HI Uplift: Unlocking eastern promise in China (maybe)
Most things in China are big. Helicopter orders are no exception. Last week, Airbus Helicopters revealed its deal to sell 50 H160s to helicopter lessor and operator GDAT. The H160s will be deployed mainly in the energy sector, including transport to offshore oil and gas platforms, wind farms and harbour piloting plus emergency medical services (EMS) and other municipal public service missions.
Colin James, MD, Airbus Helicopters in China tells Helicopter Investor: “This is a significant order for Airbus Helicopters and a testimony to the future success of the H160 on the medium twin-engine segment. We currently have around 330 Airbus helicopters flying in China so 50 additional aircraft offers a considerable boost for our presence on the Chinese market.” The contract with GDAT is one of the largest single orders for Airbus Helicopters in recent years especially on the civil and parapublic market, he adds.
“Environmental footprint will be a key attribute in the decision-making process of all responsible organisations. We see the market recovering and along with it, interest in the H160 [pictured] worldwide,” says James. “We also note positive signs of recovery in the energy sector that first started with increased flight hours. The GDAT contract is a prime example of that recovery starting with fixed orders, to ensure the availability of the right product to meet market demands.”
So, is this a new dawn for helicopter sales to the world’s third biggest country? For the industry insiders consulted by Helicopter Investor, it’s a question of balance, where potentially huge demand for helicopters is mitigated by special factors. Jeremy Parkin, founder, aviation consultancy, Parapex Media tells us the potential for expansion of the helicopter market in China is a balance between more money being available and the very tight limitations on Chinese airspace.
“Officially under military control, only about a quarter of airspace is open for civilian use,” he says. “Flights reportedly require sufficient forward planning and that means the benefits of helicopters are much lower than they are in advanced economies such as the UK or US.”
For Dr Clark McGinn, principal, Uplifting Advice: “Everything in China is big, so at one level the deal is not so surprising. Although the regulatory operating environment for civil rotorcraft in China is still complex and highly controlled, which limits the practical growth of domestic civil operations.”
While we don’t know the underlying contract structure in terms of the numbers of firm order slots and options, GDAT’s chairman Peter Jiang has an appetite for growth, McGinn tells us. “GDAT, under Peter Jiang, showed great initiative and commercial risk-taking in recognising the potential to acquire around 20 H225s grounded by Western oil majors, for relatively modest prices, and successfully repurposing them for utility work within Greater China,” he says.
GDAT covers a wide range of activities and Parapex Media expects most of the H160s will be leased out. “They already have a fleet of 10-plus ex-North Sea EC225s, which they lease out to Chinese operators, mostly for offshore energy support,” says Parkin. “If this order was announced as coming from a major lessor, it would be less surprising, and it may be just that.”
The Chinese civil turbine helicopter fleet totals 815 airframes, according to Parapex. (Airbus accounts for 315, Bell for 254, Leonardo at 103, Sikorsky with 54 and all others accounting for 89). “This order significantly consolidates Airbus’ grip on the civil twin turbine market in China,” Parkin tells us. “There are 309 twins currently in China, of which Airbus supplied 142, Leonardo 62, Sikorsky 34, Bell 31 and other OEMs account for the remaining 40.”
McGinn, at Uplifting Advice, views the 50-helicopter Airbus deal within the context of Chinese production. “The Chinese version of Airbus’s H175 super-medium, the Avicopter AC352, or Z-15, received type certification from the Civil Aviation Authority of China [CAAC] last July,” he says. “This follows the maiden flight of AVIC’s new heavy helicopter, the 13t/28 passenger AC313A, with its certification targeted for 2025. So supply for the larger rotorcraft is likely a domestic story.”
Currently, the largest segment in the Chinese market is light singles. “This is likely to remain a target for US and European OEMs – who will continue to face the challenges of airspace control domestically and the geopolitics of the EU/USA engagement with China,” says McGinn. “So, this looks like a challenge to the ubiquitous AW139, which has around 25 units deployed in China, for medium missions.”
What is beyond doubt is the size of the order – although whether it is the single biggest sale is open to interpretation. Allowing for inflation, the large multi-year S92 contracts signed by Bristow, CHC and PHI 15 years ago would each have similar US dollar values to this contract, according to McGinn. And big headline orders in China are not new. In 2015 Airbus signed a 100-unit, five-year deal with Chinese lessor CMIL for the single-engine H125.
Three years later Leonardo signed a 160-unit, five-year heads of agreement with one of its representatives in China Sino-US based on 15 AW139s for its air medical operation. “There has been no public update on either contract, but industry anecdote suggests that neither has delivered units in these numbers,” says McGinn.
Parapex Media believes it is the biggest single civil helicopter market order by value (not by volume) when considering announced orders to end user customers. “Our analysis omits any bulk commitments from OEM distributors/dealers, for example,” says Parkin. “It is interesting that on a global scale, the biggest examples are all in China.”
The biggest order by volume was in June 2017, when Bell announced that Shaanxi Helicopter signed for 100 Bell 407s, says Parkin. While the terms of the purchase were undisclosed, Parapex believes the number is assumed to be a commitment over at least 10 years. Since then, Bell has delivered 77 407s to China across all customers. “It is possible that Bell may also want to cite the order for 110 Bell 505s from Beijing Reignwood Tianxing General Aviation (aka “Reignwood”) but that was done in two batches of 60 and 50,” says Parkin.
Previously, the biggest order by value was the original commitment from Shanghai King Wing General Aviation Co to Leonardo for 32 AW119s, 24 A109S Trekkers, and 24 AW139s, he adds. “However, less than half of this by value was delivered, including up to 12 Trekkers and 15-plus AW139s which were stored by Leonardo in Italy and sold off one-by-one over subsequent years.”
But a new dawn for helicopter sales to China? We may have to wait a little longer for that.
Above and top: Colin James, MD, Airbus Helicopters in China tells Helicopter Investor: “This is a significant order for Airbus Helicopters and a testimony to the future success of the H160 [pictured] on the medium twin-engine segment.