Year of the Tiger to test global helicopter industry
People born in the Chinese Year of the Tiger are “courageous and energetic, love a challenge or competition and are prepared to take risks,” according to the British Victoria and Albert Museum. Those are qualities which will be needed in full measure during the latest Year of the Tiger (starting next month), say industry insiders consulted by Helicopter Investor.
Industry resilience and improved utilisation rates coupled with greater demand for offshore flights, plus a rise in EMS and SAR missions were all highlighted by contributors to the second part of our two-part focus on the helicopter world in 2021 and 2022.
Last year was a period of recovery, which revealed the resilience of the sector, Emmanuel Dupuy, Aero Asset president tells Helicopter Investor. “Year-over-year, transaction volume was stable, while supply shrunk in terms of units and aggregate dollar value,” he says. “The deal pipeline (which accounts the number of sales currently pending at various stage of transaction) was up 23% at the end of the fourth quarter [Q4] of 2021. The overall absorption rate ended at 1.5 years of supply at 2021 trade levels – its lowest point since pre-pandemic levels.”
Between mid-2020 and Q4 2021, the supply for sale dropped from a high point of 257 units to 196 units. So, supply shed nearly one quarter of its size. “Strong sales volume in first half of 2021 and aircraft being returned to operation pushed supply to fall to its lowest level in the past three years.”
Milestone Aviation, president and CEO Pat Sheedy also highlighted the word resilience. “2021 will be remembered for the resilience shown – the resiliency of our business, our customers and our industry,” Sheedy tells us. “Despite the challenges of the Covid-19 pandemic, the Milestone portfolio performed exceptionally well under the exceptional stress of the macro environment.” The Milestone fleet demonstrate flexibility and adaptability, in particular aircraft that serve critical operations, which continued throughout the crisis, he adds.
Driving the helicopter market this year will be a range of factors including oil price, equity and other markets, mission critical services and fleet renewals, according to Dupuy. “Pre-owned retail sales number will continue to be strong through 2022,” he says. “Overall absorption rate will remain low and supply will continue to tighten, especially in the VIP market segment.”
Dupuy, at Aero Asset, remains bullish about the medium twin market. Medium retail sales shot up just north of 40% between the first and third quarter of last year compared with the previous period, he says. “This hike was driven by the S76C+/C++ market, which had averaged five sales per year in 2019 and 2020. But the first and third quarters of 2021, saw 17 retail sales. 2021 was exceptional for the S76 market and we look forward to see how 2022 trends.” (Pictured is a 2020 Leonardo AW109 offered for sale by Aero Asset).
Sheedy, from Milestone, predicts a key focus for 2022 will be the continued recovery in utilisation rate, particularly in the heavy offshore sector. “Although there continues to be an oversupply of heavy helicopters in the oil and gas industry, we saw that reduce materially in the latter half of 2021 and expect that trend to continue through 2022 as the impact of the Covid-19 pandemic reduces and we continue to see a stable oil price environment.”
Offshore oil and incremental offshore oil exploration will remain a feature of the energy landscape for the foreseeable future, as the world seeks a proven resource to cover the necessary energy demand. “After several years of under-investment in the sector, we are looking forward to new projects coming on stream which should see a rebalance of the supply/demand dynamic for heavy helicopters in particular,” says Sheedy.
Milestone also expects a shift in focus to support solutions and supply chain challenges. Those will need to be addressed by all the industry players, beginning with the OEMs, says Sheedy. One response will be increased interest in deploying older assets into secondary missions. However, this needs to be done collectively with the end-users, operators, regulators, financiers and OEMs.
He also highlights growth in demand from the renewables space, which will spark a further increase of the global utilisation rate. Wind energy operations across several regions – from the North Sea to Taiwan and the US – continue under development and will need helicopter support for the installation, as well as the maintenance phase of the projects.
“We will also continue to see opportunities for EMS and SAR missions in both mature and emerging markets. In mature markets such as Europe, the emphasis will be on fleet renewal. Whereas in emerging markets like Brazil and India, there are growing opportunities for new placements,” says Sheedy.
Finally, Hill Helicopters foresees strengthening demand for exclusive luxury transport as the world emerges from the global pandemic. Mischa Gelb, Hill Helicopter ambassador for Hill Helicopters, told us: “It’s fair to say that over the past 16 months we have proven that there is a very large appetite in the market for a high performance, beautiful, luxury helicopter [the HX50] delivered to the market at an affordable price point. The market has been waiting for 40 years for an aircraft like this.”
This year will be very strong as far as production and sales go for the HX50 and the commercial HC50, which goes on sale to the public later this year, adds Gelb.