Impacted by slow global economic growth and volatile oil and gas-related markets, the helicopter industry is reacting with a cautious outlook for near-term new purchases. In its nineteenth annual “Turbine-Powered Civil Helicopter Purchase Outlook,” Honeywell forecasts that 3,900 to 4,400 civilian-use helicopters will be delivered from 2017 to 2021—approximately 400 fewer helicopters than called for in the 2016 five-year forecast.
Globally, the outlook predicted lower new purchase-plan rates for the next five years. New purchase results were similar to those from 2016, and range, cabin size, performance, technology upgrades, and brand experience influenced make and model selections. Helicopter fleet utilization increased overall in the past year, and usage rates are expected to improve in the coming year.
“We are down about 400 aircraft in our rolling five-year window, so the overall pie is a little smaller,” said Charles Park, director of market analysis at Honeywell Aerospace. Demand remains highest for light single-engine helicopters—almost 58 percent—but light twins have dropped from 25 percent to just over 20 percent. “That demand seems to have shifted to intermediate and twins. There’s nothing really startling in terms of a mix shift.”
As a supplier to all helicopter manufacturers, Honeywell has some insight into orders and build plans. “I expect new models like the Bell 505 to drive a short-term increase,” Park said. The manufacturer has had several years to take orders, and will work to fulfill that demand, he explained. Then, after three to four years, “it will fall back to a steady-state demand.”
Park expects that 2016 is the bottom of the market in terms of units, but without the introduction of the 505, units would be flat in 2017. He expects 2017 to be flat in terms of the dollar value of aircraft delivered.
Honeywell tries to measure each helicopter’s primary use, and sees a small increase in purchases from smaller oil and gas companies. “That would be correlated with the small increase we’re seeing in energy prices,” he said. The emergency medical services market is seeing a global pullback this year; in the United States, there’s uncertainty about insurance reimbursement. “Caution, I think, is playing back to us.” Law enforcement saw a small increase, but because it’s a small market, it didn’t move the overall needle. “We did see a small increase in general utility. That was up a few points,” he said.
“In terms of overall market outlook, we did get a fair amount of feedback about anticipated business growth or better business conditions in the U.S.,” but this is not yet resulting in purchase decisions. “Our view is that we will eventually see improved commodity prices as oil supply and demand come into better alignment,” Park said. “It will take a few years.”
The Americas account for 49 percent of global demand in the five-year outlook, while Europe and Asia gain share versus last year. Honeywell forecasts 30 percent of turbine sales in North America, 19 percent in Latin America, 26 percent in Europe, 16 percent in Asia, and 9 percent in the Middle East and Africa. There’s sustained interest in intermediate/medium twin-engine helicopters—about 33 percent of the market—but light singles remain most popular, garnering almost half of demand.
Latin America: Expectations for fleet replacement and growth have decreased in 2017 in comparison with 2016 results. Purchase plans have declined more than 13 percent compared with the previous year, although they are still higher than the global average. Latin America had the highest rate of new aircraft purchase plans, but is down year over year and has been affected by weak economic performance in Brazil and Venezuela.
Middle East and Africa: Up to 22 percent of respondent fleets are expected to add a new helicopter replacement or addition. Purchase plans have decreased by 8 percent from 2016 survey results. Intermediate and medium twin- engine models account for nearly 80 percent of planned new helicopter purchases.
North America: Purchase expectations are more than 2 percent lower than in 2016. Light single-engine models account for more than 75 percent of planned purchases, and intermediate or medium twin-engine models account for slightly less than 13 percent.
Europe: Purchase plans declined for a second consecutive year and are down by more than 3 percent.
Asia Pacific: Purchase plans fell about 1 percent in general. Several countries, including China, Australia, South Korea, Japan, and Malaysia, have more relative and absolute new helicopter purchase plans.
BRIC countries (Brazil, Russia, India and China): Purchase plans have decreased by more than 11 percent compared with 2016 results.Park has worked on all 19 surveys to date. The surveys consist of telephone interviews with 1,000 operators worldwide. “They operate about 15 percent of the total turbine helicopter fleet,” he explained. “We do that to feel more confident about extrapolation. We go through every aircraft in their fleet and ask about disposition plans in the next five years.” There is a little bias in the sample, because they can’t capture that level of data from large fleet operators. “We get a bit of understatement in the oil and gas segment, and heavy twin demand.” Honeywell adjusts for that in its analysis.