-and-high capability, warranties, speed and power as key reasons for replacing current aircraft.
In Asia/Oceania, nearly 27 percent of expected purchases will be for corporate applications, following by EMS at 14 percent and offshore use for 13 percent.
In Africa and the Middle East, corporate applications were most frequently mentioned at more than 26 percent.
Latin American expectations increased very sharply in this year’s survey. As a result, Latin America has vaulted from the lowest fleet replacement and expansion percentage of all world regions in recent years to the top again in 2006. Given strong improvement in purchase expectations as a percentage of current fleet and despite the relatively small fleet in this geographic zone, Latin America’s worldwide total share of projected helicopter demand is now second only to that of the U.S.
This region is expected to account for nearly 25 percent of expected five-year world demand for new helicopters, up nearly 11 percentage points from the 2005 survey projection. Approximately 65 percent of expected new aircraft demand in the region is for single-engine helicopters. Aircraft age is the dominant reason for expecting to replace current aircraft with new ones, according to 76 percent of comments. The next most frequently mentioned reason was speed, accounting for 49 percent of responses.
Latin American operators cited improved economic conditions, particularly in Brazil, Mexico and Venezuela. Both economic policies and oil revenues were mentioned as contributing to the improved outlook.