Rotor & Wing International
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2017 Executive Outlook

R&WI's 2017 rotorcraft outlook panels explores the state of the industry and what lies ahead.

Aftermarket Solutions on the Rise

Mark Skarohlid, Vice President, Business Development at UTC Aerospace Systems, Sensors & Integrated Systems

Mark SkarohlidUTC Aerospace Systems

UTC Aerospace Systems expects buyers to continue exercising caution for near-term civil and military rotorcraft purchases. Recent forecasting models for rotorcraft vehicle production rates point to a similar trend: year-over-year production outlooks continue to predict flat or slightly declining sales throughout much of a five- and even ten-year period. Light utility and transport rotorcraft will lead demand in the marketplace, but growth in these vehicle types won’t be enough to overcome the slowdown caused by global macro-economic market dynamics.

As a result of this continued softness, we expect that the near-term business demand for tier 1 and tier 2 systems and component original equipment suppliers will be driven by the needs of end-users to maintain the economics of their assets and to achieve commonality in functionality between existing fleets and new deliveries. The operators will desire, and need, to fly their rotorcraft more, with greater utilization and efficiency, increased safety and expanded functionality. As such, the best opportunities are anticipated to be aftermarket solutions that can offer increased utilization for existing assets, as well as be forward-fit into new production deliveries.

Increased utilization of a rotorcraft is largely driven by minimizing vehicle downtime and having predictive, scheduled maintenance. Solutions such as the UTC Aerospace Systems Pulse™ Health Monitor and Metis Design Corporation MD7-Pro™ digital structural health monitoring system (SHM), which offers on-demand structural health data collection and analysis for aircraft components and systems, will provide an accurate and timely assessment of aircraft component life expectancy, significantly reducing the maintenance hours spent conducting periodic manual inspections. Having this visibility into an aircraft’s health will improve logistics efficiency through better planning of maintenance actions, offer better scheduling of spare parts to their point of use and result in higher rates of aircraft readiness.

"Today's aircraft are required to fly demanding missions, by day and night, onshore and offshore, in all weather conditions."

Operators also need to fly their rotorcraft across larger environmental and geographical envelopes — safely. Today’s aircraft are required to fly demanding missions, by day and night, onshore and offshore, in all weather conditions. Installation of advanced components and systems that provide safe, functional performance over extended conditions, as well as increased situational awareness, will increase mission capability and availability. Systems such as the UTC Aerospace Systems TERPROM® system combine a highly accurate navigation capability with a digital terrain map, providing flight safety. More integrated and “smart” sensors, such as the UTC Aerospace Systems SmartProbe®, combine multiple traditional air data sensing LRUs into one line replaceable unit. With the advanced built-in-test, system integrity testing, data storage and real-time data monitoring, SmartProbe® provides the capability for a higher integrity flight control system. It’s important to note that “Appendix D” qualified air data probes with advanced de-icing and anti-icing capabilities will provide safe operation in more severe weather conditions. Equipage with mandated ADS-B In/Out functionality will dramatically improve traffic awareness intelligence.

Moreover, the ability to converge this advanced functionality and data into a more connected aircraft, through the use of an Aircraft Interface Device (AID) to enable aircraft systems health monitoring, efficient cockpit workload management, and position and environmental awareness will increase asset utilization, mission capability and safety. These solutions, applicable for retrofit and forward fit, are the most value-generating opportunities in the near future.

This summary has been provided by UTC Aerospace Systems solely for information purposes and contains "forward-looking statements" that involve risks, uncertainties and assumptions. UTC Aerospace Systems assumes no obligation and does not intend to update these forward-looking statements.

Opportunity Exists Where Customers are Present

Irene Makris, Vice President, Marketing, Pratt & Whitney Canada

Business opportunities for 2017 lie where they have always been — at our customers’ side. The economy has been challenging recently, especially for the offshore segment. P&WC has remained close with operators to deliver services and programs enabling their success.

Irene MakrisPratt & Whitney Canada

Products: A Trio of Turboshafts in Five Years

P&WC remains the industry leader when it comes to investment in research and development. We have certified 100 engines in the past 25 years, including three turboshaft engines in the last five years. The PW210S powers the Sikorsky S-76D, the PW210A powers the Leonardo AW169 and the PT6C-67E powers the Airbus Helicopters H175.

Deliveries are accelerating and will continue throughout 2017. But from a product perspective, we are not resting on our past accomplishments.

In terms of technological development, we continue to act on our customers’ demands for high performance, improved fuel consumption for cost savings and increased range, and continued dependability, all at lower operating costs. Our short-term turboshaft strategy centers on the evolution of our existing product line. In today’s market and economic conditions, OEMs tell us they may not be ready for clean-sheet designs, but they are all looking for an edge from engines already flying.

In response, we are looking new materials that can be incorporated into existing engines and innovative modes of operation made possible by our state of the art Full Authority Digital Engine Control (FADEC). P&WC has introduced FADEC on 15 engine models in the past 10 years. The technology allows the engine to perform at maximum efficiency, simplifying engine operations, reducing pilot workload and providing greater power response, performance and aircraft availability.

Looking ahead, we are exploring opportunities in the 1,800- to 2,000-shaft horsepower envelope through existing upgrades and new advanced engines. As we have been testing some new technologies, we have shared our progress and results with our customers and are now working on next steps. In pursuit of optimal performance, P&WC is also integrating technology from P&W’s PurePower® PW1000 engine and our PurePower® PW800 model into engines on the drawing board.

Customer Service: Availability, Reducing Costs

We do more than build engines. We consider the entire customer experience and engine lifecycle as we develop products and services to evolve our support ecosystem. We pursue a holistic approach to empower our customers’ businesses and missions. One way to achieve this is to reduce operators’ direct maintenance costs while achieving ever-increasing aircraft availability.

"We know that our customers' businesses operate around the clock and around the calendar and we are there to support them whenever they need us."

We have increased the basic time between overhaul (TBO) from 3,500 hours to 4,000 hours for our PW210 engine. As one of our latest engine models, the PW210 is poised for significant growth. It is telling that we have the confidence to increase the engine’s TBO so early in its life cycle; such has been its performance to date. The PW210 also boasts inherent design advantages that likewise reduce costs. It has no scheduled oil changes, no scheduled boroscope or vibration checks and has an easily accessible and integrated fuel nozzle for compressor wash.

We have also raised the power section TBO of the PT6B-37A engine by a full 50%, from 3,000 hours to 4,500 hours, and increased the interval for PT6T-9 engine clutch inspection from 1,250 hours to 2,000 hours.

Innovation: A Reliance on New Technologies

We progressing in preventive maintenance to lower costs and increase time on wing through advanced diagnostics and prognostics systems, including our FAST™ (Flight, Acquisition, Storage and Transmission) and Oil Analysis solutions.

• P&WC’s turnkey FAST solution provides near-real-time situational awareness about engine health, usage and trends. The solution automates the capture and analysis of a wide range of full-flight engine and aircraft parameters, including wireless access to encrypted and secure FDR data, and sends them electronically to customers within minutes of landing. It also provides automated power assurance checks. Through the FAST solution, customers can make informed, data-driven decisions to maximize aircraft availability, optimize maintenance planning, reduce operating costs and avoid delays and cancellations.

• P&WC’s innovative Oil Analysis Technology Program (currently in customer trials) continues to build momentum as a revolutionary on-wing monitoring solution for preventive maintenance. The new technology has demonstrated its potential to be much more precise than existing oil analysis methods. The highly sensitive technology detects minute particles in engine oil, providing early and precise exposure of the deterioration in oil-wetted components well before a potential event occurs.

We have also created a team of turboshaft specialists and have assigned them to work with operators in the development of specialized maintenance solutions that deliver the best value in the industry through guaranteed fixed pricing for major maintenance. Under our P&WCSMART initiative for turboshaft engines, the new offers include engine upgrades, overhauls and exchanges, plus capped cost and fleet enhancement programs.

We know our customers’ businesses operate around the clock and calendar. We are there to support them whenever they need us. Our CFirst customer response center is open night and day, setting the benchmark for rapid, real-time customer support. This level of response has helped maintain P&WC’s turboshaft engine leadership.

In terms of constant connectivity, we took our customer online experience to new levels in 2016 with the MyP&WC Power portal. It provides customers with instant, 24/7 access to spare parts, technical publications and many more services all accessible from a computer, smart phone or tablet. Customers can purchase and pay for parts online, activate warranties, rent engines and then plan their return. It’s a standard bearer for online efficiency and simplicity of use.

So opportunity exists wherever our customers are present.

Highlighting Opportunity Amid Oil’s Slump

Eric Strafel, President & CEO, Aviall, A Boeing Company

Eric StrafelAviall

The rotorcraft industry continues to show an overall positive global outlook despite a number of challenges faced in 2015-2016.

The slump in prices for crude oil brought a significant negative impact on helicopter demand, particularly in the global energy segment. Predictions suggest that oil prices are slowly going up, which should help improve the market. However, other global market conditions suggest that demand for helicopters will remain relatively stagnant in 2017. As a result, operators continue to look for additional ways to become more cost effective, presenting a number of business opportunities going forward.

With older aircraft remaining in flight, the need for aftermarket parts, avionics and component upgrade support remains a high priority in the rotorcraft industry. Aviall continues to be a leader in providing parts and innovative supply chain solutions to meet business demands in tough market conditions. By taking a comprehensive view of the entire platform, Aviall offers a number of services to keep platform support costs low. In addition to its world-class parts inventory, Aviall’s LIFT program continues to reduce costs and improve efficiencies through local material stocking, supplier consolidation and product availability. Additional offerings for helicopter operators include used serviceable material, rotables and exchanges and chemical solutions. As a company, Aviall looks to provide original equipment manufacturers (OEM) and customers with innovative lifecycle management solutions to lower maintenance costs and extend the economic viability of legacy fleets.

Other opportunities exist in the military helicopter segment, with favorable global demand in several regions including North America, Europe, the Middle East and Asia-Pacific. The need for modernization and technological improvements will fuel this growth as countries look to replace or upgrade existing aircraft with sophisticated platform designs, materials and capabilities. Aviall has 40 locations strategically located across the globe to provide support in this continued growth segment. Through our tight-knit relationship to Boeing, we also have various touchpoints around the world, firmly equipping us for additional business opportunities in existing and future markets.

"Aviall continues to be a leader in providing parts and innovative supply chain solutions to meet business demands in tough market conditions."

Along with technological improvements, developments in existing trends such as unmanned aerial vehicles and autonomous technology continue to push the industry forward for military, civil and commercial applications. Data analytics also remains a key business opportunity as the need for multi-use platforms and systems emerges. With Aviall’s investments in technology, the ability to connect with systems to receive and analyze data from our OEM partners and customers creates enhanced value and actionable market intelligence to meet the growing needs of the industry.

Aviall’s two million-plus parts catalog, 40 global locations and 50-plus years of helicopter experience is invaluable to operators, customers and OEMs facing tough market conditions.

Preparing for a Brighter Future

Chris Emerson, President, Airbus Helicpters Inc.and Head of North America Operations

There is an old saying that every cloud has a silver lining, and I think that’s the case in the helicopter industry. Let’s face it — the industry is navigating a stormy patch of weather. It is a tough business environment with a variety of factors weighing on the market and on demand for new aircraft.

I don’t look for any immediate market resurgence in 2017. We do not anticipate any significant change in the offshore oil industry’s fortunes, which is unfortunate because just a couple of years ago that sector was the driving force for sales in the global helicopter market.

Still, I believe there are silver linings in the clouds. There is a bit of a tailwind out there. Recently, our funnel of sales prospects has been filling at a faster pace than at any time since I joined Airbus Helicopters Inc.

Chris Emerson, left.Airbus Helicopters

We see some signs indicating a more vibrant market in the not too distant future, including:

• A growing awareness from many business executives, entrepreneurs and well off individuals that a helicopter can be an extremely useful transportation tool, not just a luxury. Cities are getting larger and denser, traffic is getting worse, and the only way to get from one place to another without sitting in that traffic is flying over it.

We have seen more business people coming to us in the past 18 to 24 months looking for transportation solutions, and we have received some new corporate/VIP orders, especially for single-engine helicopters. They are work tools, a way to manage far-flung operations, save time and make money. We believe that trend will continue in the coming years, especially as OEMs lower the cost of helicopter operations.

"I believe there are silver linings in the clouds. ... We're preparing for a brighter future."

When Dallas Cowboys Owner and President Jerry Jones took delivery of a new Airbus H145 in the fall, he immediately put it to work. The Cowboys’ new headquarters and practice field are in Frisco, well north of downtown Dallas. It’s a 30-minute drive with no traffic or, as is more likely, an hour to 90 minutes. From there to AT&T Stadium in Arlington, where the Cowboys play, can be another 90 minutes. Within a couple of weeks of receiving his helicopter, Jones was zipping around the Dallas-Fort Worth area and above the traffic.

• Border security and guarding against terrorism and criminals have been a constant concern since the tragedy of 9/11. In his campaign, President-elect Donald Trump heavily emphasized reinforcing oversight of U.S. borders. These factors should lead to increased U.S. government investment in new, more capable helicopters for U.S. Customs and Border Protection, law enforcement agencies and, at some point, probably the U.S. Coast Guard. These agencies all work their existing helicopter fleets hard and will need to replace aging and worn-out aircraft.

• Similarly, the U.S. Armed Forces will need a variety of new vertical-lift aircraft in the coming years. Much industry attention is focused on the Future Vertical Lift program for a new generation of combat aircraft, but that’s a program the U.S. Army doesn’t envision having available until 2030 or well beyond. All of the services are likely to require new utility and training aircraft to perform missions that don’t require combat helicopters and can be performed at lower cost. Extending the life of existing helicopters will mean more maintenance and refurbishment work.

There will also be increased demand for unmanned aerial systems to fill military and law enforcement/border surveillance and patrol missions that are now performed by manned aircraft.

• The availability of new aircraft and technology itself stimulates demand. We see a lot of interest from various market sectors for the Airbus H160 currently in development. The size, speed, payload and range this aircraft offers will make it a standout, as will the improved fuel economy and lower noise levels and emissions.

• Airbus’ Helionix avionics system is already in use on the H175, H145 and now H135 and is drawing rave reviews. Helionix reduces pilot workload, increases aircraft capability and enhances safety. We are working to bring Health Usage Monitoring System (HUMS) and Flight Data Monitoring (FDM) systems to the light helicopter world, again using enhanced technology to lower operating costs and improve safety.

• Our industry’s traditional market segments in North America (air medical transport, law enforcement, tourism and utility) probably are going to remain stable, with sales primarily driven by replacement of aging aircraft. Here again, new technologies that lower operating costs, improve efficiency and enhance safety will be differentiators. At Airbus Helicopters, we believe we are well positioned with technologically advanced aircraft to capture those sales.

When I took over at Airbus Helicopters Inc., I saw this slower market as an opportunity to improve the performance and capabilities of our company. We have been working hard to identify areas where we need to improve the quality of service we provide to customers. We are putting the building blocks in place to be a much better company. I’m receiving good feedback from customers. We must continually strive to be better because we know our competitors are working hard to improve.

We have gotten high marks in recent months for both the quality of our helicopters on delivery and the delivery process. Our Customer Support team has made great strides in improving on-time spares delivery and AOG response.

So while this isn’t the best of times for the helicopter industry, at Airbus Helicopters we see some light coming through the clouds. We’re preparing for a brighter future. R&WI