The year 2016 wrought quite a bit more change than many expected. The world over the last 12 months was more than familiar with the predicament of the oil market and its impact on many segments of the economy (mostly negative for the manufacturing and operation of big helicopters).

Likewise, we were generally keen to the grip that terrorist threats held on our psyches and for the most unfortunate on their lives.

In the rotorcraft world, we were becoming accustomed to the presence of small unmanned aircraft systems (UAS) in our daily lives and business plans. Many a manufacturer, supplier, modifications and completion shop and operator were astounded by the latitude granted to drone flyers at a time when aviation and certification regulations seemed to throttle aspirations in the manned aircraft community.

The big surprises began on June 23, when United Kingdom voters stunned prognosticators in calling (by a margin of 51.9% to 48.1%) for that nation to exit the European Union. The vote rattled global markets, weakened the British pound and led to the resignation of Prime Minister David Cameron and the formation of a new U.K. government.

That unleashed a wave of populist uprisings that promise to unsettle major governments in the Western world. Those changes — combined with low oil prices, weak economies, geopolitical tensions and safety concerns — add to the challenges facing the rotorcraft industry.

In the pages that follow, several industry leaders examine those challenges and explain how operators and their companies are addressing them. A common theme in their views is the drive of operators to increase the efficiency of their operations to sustain their businesses during a persistent downturn spurred by weak oil.

“The operators will desire, and need, to fly their rotorcraft more, with greater utilization and efficiency, increased safety and expanded functionality,” says UTC Aerospace Systems Business Development VP Mark Skarohlid. “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.”

Aviall President & CEO Eric Strafel says, “With older aircraft remaining in flight, the need for aftermarket parts, avionics and component upgrade support remains a high priority in the rotorcraft industry.”

Pratt & Whitney Canada’s short-term turboshaft engine strategy focuses on evolving its existing product line, according to that company’s VP of marketing, Irene Makris. “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,” she says. “In response, we are looking new materials that can be incorporated into existing engines and innovative modes of operation” as well as improved support for operators.

Airbus Helicopters, Inc. President Chris Emerson sees a bright spot in the slow market in the “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.

Emerson, who is also head of Airbus Helicopters’ North American operations, points to a compelling macroeconomic factor. “Cities are getting larger and denser, traffic is getting worse,” he says, “and the only way to get from one place to another without sitting in that traffic is flying over it.”

In addition to the thoughts of those leaders, we summarize other factors that will affect the industry in 2017.

Populist Change

Following June 2016’s “Brexit” vote, shocking change further flummoxed political forecasters through year’s end. In November, it was Donald Trump’s victory in the U.S. presidential election. Last month, Italy’s prime minister, Matteo Renzi, resigned after voters there rejected a package of constitutional changes he had proposed.

Further shops may be in the offing, with major elections scheduled this year in Germany, France and the Netherlands (as well as Italy now).

Election results were prompted by voter dissatisfaction with the pace of economic growth and the effectiveness of elected officials in managing national affairs and major threats such as influxes of immigrants and attacks by terrorists.

December’s vote in Italy may be more significant than the Brexit balloting, according to some experts, since Italy is a founding member of Europe’s Common Market.

“This is a crisis that strikes at the absolute core of the European Union in a way even Brexit does not,” Mujtaba Rahman, the managing director for Europe at the Eurasia Group, a risk consultancy, told The New York Times. “The U.K. was always one foot in and one foot out. Italy is a founding member state. This is existential for the E.U.”

Trump’s election could be influential in other ways. Many who voted for him to demand reductions in federal regulations. He’s adopted their arguments, and his nominee for U.S. transportation secretary, Elaine Chao, has long been an advocate for cutting back on federal rules.

It remains to be seen how these positions might affect regulatory areas such as the FAA’s review of single-engine helicopter IFR certification in contemplation of new requirements for crashworthy fuel systems and better occupant protections in civil helicopters.

Trump’s backers also want to crackdown on illegal immigration, improved counter-terrorism efforts and increased military spending. That obviously could benefit helicopter OEMs and vendors that support homeland defense and military operations.

An added benefit for them would come if Trump moves away from President Barack Obama’s emphasis on promoting human rights in international relations. That focus has been seen in the defense industry as an obstacle to the sale of U.S.-built aircraft and weapon systems to other nations (especially ones with questionable human-rights track records) under the Foreign Military Sales program.

Chronic Oil

The good news is that oil prices might have ended their slide. The bad news is few forecasters expect prices to rebound much beyond $50 a barrel through 2017.

“We’re seeing signs that the bottom may have been reached in oil and gas, including month-over-month improvement in recounts and drilled but uncompleted wells and a stabilizing oil price,” Honeywell SVP and CFO Tom Szlosek told financial analysts in late October.

A price floor of $50-plus was bolstered by the Nov. 30 agreement among members in the Org. of Petroleum Exporting Countries to cut oil production by about 1.2 million barrels a day from an October baseline and to lower the production ceiling further on Jan. 1 and keep it there for at least six months. Significantly, Russia (a major oil producer) has backed the plan.

Drones Are Here to Stay

FAA Admin. Michael Huerta spoke in late October at the International Rotorcraft Safety Forum and afterward addressed the question of safety for small UAS.

Drone advocates counter calls for increased regulations of their activities with the argument that they have a perfect safety record — small drones haven’t killed anyone. That position sounds ridiculous to anyone with a small amount of experienced aviation; a standing principle of the industry is that the lack of accidents does not equal a safe record. Huerta said his response to those advocates has been: “Yes, you have a great record. But how do we make it better?”

With Federal Aviation Regulations Part 107 governing operations of small drones and a new Drone Advisory Committee, it seems clear that the FAA will not constrain development of the drone industry. Congress has made it clear to the agency to avoid that. But the agency is likely to limit the airspace in which drones can fly in the areas over which they can operate until then industry demonstrates its safety reliability in a more conventional fashion.

China’s Ambitions

China is likely to step up efforts to assert dominance over the South China Sea and Asian region, if only to test a new U.S. president’s abilities to handle such pressure.

The superpower is wooing the Philippines, long U.S. ally in the region and now led by another of the new generation of unconventional, populist political leaders: Rodrigo Duterte. With a penchant for publicly attaching profane names to the U.S. president, he has vowed to weaken the Philippines’ close ties with the U.S. When China in mid-December seized the U.S. Navy unmanned submersible believed to be engaged in gathering intelligence on Chinese submarine operations just to the west of the Philippines, Duterte registered no protest.

Some analysts believe China is now arming the reefs it has built into islands over the last several years in the South China Sea. The U.S. Center for Strategic & International Studies in December released a report by its Asian Maritime Transparency Initiative detailing the presence of what it said were defensive fortifications on some of these outposts in the Spratly Islands.

The U.S. and any other nations reject Chinese territorial claims in the South China Sea, maintaining the area is international waters and vowing to protect freedom of navigation there.

Safety Shifts

The U.S. Helicopter Safety Team, a dedicated group of professionals committed to improving industry safety record, is tweaking its approach a bit in 2017. Drawing on new analysis of U.S. fatal accidents from 2009 to 2013, it is focusing on three problem areas: loss of control in flight, unintended flight into instrument meteorological conditions and low-altitude operations. The team says those three areas accounted for half of the 104 fatal accidents between 2009 and 2013.

It aims to complete a plan for reducing accidents of the types early this year. R&WI