Soft landings

However, with the start of the global financial crisis taking hold during last year, the industry – particularly on the sales side – experienced a dramatic slowdown. “At that time everybody stopped buying, and I think it was more of a shock than anything else,” said John Skeen of Robinson and Agusta Westland dealer Heliflite. “Everybody was caught by the same shockwave. From there though, once it became clear what was going on in the world, you then find different sectors reacted differently.”

Most affected private flyers, most of whom purchased smaller helicopters such as Robinson R22s or R44s. Most of the dealers Australian Aviation spoke to said that inquiries from private individuals were down sharply during 2008, while there has been a slowdown for scenic operators too.

Nevertheless, for many commercial helicopter operators, business is continuing as usual, with many utility operators having tied down long-term arrangements in previous years. Offshore operations in support of the oil and gas industries, as well as operators involved in support of the mining and exploration are reporting that business has largely remained on track, despite the economic downturn.

Similarly, those organisations involved in training for utility work for long term customers are also faring much better than those catering to private owner-fliers.

Accordingly, some companies have been still making enquiries and placing orders for new helicopters. Still, with financiers tightening up their requirements for granting finance on aircraft, it has been somewhat difficult. “Although people have a need and a requirement for aircraft, there were a large proportion of those not able to upgrade because financing wasn’t there,” said Skeen.

As with other sectors, new and used helicopter purchases have been affected by more stringent requirements for financing, which in some cases has seen financiers demand other items of collateral than just the aircraft. “The finance providers’ requirements are becoming more and more restrictive, but we’re fortunate that our clients are meeting the requirements,” said Peter Crook of Bell representative Hawker Pacific.

Much of that has been linked to the mining industry, particularly survey work. Despite this industry also having been affected by the global economic slowdown, indications are that many are continuing their exploration work, particularly in regions such as Western Australia and Queensland. Others are expected to gain from the government’s release of funding for infrastructure projects, as some are likely to include some use of helicopters in some form of capacity.

Despite these challenges, many dealers are somewhat comforted by the fact that there are still strong backlogs – both locally and globally – which will ensure that there continues to be a strong stream of aircraft coming in-country over the next few years ahead.

And though inquiries have been down over the last 12 months, more recently dealers are reporting an increase in interest for new helicopters. Both Skeen and Holloway said s a result of the federal government’s investment allowance that sales of Robinsons are starting to come back, albeit not at the same level as before. “We’ve found quite a significant increase in enquiries and we have been making some sales as a direct result of that,” said Skeen. “Those sales have been for companies or people who have always had the requirement for those aircraft. What the incentive has allowed them to do is make the jump right now, whereas they were deferring or waiting”

However, this has not been universal, with Crook noting that this has not had as much affect on interest in Bell helicopters. “It hasn’t had an impact on the turbine machines, and I don’t know why,” he said. “One would have thought that a couple of corporate could have jumped at the opportunity to save some money.”

Nevertheless, sales of Bells have been driven by the need for some operators to update to newer, more capable helicopters. “Over the last few years is that some of the aircraft that are operating for the big resource companies and TV contracts, some are now specifying that their aircraft cannot be more than 8-10 years old,” said Peter Crook, adding that historically the Australian helicopter fleet has averaged around 20-25 years.

That need by commercial operators for newer helicopters is expected to remain stable. Accordingly, backlogs for larger twin turbine and larger helicopters have barely been unaffected by the slowdown. “Those sorts of activities haven’t slowed and those requirements are still there,” said Skeen.

With the global affects, of the crisis, some customer cancellations have meant lead times have fallen on some models, but larger aircraft have not been as affected. “Prior to the financial crisis, the Koala had about a two year lead time. It now has a 12 month lead time,” said Skeen. “The Grand is in a similar position, and the A109 Power has gone from about 18 months to 12 months.”

Training

With the industry largely slowing down, general helicopter training rates in the major capital cities and the Gold Coast have been lower, with fewer pilots making starts in their training. Nevertheless, it appears that most students who have made starts have not abandoned their training.

Indeed, those in such a position appear to be well placed to continue their training. “Even though we’ve had the economic thing, the guys doing their training have the money or have saved up and worked for it haven’t lost it,” said Mike Becker of Queensland based Becker Helicopters.

Despite the slowdown in private helicopter training, a number of flying schools around the country have benefited from building long-term partnerships with overseas companies to provide training. In many cases, this has included for foreign governments and police services, and has meant that some schools have built up unique capabilities.

In the case of Beckers, this has led to the acquisition of four Bell 206A JetRangers, including one which is being fitted with an IFR glass cockpit to meet the needs of some of its customers. The company also has an Agusta A109E Power on order.

Increasingly, students seeking out commercial pilots’ licenses are also seeking out more from their training in order to make themselves more attractive to some of the larger operators. “I’m finding that the industry is demanding more now,” said Becker.” If you don’t have a night VFR rating and at least 10 hours of instruments, you’re not going to be taken seriously by any of the operators out there.”

Police , SAR and charity

The police, EMS and SAR sectors have all remained relatively busy in recent years, with a number of states allocating funding for more helicopters, while charity helicopter operators have been facing some difficulty attracting sponsors due to the financial crisis.

In WA, the Police Air Wing is expected to soon select a new type to fly alongside its sole Kawasaki BK117. “One of the difficulties that we are faced with in Western Australia is the size of the state, the lack of rotary assets suitably equipped and available for SAR work and so we need to make sure that we choose carefully to ensure that we get the right platform to meet the needs of our role,” Inspector Peter Scott of the WA Police Air Wing told Australian Aviation.

WA has also recently seen the return of a helicopter for the Surf Life Saving WA, which operates beach rescue services, as well as summer shark patrol flights along the Perth coast. The helicopter is provided by Heliwest, and is supported by corporate sponsorships and the state government.

In Victoria, the number of EMS helicopters has grown, with Australian Helicopters now operating two Bell 412EPs in the state. The recent state budget has also granted funding for a third EMS helicopter for Warrnambool, with the new 412 to start operations by July. Another helicopter for Adult Retrieval Victoria is also due to come online soon, taking that state’s EMS fleet to five.

In New South Wales, the introduction of the AW139 fleet of rescue helicopters has been less than smooth, with recent newspaper reports highlighting modifications which have had to be made to the aircraft suited their role. Most recently, this has seen the NSW government admit that it will have to install new searchlights on the aircraft to improve visibility during remote night landings.

As well as the government supported providers, a number of the charity helicopter operators has been growing, but appear to be facing the threat of decreased corporate sponsorship and public support due to the economic slowdown. For some services this can account for up to 60 per cent of their income.

Securing funding has become somewhat harder recently with some corporations cutting back on their spending in certain areas, it is expected that this will only get harder. Sunshine Coast Helicopter Rescue Service recently lost its long-term sponsor Energex, although it announced in March a new three year naming rights sponsorship from AGL Energy.

Mount Isa based NQ Rescue, which operates a single Bell LongRanger, has also been struggling with sponsorship issues since major sponsors CopperCo and MacAir succumbed to administration last year. Given its support base has been from the mining industry, it seems that there will be some difficulty securing a long-term sponsor.

“We instantly lost 50 per cent of our funding. In this current climate, it was probably the worst time to be losing that amount of funding,” said NQ Rescue’s CEO Alex Dorr. “We will look to try and get other mining companies to try and assist with sponsorship, but at some stage government needs to step up and support us as the only helicopter service in the region.”

Government support has been difficult, as the Queensland government regulations stipulate that NQ Rescue must operate a twin-engine helicopter as its primary aircraft to receive funding and allow ambulance personnel to be carrier on board. That is pushing the organisation toward upgrading to a BK-117, but with the organisation still struggling to find major sponsors that plan is likely to be put off until sufficient financial support can be obtained.

Outlook

As it has for many years before, the helicopter sector in Australia looks well placed to ride out the challenges which the economic climate has brought upon it, and few are pushing the panic button.

With work steady for most operators in the mining survey and utility areas of the industry, these will continue to do so, particularly with some commodity prices starting to rebound in mid 2009.

Skeen says that the private industry is also expected to come back at some point. “I think once the private guys see that the economy is moving forward, I think we’ll see them come back into the market. They still need and want the aircraft, but I think they’re going to be a bit more cautious.”

According to Holloway, some of that confidence is starting to return. “With the Aussie dollar on the increase and consumer confidence growing, our sales are starting to increase,” he said.

“We aren’t planning from a company point of view to return anywhere we were two or three years ago,” he added. “I think we’d all prefer to see a steady stream of enquiries leading to people purchasing aircraft and also a steady flow of used aircraft being traded in for new replacement aircraft.”

“I’m quite happy with the way it’s going at the moment,” said Hawker Pacific’s Crook. “Another one or two orders this year would be nice.”
Already, some are positioning themselves for the inevitable upturn. “When it does start to go up, the ones that do have the orders are going to capitalise,” said Crook. “When the work does start up again, some will be caught short.”

From the manufacturer’s perspective, most have reported that they expect orders during 2009 to be sharply lower than in previous years, but there have been no announcements of plans to cut production or delay the launch of their newer models most of which are expected out over the next three years.

Eurocopter has committed to launching its EC175 on time, and is expected to be in service by 2012. Although intended for the offshore and SAR sectors of the global industry, Eurocopter revealed a corporate version of the aircraft at this year’s HeliExpo, possibly demonstrating that it expects the corporate market to come back into the sales field.

Bell has also reported that the 429 is still on track to be certified and achieve first customer delivery this year. “The 429 is proving to be all we said it would be and we are as anxious to start delivering this outstanding aircraft to our customers as they are to put it into service,” said Bell’s VP of business development and commercial programs, Bob Fitzpatrick.

For Robinson, getting the turbine-powered R66 off and flying is much more about survival, and so it isn’t talking down any delays. “The only thing that we can count on to save this company is to get the R66 on the market as soon as possible, and at that point we can stop having layoffs,” said company founder Frank Robinson in February.

Overall, while business has been descending over the last year, indications are that this situation is beginning to stabilise. With many operators and flying schools tied to long-term contracts, and dealers holding orders for new helicopters to be delivered over coming years, the industry appears to be set to ride out the economic slowdown and resume a growth pattern, albeit at a lower rate than before.