June 30, 2020 | International, Aerospace
Army Helo Market Pegged at $10 Billion
By Jon Harper Market opportunities for the Army's helicopter fleet will average about $10 billion per year over the next decade as the service modernizes its rotary-wing assets, according to analysts. The current inventory includes UH-60 Black Hawk utility helicopters, AH-46 Apache attack helicopters, CH-47 Chinook heavy-lift helicopters and UH-72 Lakota light utility helicopters. All but the Lakota are still in production today. Meanwhile, future vertical lift is one of the Army's top three modernization priorities, and it is pursuing two new aircraft: an armed scout platform known as the future attack reconnaissance aircraft, or FARA, and the future long-range assault aircraft, or FLRAA. “The Army's effort to develop and field the next generation of vertical lift aircraft ... will have significant implications for the industrial base,” defense analysts Andrew Hunter and Rhys McCormick wrote in a recent report for the Center for Strategic and International Studies. “Projections show that although there will be a drop-off in the procurement of legacy aircraft in the mid-2020s as FARA and FLRAA full-rate production starts to ramp up, there is still a roughly $8 billion to $10 billion annual addressable Army vertical lift market over the next decade,” they said in the report titled, “Assessing the Industrial Base Implications of the Army's Future Vertical Lift Plans.” FLRAA has an estimated program value of $40 billion, while FARA could be worth about $20 billion. In March, the Army announced it had selected Bell and a Sikorsky-Boeing team for the FLRAA competitive demonstration and risk reduction effort. The winner of that phase is expected to be selected in fiscal year 2022. The service also picked Bell and Sikorsky to continue on in the competition for the future attack reconnaissance aircraft. A “flyoff” for the FARA competition is scheduled for fiscal year 2023, with a production decision expected in fiscal year 2024. Both the FARA and FLRAA platforms are slated to enter production later this decade. Meanwhile, operation and sustainment costs will remain the largest source of Army vertical lift spending over the next 10 years, according to the CSIS report. “There's going to be opportunity [for industry] in kind of the aftermarket side because even as you start to produce the new aircraft, there will still be the enduring platforms that are out” operating as next-generation helicopters come online, said Patrick Mason, head of Army program executive office aviation. “We will still need spares and certain things done within the aftermarket side as this transition would occur,” he added during a recent press briefing. “That drives so much of the supply chain.” Some observers have questioned whether the Army will have enough money to buy high-ticket FARA and FLRAA platforms at the same time given future budget projections. There is also the risk that the programs might go off the rails. “FVL isn't the only game in town, but it is by far the biggest,” Loren Thompson, a defense industry consultant and chief operating officer of the Lexington Institute think tank, wrote in a recent op-ed for Forbes. “If production of legacy rotorcraft ceases to make room for new ones and then FVL fails to deliver, industry might not have enough cash flow to sustain essential skills and suppliers.” Hunter said problems with the future vertical lift initiatives would upend the CSIS market projections. “If you were to take one of those programs out of the equation, that changes the addressable market in two significant ways,” he said. “One is, it shrinks it obviously by pulling out ... multiple billion dollars of investment throughout the 10-year window that we looked at. The other effect that it has is it reduces the competitive opportunity for industry. Right now, you know you've got multiple companies gunning for two aircraft. And even if you went down to one [program] and you were still competing, that's much less opportunity for industry to win in that scenario.” https://www.nationaldefensemagazine.org/articles/2020/6/29/army-helo-market-pegged-at-$10-billion