Helicopter Investor London 2020: Starting with cautious optimism
Cautious optimism summed up the mood on the first day of Helicopter Investor’s London 2020 conference.
While speakers acknowledged the sector was still grappling with what one termed “the hangover of oversupply,” there was optimism that the worst of the industry’s headaches may now be over.
A few years ago, it seemed the industry’s problems of oversupply of aircraft and falling demand had no end in sight. But at our London2020 conference, many predicted that stability was beginning to return to the helicopter market, as it adjusts to the new normal.
So, what does the new normal look like? It is a market that is adjusting to curbed demand and consolidation in the operating and leasing space. The helicopter market has accepted some harsh truths since the oil and gas downturn in 2014, but is slowly on its way up again, sparking optimism in in the key sectors of leasing, financing and operating.
“The civil helicopter market is a small one, it can be oversupplied easily, but if we ‘right-size’ the market, and remove the oldest helicopters, then we have bright days ahead of us,” Mike Platt, CEO of lessor LCI Helicopters told the conference’s 230 delegates in his keynote presentation.
That was optimism reflected in an audience poll; in which 67% of respondents were either very optimistic (17%) or fairly optimistic (50%). A third were fairly pessimistic while no respondent was very pessimistic.
LCI Helicopter’s Platt highlighted strong opportunities encouraging significant growth in the EMS sector. But it was the potential growth in demand for helicopters serving superyachts, sight-seeing flights and urban air taxi that most engaged a panel dedicated to exploring the potential for VIP transport. In addition to the VIP market in Europe and the US, they also highlighted the potential in emerging markets, particularly for EMS missions.
Sustainability was also a key topic, with many younger millennial customers aware of their impact on the environment and wanting to offset their helicopter flight emissions. Some Ultra High Net Worth Individuals [UHNWI] in the US were even reported to be downsizing their helicopter and corporate jet fleets in response to environmental concerns.
Whilst the panel highlighted eVTOL aircraft as a potential solution, conventional helicopters can also cut carbon compared with city-wide cab trips if you are running a full helicopter.
Chris Bradshaw of Era Group shared insights on its acquisition of fellow oil and gas operator Bristow Helicopters. Making costs savings was one of the main drivers of the deal with about $35m [of synergies] on offer. “Most of these are fixed costs, so achievable within 12-24 months,” he said.
The new merged business plans to continue its leasing operations even with the Bristow partnership, he added
“We like the business model of combining leasing and operating. If we can’t find a place for aircraft in our own fleet, we can lease it out.”
So, as delegates networked in the cocktail reception, sponsored by Aero Asset, while the mood could not be described as jubilant, it was a lot more positive than many thought it would be as little as six months ago.
In 2020, we are in a market that has consolidated, and values have fallen to meet the demand. The good news is that stability is returning to a volatile market.