Why 2020 is the year to go rotary
The past five years – that’s right five years – have been tough for helicopter sellers. But markets are starting to harden. Words: Alex Baldwin
HELICOPTER MANUFACTURERS have always been happy to fly a large twin-engine machine to the Monaco Yacht Show, the Polo finals or land one on the grass outside open air operas. They have even collaborated with other companies so your chopper can match your Aston Martin (Airbus in December 2019), your dress (Versace and Leonardo in 2007) or your Birkin Bag (Hermes and Airbus 2008).
But anyone buying a new VIP helicopter knew inside that they were a lot less important to the manufacturer than the big offshore buyers who were taking fleets of 20 or more. Manufacturers loved using the odd photo of a helicopter landing on a superyacht in their brochures, but it was no secret that the real money came from hauling groups or engineers to oil rigs in the North Sea or lifting people with broken legs off mountains.
This all changed when the oil price crashed from an average price of $98 a barrel of West Texas Intermediate in 2014 to $48 in 2015. Since then the three largest helicopter operators in the world – Bristow, CHC and PHI – have entered Chapter 11 bankruptcy protection. They have cut their fleets and cancelled orders. It has been a buyer’s market – for both new and pre-owned large helicopters for four years now.
“It is without doubt a depressed market and every OEM is keen to increase VIP, owner-pilot and corporate sales,” says Jean-Marc Youkhana, MD of Uplifting Aviation. “The OEMs will talk to you every day of the week. You can find good deals on some models – although not all – and helicopter manufacturers are still pretty disciplined. But the real value is arguably in the pre-owned market.”
“As with any high-end purchase, get proper counsel.”
A large part of Youkhana’s job is selling pre-owned helicopters, so you would expect him to say that. But Jason Kmiecik, President of appraisal company HeliValue$ agrees. “Right now, there are a ton of good deals out there as the market is still flooded with many models of helicopters, especially older models that can be repurposed,” says Kmiecik.
Large twin-engine helicopters, the workhorses of offshore fields, were the worst hit. But the pain has also trickled down to smaller helicopters. “Most buyers look at the whole market to guide pricing and purchase decision,” says Emmanuel Dupuy, sales director of helicopter broker Aero Asset. “The performance of one-configuration segment can impact pricing of the other. Some helicopter models are great multi mission platforms. Over their life span, these models get converted by operators and lessors to fit demand. This furthers the interconnected nature of market segments.”
Research by Aero Asset shows that VIP configured helicopters accounted for two thirds of pre-owned twin-engine helicopter transactions and half the supply. The rest were helicopters set up for Emergency Medical Services, oil and gas, Search And Rescue and others.
“The challenge for preowned VIP helicopter markets remains the impact of excess oil and gas configured aircraft for sale, on pricing of VIP supply. For example, in the Sikorsky S76C++ market, 90% of the supply for sale is oil and gas configured. Sellers of VIP configured C++ helicopters have to challenge the perception of a flooded market,” says Dupuy. “Both configurations speak to entirely different audiences. It seems logical there should be no pricing correlation between the two configurations. Yet, were the oil price to hit $100 or $150 a barrel, oil and gas configured supply would decrease and this would in turn positively impact VIP configured C++ pricing.”
HeliValue$’s Kmiecik agrees: “On the VIP side, the Leonardo AW139 and Sikorsky S76C+ and C++ models are gaining attraction and moving fairly quickly. Prices have fallen so much on the AW139 model that new buyers are coming to the table now.”
Leonardo AW139s sold well in 2019 so the preowned supply of VIP aircraft is low. “The AW109S and AW109E are holding value right now,” says Philip Queffelec, chairman of Sparfell Aviation Group. “They are great aircraft. I own one of each. Private customers love it and it is very popular throughout Europe, if you are flying it yourself or riding in the back.”
“A bargain helicopter can easily turn back and bite you.”
Good deals are widely available but it pays to seek informed advice before purchasing.
How to buy
It may be a buyer’s market, but they should still beware. “There are definitely bargains out there. But you have to be extremely careful and know what you are buying. It is a pick and choose market and you have to consider each individual aircraft carefully,” says Youkhana. “It is easy to make a mistake and buy the wrong helicopter for you. A bargain helicopter can easily turn back and bite you. Just don’t think you can do it all yourself”
Dupuy agrees: “If you need it, buy it right. As with any high-end purchase, get proper counsel.
“There are great deals to be had in all preowned market cycles. As with any high-end purchase decision, being well informed is key. Good information yields good decisions. Seek access to recent trades, best buy’s and pedigree and position your offer competitively. Seek counsel from people in the know.”
Aero Asset, Sales Director
+1 289 400 4725
Sparfell Aviation Group, Chairman
+41 22 787 08 77
Uplifting Aviation, Managing Director
+44 (0) 207 8874524