Back to news

September 20, 2019 | International, Aerospace

Opportunity knocks: A look at the used helicopter market

by Howard Slutsken

If you're thinking of buying or selling a used helicopter, this might actually be a good time to do so. Maybe we're finally getting past our focus on the doldrums in the oil and gas sector, or it could be that the replacement cycle is catching up with older helicopters, with operators making the decision to upgrade their fleets.

The helicopter market has always been very cyclical, and the perceived strength of the marketplace will often depend on the specific needs of a region — and the opinion of who you talk to.

“The trend we're seeing in Canada is for hydroelectric powerline work, whether patrol or working on the towers, they're going with Cat A twin-engine aircraft,” said Steve Dettwiler, president of Maple Leaf Helicopters Canada, a brokerage service based in British Columbia. “Some operators are using the MD 902 Explorer, others the [Airbus] EC135. There are lots of [Airbus AS350] AStars available, but for Cat A [performance requirements], you'd have to go with an [Airbus] AS355NP TwinStar.

“We're seeing the Bell LongRangers being sold off and replaced by the AS350 B2 and B3 series,” Dettwiler continued. “When it comes to the B3e [H125], most Canadian operators are interested in the ones that have dual hydraulics. For forest service work, there's the inclination to go to twin-engine on the Bell mediums.”

Airbus machines are certainly in demand, and it might be a better financial and operational decision to search the used market rather than buy new, according to Jason Kmiecik, president of HeliValue$, producers of The Official Helicopter Blue Book.

“The lights twins — EC135s, 145s — there's a big market for those,” he said. “In the U.S., Metro Aviation and Air Methods have pretty much grabbed everything [in terms of those types] that was for sale or is about to come online for sale. In today's market, you could buy two used aircraft, fully retrofit them with brand new interiors and avionics in both aircraft, and you're at about the price of one brand new aircraft.

“There are plenty of transactions happening on those aircraft all over the place,” Kmiecik continued. “Some of them have actually started going up in value — the AStars and some of the newer 407s — because there's just starting to not be that many out there for sale.”

Finding a deal

But, as with any marketplace, there are bargains to be found.

“There are some really good deals out there,” said Dettwiler. “As an example, we've got a Bell 212 for sale for $1.5 million, which is a good price for a 212. [The market] does go in cycles. Right now there are a lot of aircraft available for sale, which drives the prices down. You can get into a nice little JetRanger probably for $350,000 to $400,000.”

There's also a bit of an underground marketplace where transactions happen quietly, with a handshake, explains Kmiecik.

“You'll see the sales happen,” he said. “They were never listed online. They sell to the operator next door or somebody's buddy. The smaller, cheaper aircraft are garage transactions.”

And speaking of those smaller machines, Kmiecik believes that the operators who still love Schweizer helicopters are going to be happy with the company's new owners, Schweizer RSG.

“Their plans are to go full production again,” he said. “So I think there's going to be a comeback of Schweizer.”

While Kevin Mawhinney, helicopter technical advisor at Jet Support Services, Inc. (JSSI), doesn't think much has changed in “the day-to-day, ins-and-outs of the industry,” he does see a trend developing in the “larger-medium” sector.

“I think you're going to see more people move into this segment with machines that fill that niche,” he said. “For example, the [Leonardo] AW139 has really filled a need, and we're seeing a lot of interest in it.”

He points to the multi-role capability of the AW139 as being a driver for new operators. “I think it fills a niche that no other machine was filling before.”

Super Pumas airborne again

And what about all of those Airbus H225 Super Pumas that have been languishing on helipads around the world? They're now in demand, according to Kmiecik — but for utility work, not offshore.

“What we're seeing now is supply is actually shrinking,” he said. “Aircraft that were once for sale are now pulled off the market and are back to work with the original lessees or new people.”

With the shift in deployment of Super Pumas from offshore work to utility missions, Kmiecik said that there's a bottleneck getting the parts that operators need to change the primary mission of their helicopters.

“The 225 is becoming the utility machine, the go-to machine now,” he said. “The problem is the supply of utility parts with Airbus — cargo hooks and stuff like that. They can't get them in stock fast enough to ship out to the people who need them. There's aircraft waiting on the ground right now for parts so they can get out on a contract.”

Kmiecik said that some operators have recognized the value in the 225 and have focused their acquisition strategy on the type. “It's a lot of aircraft with a lot of lifting for the price.”

Dettwiler also knows of companies that targeted an opportunity by buying up inventory of specific types. “We sold 14 SA 315B Lamas in the past few years to a company in Scandinavia, who's basically stockpiling all the Lama inventory from around the world and supporting the existing Lama operators. But it's going to come to an end. Airbus would prefer to sell the H125/AS350 B3e,” he said.

Operating costs

Brandon Battles, vice-president, Conklin & de Decker, has been researching and analyzing helicopter operating costs for over 30 years. With his years of experience, Battles has seen the cyclical changes that the industry has faced.

“I think we've all seen it through our careers - oil and gas is bad right now, but another operation that uses helicopters might be very strong,” he said. “The firefighting folks are probably having some pretty good years, from a business point of view.

“I'm noticing now that it's not just the acquisition cost that's important anymore, it's also those operational costs that they'll be encountering over the long ownership of that aircraft,” he added.

Kmiecik echoes that thought.

“Pretty much everybody's complaint is to try to get operational costs cheaper for these aircraft, especially for the S-92,” he said. “It's a very expensive aircraft to operate, and with what they're making each month on their contracts, it's getting very tight to be able to make a profit at all on them.”

While some of the focus on operational costs may be driven by corporate acquisitions and industry consolidation, Battles believes that operators at all levels have become more attuned to the business side of the equation, in some ways resulting from the economic downturn of 2008.

He said that operators may have planned to acquire a helicopter and keep it for perhaps 10 years. After that, they may look to sell it to avoid major inspections or the required replacement of life-limited items or other significant maintenance.

“They had a plan but when the economy changes and they can't sell the aircraft for as much as they planned, now they must continue to operate it and wrestle with some of the higher costs that are associated with an older aircraft,” said Battles. “Maybe because of that experience, people are considering the maintenance and operating costs more than they used to.”

What's next?

Kmiecik's analysis of the super-medium market suggests that machines like the Airbus H175, Leonardo AW189 and the upcoming Bell 525 are going to face challenges in making an impact on the market.

“In general, the super-mediums haven't lived up to expectations that everybody thought was going to happen,” he explained. “And that's because the S-92 has dropped in value, so where it's actually cheaper to rent a S-92 than it is to buy a brand new super medium.

“Capital is drying up in the space,” Kmiecik continued. “There's not many people that are willing to go out and buy a $15- to $35-million helicopter anymore for offshore when we've got so much supply still in the market right now that is sitting idle for sale.”

And Kmiecik is pretty blunt in his assessment of what needs to happen in the oil sector to ensure that helicopter operators can continue to provide service.

“I think over the next six months to a year, you're probably going to see some change in the attitude of the oil companies,” he said. “There has to be a change because they're forcing everybody into bankruptcy. I think that people are now telling them ‘no' on certain requirements that they're setting on tenders, like age requirements for aircraft. I think that they're going to have no choice but to start helping out the people who are keeping them in business.”

https://www.skiesmag.com/features/opportunity-knocks-a-look-at-the-used-aircraft-market

On the same subject

  • UK: Speech by Admiral Sir Philip Jones, First Sea Lord and Chief of Naval Staff

    November 30, 2018 | International, Naval

    UK: Speech by Admiral Sir Philip Jones, First Sea Lord and Chief of Naval Staff

    Introduction Good morning everyone, and Nick [Childs, IISS], thank you very much for the introduction, for the invitation for Mike [Noonan, RAN] and I to be here with you all this morning, and to everyone here at IISS for facilitating this event. And a special thanks to Mike. He looks as fresh as a daisy this morning, but he's on a bit of a world tour, taking in London having also taken in some substantial visits in Europe to check on future RAN capability, I'm sure you'll hear more about that later, and then after a trip to Scotland tomorrow to have a look at what a Type 26 looks like, and we'll see the significance of that of course, we're then travelling together to Chile on Thursday night to help them commemorate the 200th Anniversary of their navy. So you've covered a lot of ground as Chief of Navy but for very good reason and it's really good to have you with us, Mike, today. What I wanted to do is to set the scene, before we hear from the Theatre expert, Mike, on the Asia Pacific Region, about how the Royal Navy sees that region and the way we've shifted some of our posture to reflect that in the last year or so. RN Pacific Presence Because it won't have escaped the attention of most of you who are tracking what the Royal Navy does and where it goes that this year has seen a very public return to that region. The deployments of the frigate HMS Sutherland initially, which also went to Australia, the LPD HMS Albion and her embarked Royal Marines, now followed by the frigate HMS Argyll which is in the region as we speak, and then HMS Montrose, who I'll be on board in Chile in a couple of days' time, is then crossing the Pacific to New Zealand and Australia on her way through the region too; so all of that has drawn no small amount of interest and commentary, both in the region and back here in the UK. And I hope that comes as no surprise because those deployments have had in the region, I am told, a really tangible effect. Whether on be operations: helping to enforce UN Security Council Resolutions against the DPRK, or the significant programmes of defence engagement they have been conducting right across the region – Indonesia, Vietnam, the Republic of Korea, Brunei, Japan and of course Australia to name but a few. But why now? Why has that change of focus to the region come now? Importance of the Pacific Those of you who are aficionados of IISS events may have been at their other site in June when, the US CNO, Adm John Richardson, and I spoke at a similar event about the challenges we share together in the maritime domain, challenges that have grown considerably into threats, and threats have both intensified and diversified. And whilst it's perhaps unsurprising that our combined UK/US geographical focus is principally in the Atlantic area, we made the point that the same challenge to freedom and security on the high seas is to be found in many other places in the world, perhaps most notably over the last year or so in the Indo-Pacific region. And that's a region we here in the UK simply can't afford to ignore. As I said at my Sea Power conference at RUSI a few weeks before that IISSevent I did with CNO, we were feeding off the UK Defence Concepts and Doctrine Centre's analysis of Global Strategic Trends which clearly identifies the economic shift towards the Indo-Pacific region; that's already on the way and will only intensify in the years to come When you combine this with the well established importance and growth of global maritime trade, and the UK's ambitions for an enhanced global trade network once we depart from the European Union, it becomes very easy to see why the Indo-Pacific region will be of such strategic importance to this island nation in the years to come – physically separated from that region by several thousand miles though we may be. But this renewed ambition for trade links in the Indo-Pacific, where some of the largest and fastest growing economies reside, does rely on influence in the region; you have to earn your place there. And that's where the key attributes of a navy can come into play, the ability, as one of my predecessors, Adm Sir Mark Stanhope, once put it, to do ‘engagement without embroilment', and that can come into play in support of cross-government objectives. But to paraphrase our Secretary of State for Defence: it's not all about soft power, it's also about being able to back it up with credible, hard power if required. And the way we can proactively contribute to regional maritime security is clearly one component of that. China In any assessment of the Indo-Pacific region, the growing role and influence of China will play a major part. China is the most populous country in the world, it's home to the largest supply of natural resources, it boasts the second largest world economy. So it is perhaps only natural that given their place in world they should look to exert their influence as a world power. And we're seeing this ambition play out very clearly in the maritime domain as the PLA(Navy) evolves from a coastal force to a regional force, and now very clearly a global force; they had 5 different task groups on deployment around the world last year. It's an ambition backed up by a programme of Naval expansion that massively exceeds any other country in the world, including the United States. If you look at the scale of their shipbuilding programme purely in terms of tonnage, it broadly equates to launching the equivalent of the whole Royal Navy or French Navy, every year, and they'll be able to do that for the next 10 years. Combine this with their equally rapid development of tactics and doctrine and it is very clear that they now possess a potent Naval force, equipped and ready to support China's national agenda, and this will be the case more and more in the years to come as they become bigger and more and more capable. Now there are probably differing, even conflicting views as to how this growth in Chinese military capability is to be perceived, but these perceptions are surely influenced in no small part by their recent actions like the militarisation of artificial features in the South China Sea, and I suspect not influenced for the better. UK/China relationship At the national political level, Britain is very clear eyed in its relationship with China, it's a good relationship and one we hope will continue to prosper for all sorts of reasons. And at a Head of Navy level, I'm pleased to say my relationship with Admiral Shen Jinlong, Commander of the PLA(N) is a good one. I visited him in China this year and we had a further meeting at the International Sea Power Symposium in Newport, Rhode Island a couple of months ago. Now unquestionably there were issues on which we do not see eye to eye, but the open, honest and frank discussion we have over a myriad of issues which affect all of us in the maritime domain are open and genuinely valuable, and I thank him for it. But at the same time, to again paraphrase my Defence Secretary, we will not shy away from telling them when we feel that they do not respect the commonly accepted rules and norms of international behaviour, the laws and systems from which we all benefit and therefore have a duty to protect. Specifically, in the Maritime domain, we are committed to ensure that the global commons remain secure and freely available for all mariners who are going about their lawful purpose, anywhere in the world, and we will continue to work to ensure that the laws and conventions that exist to protect those rights are followed. Return to Pacific So it's clear that the Pacific is somewhere the Royal Navy needs to be, in defence of our national interests and to promote our national prosperity, but also to exert our influence in the region as we seek to uphold the rules that have underwritten our collective security since the middle of the last century. But all of this comes after something of a fallow period in the Royal Navy's record of operations in this region, and I'm very keenly aware of that. Following the decision in the 1960s to withdraw naval forces from the region, and the demise of the Far East Fleet in 1971, our last ship, HMS Mermaid, left the Sembawang Basin in Singapore in September 1975. Since then we have seen a steady decline in the Royal Navy's presence in the region, exacerbated further by the withdrawal from Hong Kong in 1997, to the extent that when Sutherland arrived back in the region earlier this year, that was the first Royal Naval presence in the region for 5 years. The stark contrast of this year's near constant presence shows that we've now passed that nadir of presence and engagement, and I think we can now look forward to far closer engagement with our key regional partners there, whether it be in the guise of FPDA activity or bi-lateral and tri-lateral relationships such as our burgeoning relationship we have with Japan, and after Chile I fly on to Japan with Admiral Richardson to have another one of our close tri-lateral meetings with Admiral Murakawa, the head of the Japanese Defence Force. RN/RAN But whilst we may have been removed from the Pacific for a while, we have not lost our links with Pacific-based powers, especially the Royal Australian Navy. Throughout, our 2 navies have continued to enjoy a significant programme of personnel exchanges, building those all important personal relationships, shared experiences and mutual understanding. And at the tactical and operational level, our collective efforts in the Middle East in particular have kept our 2 navies closely aligned. As 2 of the 4 central members around which the 33 nation Combined Maritime Forces coalition has been built over the last 15 years or so, our ships have worked side by side and we have each taken a large share of Task Force Commander responsibilities. And if you've seen in the press in the last couple of days, we've also started to muscle in on the Royal Australian Navy's drug busts as well. In the course of these commitments the Royal Navy and Royal Australian Navy have shared in a plethora of operational tasking – and no small amount of operational success – be it counter piracy and counter narcotics focussed maritime security tasking right the way through to offensive military action. Going back to 2003, on the gun line off the Al Faw peninsula during 3 Cdo Bde RM's assault, that gunline was HMS Marlborough, HMS Richmond, HMS Chatham and HMAS Anzac. And that Combined approach was far from unprecedented either; 12 years earlier during the 1991 Gulf War, HMS Gloucester and HMS Cardiff had operated in the high end of the Gulf establishing air defence supremacy alongside their Australian counterparts HMAS Brisbane and HMAS Sydney. All of that is evidence of how closely our 2 navies have, and can, integrate with each other. Interoperability I hope we can take it as an established fact that interoperability lies at the heart of successful international partnerships. And that for effective interoperability, how we operate and why we operate is just as important as where we operate and when we operate. So it's about far more than simply our ability for our comms fits to speak to each other – important though that may be. In this sense, the Royal Navy and Royal Australian Navy are always going to be natural partners. We have those ties that bind our 2 countries together, our common history including being part of the Commonwealth, and we're always going to share near identical outlooks and values, and I would contend that this is especially true in the relationship between our 2 navies. But now we have a generational opportunity to further enhance this Naval partnership. The decision by Australia to buy and operate Type 26 frigates means that our 2 navies will soon be operating common Anti-Submarine Warfare platforms, the Australian Hunter class working side by side with our near identical Royal Navy City Class. And if you add to that our common outlook on how we generate these common platforms, how we bring that capability and its characteristics into service, it's but a short leap to see that we can find a way to operate them more closely together. And therein lies the opportunity to set the gold standard for interoperability – in the Asia-Pacific region, in Combined Maritime Forces and more widely amongst the ‘Five Eyes' community. And if the Type 26 has a coalescing effect for Combined RN/RAN operations, it will surely enhance our Anti-Submarine Warfare strategic partnership too, and Admiral Mike and I have signed an agreement today to push that between our too navies. There's no small amount of truth in the old adage that ‘2 heads are better than 1'. So the ability to tap into all of the skills, knowledge and experience that our navies both share, to address the future challenges in the underwater battlespace that we know we face, I think that makes a really powerful partnership. US and Regional Leadership Potent though this combined force may be, I think it would be remiss of me not to reflect on the predominant Naval power in the Pacific, which of course remains the US Navy, a navy with whom both the Royal Navy and Royal Australian Navy also work incredibly closely. Given the number of maritime facing nations in the Indo-Pacific region, some of which may be small but all of which are rightly proud and keen to play their part, leadership opportunities abound. And working alongside the USN, there's no doubt that there's something the Royal Australian Navy can provide in leadership through the region, which is significant; providing the lead for other navies to follow and providing a unifying role within the region. And I think this is something our 2 navies very much have in common. Just as the Royal Australian Navy provides that leading role within the Pacific, I would like to think the same can be said for the Royal Navy's corresponding leadership role in the Atlantic and the adjoining seas, bringing together, in our case, principally European navies to work together alongside the US, in our case most often under the framework of NATO. So the leadership role we play in our respective oceans is a real point of connection for us, and I hope this is something that will allow the Royal Navy to quickly begin to deliver effect alongside the RAN in the Pacific. I hope that this work, the unifying effect that we can bring with the Royal Australian Navy, can achieve within the region the leadership opportunity that I think is there, and by bringing to bear our mutual close relationship with the US Navy and a host of other navies in the region, I think this can have a powerful effect. Conclusion A few weeks ago we marked the centenary of the armistice that brought to an end the First World War. The Royal Australian Navy might only have been formed 3 years before the outbreak of that war, but from the very outset our 2 navies were entirely compatible. The Royal Australian Navy had almost all its major units operating as part of the Royal Navy's Grand Fleet in the North Sea for most of the Great War, and the Royal Naval Division landed directly alongside the Anzacs at Gallipoli. In the Second World War, 5 Australian destroyers distinguished themselves repeatedly as part of Admiral Cunningham's Mediterranean fleet and over 1,000 Australians were serving in the Royal Navy on D Day. Through the subsequent campaigns in Korea and Malaya, and right up to the present with those 2 recent conflicts in the Arabian Gulf, our 2 navies have been at each other's side. It's a partnership steeped in history. But it's also modern, forward looking, and it's hugely valued, certainly on my side, and I look forward to seeing it grow in the future. So I'm hugely grateful to Mike for being here today and for all your team is doing to lean so heavily in to the optimisation of this relationship. Because as we re-assert our presence in your region I have no doubt our cooperation with you will continue to feature very heavily. https://www.gov.uk/government/speeches/iiss-global-partnerships-event-2018

  • Future Pakistan-Turkish defense cooperation likely to be incremental, for now

    September 20, 2018 | International, Aerospace, Naval, Land

    Future Pakistan-Turkish defense cooperation likely to be incremental, for now

    By: Usman Ansari ISLAMABAD — Pakistan's ambassador to Turkey pledged this week to increase defense cooperation between the two countries to new levels, but after a string of recent deals, analysts believe further cooperation will be incremental. Speaking to Turkey's Daily Sabah, Muhammad Syrus Sajjad Qazi highlighted defense relations such as recent deals for platforms like the T-129 helicopter gunships and Milgem corvettes, which he said would further improve as the countries continue to explore new opportunities. The existing deals alone are likely to see substantial offsets and technological input for Pakistani industry, and build upon existing supply of defense technology critical for all three branches of Pakistan's military. Pakistan's defense industry generally lags behind other nations, and has struggled to offer much in return bar a deal for the PAC Super Mushak basic training aircraft, further highlighting the importance of the relationship between Ankara and Islamabad. Asked exactly how that relationship may further improve, Brian Cloughley, and author, analyst, and former Australian defense attaché to Islamabad, said there is room to do so. He highlighted training as one area of cooperation, thanks to tensions between Pakistan and the U.S., along with armored personnel carriers and future orders of helicopters. While Turkish AFV-related technology is already finding its way onto Pakistani APCs and tanks, Pakistan is exploring options to supplement or even replace its M113 type APCs, perhaps with an IFV design, with Turkey's Kaplan or Tulpar IFV programs potentially of interest. Turkey's T625 multirole transport helicopter may also be considered to replace Pakistan's range of legacy types. Both countries also have active fifth generation fighter development projects, but analysts believe this level of cooperation is presently a step too far. Justin Bronk, an analyst with the RUSI think tank, raises concerns given “the lack of any proven domestic capacity in both Pakistan and Turkey to produce a fifth-generation fighter, than with any issues around security or industrial interests.” “Neither country is in any position to develop such capabilities for the foreseeable future without massive external assistance and technology transfer,” he said That idea is echoed by author, analyst, and former air force pilot Kaiser Tufail, who nevertheless stresses their respective fifth generation programs “must continue for a long-term goal of manufacture”. Tufail believes both nations should co-operate on an interim type of jet, with some of the technical characteristics of a full fifth-generation fighter “rather than jumping straight to a full-capability fifth generation fighter.” Though new to aircraft manufacture, he believes Pakistan has gained a slight edge over its potential partner, having co-produced the JF-17, “essentially a Chinese design based on PAF's specifications”, though there is still “need for collaboration in design and production of any new fighter.” Turkey in comparison, though having license produced F-16s, lacks comparable modern fighter design experience. Their close relationship makes fighter co-production “logical” though, he said. Therefore, present co-operation “could well take the shape of a ‘Block-4' JF-17 developed by Turkey and Pakistan” to be “considered for joint design and co-production”, after which “a stealth fighter would then be a logical next step.” https://www.defensenews.com/global/asia-pacific/2018/09/19/future-pakistan-turkish-defense-cooperation-likely-to-be-incremental-for-now

  • Fincantieri buys Leonardo's submarine business in 415 mln euro deal
All news