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2019: The Year of Optimism, Growth for Helicopters

Rotorcraft may rebound in 2019, as the U.S. military faces “pivot points."

Next year looks to be one of resurgence of sorts for the global helicopter industry.

Increasing oil prices are usually good news for helicopter companies serving oil and gas rigs, as those firms had felt a stagnation in the business since the drop in oil prices in 2014. But helicopter overcapacity in the oil and gas business may dampen company production of such rotorcraft in the near term, as oil and gas operators look to capitalize on their underutilized fleets, said Ray Jaworowski, a senior aerospace analyst at Forecast International.

Oil and gas has been a key market segment for civil helicopters.

However, helicopter emergency medical services (HEMS) — designated as helicopter air ambulance by the FAA — search and rescue, law enforcement, firefighting, corporate transport and offshore wind look to be growing business segments, he said. Aerial firefighting may rise in importance because of the longer, harsher fire seasons the U.S. has seen over the last few years.

Helicopter air tour revenues are stable, and corporate flights “are starting to grow” because of the growing economy, said Matt Zuccaro, president of Helicopter Association International.

While the U.S. has been the largest HEMS market, demand has decreased in the past few years because of healthcare reimbursement issues for HEMS providers and the consolidation of EMS providers. Yet, Jaworowski noted that the EMS segment has been growing in China and the rest of the Asia-Pacific region and that the region “has significant potential for market growth and should help offset somewhat the slowing U.S. HEMS market.”

“The U.S. operates the largest fleet of air ambulance aircraft in the world, and many nations want to learn from those companies that have established themselves as subject matter experts through their extensive experience,” according to Zuccaro. Some of the larger air ambulance operators are already having conversations with these countries, and we expect they’ll be able to work together to mutual benefit.

Jaworowski said that HEMS sales may indeed “kickstart recovery in the market,” and, as the industry “waits for demand from the oil and gas segment to revive, the HEMS segment will likely account for at least 18 to 20 percent of global demand for civil turbine helicopters.

Airbus Helicopters delivered a search and rescue-configured H175 to the Hong Kong Government Flying Service in 2018.Photo courtesy of Airbus Helicopters

China looks to be an area of growth, not only for its growing HEMS demand. “There is always potential for growth in China as more of their airspace becomes available,” Zuccaro said. “They have one of the fastest growing economies in the world, and they are rapidly developing new technology to support the vertical lift community.”

The electric-vertical-takeoff-and-landing (EVTOL) and urban-mobility concepts will also likely make advances in 2019, but the fielding of such vehicles in significant numbers is unlikely before 2030, industry observers said.

“While HAI is excited about the potential growth of urban mobility requirements, we also urge that federal, state and local governments move cautiously towards implementation of vertical transportation systems,” Zuccaro said. “The helicopter industry has an expansive knowledge of applicable regulatory requirements, and several of our member companies are poised to lead the vanguard into this exciting form of transportation. While we love the idea of flying above over-crowded freeways, we believe strict safety systems must be in place before these flights can take place. Based on our years of experience in working with urban heliports, we expect that regulators need to properly consider requirements for adding or expanding heliports, as well as safely integrating these services into the lower elevations of the National Airspace System.”

A number of new helicopter designs and models are to take first flight or delivery next year, including the Leonardo AW609 — the world’s first civil tiltrotor — and the Airbus Helicopters H160, which the French military has selected for its Helicoptere Interarmees Leger (HIL) program and may present opportunities for Airbus in a number of civil market segments, including EMS.

“What the AW609 brings to the market is greater speed and range than conventional heavy-lift helos,” Jaworowski said. “It has the ability to bypass airports and fly point to point, which could result in significantly less travel time and savings. It could compete with small business jets. One of the difficulties will be infrastructure, even though the 609s don’t need airports. They also haven’t officially announced the price tag, which remains to be seen. There is a potential market for the 609, particularly among operators for which greater speed and range are a priority. EMS is a possibility, as is VIP transport, offshore and other missions, like border patrol.”

Boeing and Sikorsky’s SB-1 Defiant will compete in the U.S. Army’s Future Vertical Lift initiative.Image courtesy of Sikorsky

Leonardo expects the FAA to certify the AW609 next year and has said Era Group will be the launch customer. Era has ordered two 609s for a 2020 entry to service, and Leonardo said it had received interest from operators for 50 of the aircraft in all.

On the military side, the U.S. Army in 2019 will continue its work on Future Vertical Lift (FVL) and the Future Attack Reconnaissance Aircraft. Boeing and Sikorsky are hoping to fly their SB-1 Defiant FVL prototype at speeds of 200 knots or more by the middle of 2019 as part of a phased flight test program worked out with the Army.

The Army also is to announce a contract winner in the Improved Turbine Engine Program (ITEP) to re-engine the Boeing AH-64 and Sikorsky UH-60 helicopters.

General Electric (GE) and Advanced Turbine Engine Company (ATEC), a joint venture between Honeywell and Pratt & Whitney, are competing, with GE offering its T901 single-spool engine and ATEC bidding a dual-spool T900 engine.

Overall, while civil markets are looking at some resurgence or steady states in 2019, “the big pivot points are all in the military markets,” said Richard Aboulafia, VP of analysis at Teal Group. Other than FVL, the U.S. Navy is facing upcoming decisions on its plans to replace its fleet of Bell TH-57 training helicopters.

For the U.S. Army on FVL, “this will be the year of reality hitting,” he said. “What are they going to do for force structure and industrial base?”

FVL has brought back memories of the canceled RAH-66 Comanche — once heralded by Army leadership as the “quarterback of the digital battlefield.”

“By contrast, the FVL program seems a lot more balanced,” Aboulafia said. “There were three flaws in Comanche. It competed with Apache to a great extent, and the Army was far more comfortable with Apache and its ordnance load. Second, Comanche was a cost-plus contract structure, while FVL is frugal by comparison and has a higher level of industry buy-in. The third thing is that the key enabling technologies are for speed and range, which are doable at a lower price point, rather than stealth and maneuverability. It wasn’t clear what Comanche was bringing to the table.”

NH90 with Australia’s navy.Photo courtesy of NHIndustries

Getting FVL unit costs down for a basic model and not requiring a slew of “capability sets” may be key for ensuring that the Army can field 1,500 to 2,000 FVL helicopters and not rely on retrofits and upgrades for a significant portion of the service’s Chinooks and Black Hawks.

“It may be that the Army will have to accept the reality of niche technologies,” Aboulafia said. “Maybe this is a regrettable thing we learned from Comanche.”

“An idea to have FVL for capability sets 1 through 6, we’re nowhere near that,” he added. “Costs associated with that would make FVL pretty niche. They have to make a lot more progress. The V-280 sure looks like it’s in the $30 million or $40 million range per copy, which would be an impressive achievement, but it’s considerably smaller than a Black Hawk.”

The Bell V-280 Valor is a likely competitor for the third FVL capability set, a utility variant that was initially “FVL Medium.”

Army documents lay out the requirements for Capability Set 3 as cruising at between 230 and 310 kt with a combat radius between 229 and 450 nm, an internal payload of between 3,000 and 4,000 pounds and external carrying capacity of 6,000 to 8,000 pounds.

The FVL winner or winners will likely be in a good position to win foreign military contracts in the future as well.

“In the near future, we see rising defense spending in other countries on operations and maintenance and readiness, not necessarily on new platforms,” Jaworowski said. “Many European countries are ending their re-equipment phases.”

Production of new Airbus Tiger attack helicopters for Australia, Germany, France and Spain could end next year, but upgrades and mid-life updates could continue, while the order book for the NH90 tactical transport and NATO frigate helicopters looks robust at several dozen per year in the near term, Jaworowski said.

The NHIndustries Consortium of Airbus, Leonardo and GKN Aerospace’s Fokker unit has built the NH90 for 14 countries. RWI