HI Uplift: HEMS opportunities for lessors and pre-owned


Growing demand for Helicopter Emergency Medical Services (HEMS) could boost demand for leased and pre-owned aircraft, as more new production is directed towards military applications – particularly in Eastern Europe. That was the message from Helicopter Investor’s recent Town Hall online meeting dedicated to the market.

The HEMS market will experience strong long-term growth, particularly in wealthy regions such as Europe. But growing and unexpected military demand will limit the availability of new helicopters, predicted Camille Brunel, partner, RIVE Private Investments.

As the war in Ukraine continues, countries like Poland, Czech Republic, Hungary and even Germany are starting to increase their military budgets. “This is an historic and unexpected change, which we have not seen in Europe during the past 20 years,” said Brunel. “Defence budgets [for new helicopter acquisition] will get priority. And the budget increases will limit the capacity of the barrier states in other areas.” While it’s difficult to predict how long this will last, such investment cycles usually last five to 10 years, he added.

Another challenge for the HEMS market is finding financing. “During the past six months we have seen a tightening in financing conditions, with lower activity and higher amortisation rates, credit margins and interest rates,” said Brunel. “The cost of financing will be more expensive for us [equity providers], operators and the states using helicopters.”

Rapidly rising costs in western countries – for pilots, technicians, fuel and other energy costs were eating into operators’ budgets more than expected. “We see fewer investment opportunities [particularly in Eastern] Europe than two to three years ago,” said Brunel. “Perhaps investors won’t invest as fast as was expected.” But operators will have to renew older helicopters in their fleet, especially in Eastern Europe. Some countries will expand their HEMS systems and they are still willing to do so.

Two strategies to mitigate the impact of this could be more opportunities for secondhand helicopters and opportunities for firms to provide leasing solutions.

Brunel also suggested a role for manufacturers (and lessors) to provide flexible solutions for helicopter buyers beyond simply agreeing asset finance for new aircraft arranged over 10 years. “This could involve discussions with manufacturers to extend the life of existing assets, where it is economically viable to upgrade them,” said Brunel. “The retrofitting of assets might be an alternative way to sustain the market.” But the industry also needs a flow of new helicopters, he added.

He concluded by highlighting the vital role of HEMS services in saving lives and the need to attract more capital. “Financing costs will become more expensive. We need to bring capital to this market and to continue to invest – despite the economic challenges we are facing. We need to convince banks, debt firms and other equity providers that, in the long term, it is interesting to invest in such markets.”

In June, RIVE expanded its international helicopter leasing platform with the acquisition of 19 helicopters alongside LCI and Turning Rock Partners.

The size of the prize available in the European HEMS market was set out by Gema Martin del Burgo, Sales & Business development director, Babcock Spain and Portugal. In 2020, the market was valued at $5bn (€5.20bn) with an annual growth rate of 8.2% predicted between 2021 and 2028.

The HEMS market in Europe quickly recovered to its pre-pandemic level after lockdowns ended, said del Burgo. There are still possibilities for growth despite most countries offering a medical aviation service. Coverage in Eastern Europe is scant or non-existent and 24-hour coverage, although strong in central Europe, did not exist in France, Italy and a few other countries.

The problem is, at a time of rapidly rising costs, operators’ margins are looking increasingly unsustainable, said del Burgo. “After the pandemic, all customers are aware of the service they receive in terms of technology, benefit and excellence. But the price they are paying, in many cases, does not correspond to the real cost.”

This has become a stark problem for HEMS operators. “All customers want, every day, a more sophisticated service but they do not want to pay for it.”

Delivering a North American perspective, Thomas Judge, executive director, Lifeflight of Maine & CEO, LifeFlight Aviation Services, said the HEMS market was experiencing “challenges, opportunities and a lot of disruption”. For example, electric aircraft would become popular in urban areas for their noise reduction benefits. But rural areas will not have the energy supplies to support electric flight.

Growth opportunities in North America would be limited to HEMS operators who are “incredibly cost efficient”, he said. “That’s because the payment is not going to get any larger.”

Judge highlighted the role of well-staffed and equipped HEMS helicopters delivering medical services much more efficiently than ground suppliers. For evidence, he quoted South African research that estimated a medically staffed helicopter to offer the same emergency cover as 50 ground ambulances. The goal was to work towards 100% reliability of operations, 24 hours a day and 365 days a year.

He even suggested HEMS helicopters, equipped with the latest medical technology, could replace hospitals in some remote areas in terms of offering a more efficient and cost-effective service.

Helicopter Investor’s Town Hall – EMS Helicopter Market: The landscape, complexities and challenges – took place on November 17th, 2022. You can listen to the online event, hosted by Aero Asset president Emmanuel Dupuy and sponsored by Aero Asset, here.

Meanwhile, register for your free Helicopter Investor weekly newsletter here.

HI Uplift Dashboard: Helicopters for sale

Multi-engine fleet

  • Total for sale: 306 – two more than last week
  • Percentage for sale: 4.16%
  • Absorption rage (months): 5.77
  • Total fleet: 7,363 – four more than last week.

Single-engine fleet

  • Total for sale: 398 – seven more than last week
  • Percentage for sale: 3.5%
  • Absorption rage (months): 4.01 months
  • Total fleet: 11,367 – eight more than last week.

Source: AMSTAT, November 24th, 2022.

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