Lower fuel costs mean fewer offshore helicopter sales

 

The latest slump in world crude oil prices and the resulting effect on fuel costs will have an inevitable impact on the offshore petroleum sector’s plans to acquire new, more fuel-efficient helicopters. So warned two of the industry’s most respected market analysts at the latest Aerospace Industries Association of Canada (AIAC) summit.

 

Kevin Michaels, global managing director of aviation consulting and services at ICF International, headquartered in Fairfax, Va., and Ron Epstein, managing director of aerospace and defense at New York-based Bank of America, Merrill Lynch Pierce, Fenner & Smith Inc., were tasked with a panel discussion on industry trends.

 

Epstein began by joking that he didn’t want to say “bad things about Barry’s business,” referring to AIAC Chairman Barry Kohler, the president of Bell Helicopter Textron Canada, who was front-and-centre in the audience.

 

But, he went on to confirm that “it’s tougher to sell helicopters to the oil industry,” acknowledging that he routinely monitors not only Bell, but also Sikorsky and other companies. “We keep an eye on . . . demand for offshore oil services and related helicopter demands. A fall in oil prices makes their job tougher.”

 

Michaels agreed, noting that the medium-twin segment market has “really been bolstered” by an “explosion of deepwater and offshore exploration.” He said there are approximately 600 helicopters in the Gulf of Mexico and 180 in the North Sea, but it was “the hot spots in West Africa and the South China Sea and elsewhere off Australia” which had been “really been driving the growth and fuelling the interest in aircraft like the (Bell 525) Relentless.” 

 

Michaels also said that lessors have been entering the medium-twin market “in a big way,” much as they have in other aircraft markets. “So you’ve got a different set of customers than you’ve had in the past – very financially sophisticated.”