Expected Helicopter Sales
Honeywell (NYSE: HON)
announced today that its ninth Turbine-Powered Civil Helicopter
Purchase Outlook projects deliveries of roughly 3,500 new civil use
helicopters during the five-year period 2007 - 2011, driven in part
by strong demand for light single and intermediate twin-engine
models offering newer technology.
Corporate, emergency medical services (EMS) and law enforcement
helicopters combined are expected to account for more than 60
percent of all new civil rotorcraft sales during the five-year
Some key findings revealed by the annual survey of civil helicopter
operators’ purchase expectations are:
helicopter deliveries were up nine percent in 2006 and are expected
to rise strongly in 2007, as helicopter manufacturers increase
production to satisfy strong demand for new aircraft
Civil helicopter sales
during the five-year period 2007-2011 are predicted to be up to 40
percent greater than in the five-year period 2002-2006.
Global demand could
exceed 8,000 new civil helicopters during the 2007-2017 period.
“Honeywell Aerospace’s 2007 survey has identified avionics
capabilities, performance and power, and direct operating costs as
the top criteria operators consider when selecting new helicopters,”
said Vicki Panhuise, Vice President, Honeywell Commercial and
Military Helicopters, Honeywell Defense and Space. “The decision to
acquire new helicopters is driven primarily by the age of current
aircraft which is usually reflected in an operator’s desire for
better technology, more range, more power and lower operating costs.
Survey results have improved four years running, and OEMs report
strong sales activity supporting our view that helicopter demand has
great long range prospects in a growing global economy.”
Near-term increase in demand is supported by ongoing strong
worldwide demand for corporate, EMS, law enforcement and utility
helicopters, expanding African and Asian economies and continued
strength in oil producing regions.
In North America, law enforcement applications continue to receive
high levels of interest with 35 percent of all mentions this year,
exceeding all other planned use categories. Emphasis on security and
police capabilities remains high. Availability of homeland defense
funding at local levels contributes to the strength of this sector.
EMS applications held steady at 25 percent of planned new purchases
in North America from 24 percent in the 2006 survey, and remain the
number two end use category cited by the survey respondents for new
helicopters in the region. Planned purchases for corporate use in
North America fell slightly to 11 percent of the total in this
“The 2007 outlook projects annual turbine helicopter delivery levels
exceeding 700 units in the near term, with survey based indications
that latent demand could drive rates even higher if capacity limits
are not encountered,” Panhuise said. “The improved 2007 outlook is
also boosted by potential new OEM entrants offering affordable high
value platforms stimulating demand and drawing new operators into
the turbine segment.”
Purchase Expectations Survey
The ninth worldwide survey of civil helicopter operators’ future
purchase plans supports much stronger demand for new aircraft over
the next five years. Purchase expectations rose about eight percent
measured on the basis of specific new Helicopter purchase plans in
2007 over 2006 levels. In terms of fleet replacement and addition
percent, the 2007 results were up nearly five points.
The survey continues to show that there was little trade-up
expectation among the world operator base. More than 80 percent of
new purchases will be made to replace older aircraft in the same
size/capability and price class. Only about 11-12 percent of
operators plan to trade-up to more expensive and capable machines.
Buyer interest continues to improve overall and there is no
indication that a demand decline is likely to occur in the near
future. These findings are based on inputs from nearly 1,000 flight
departments in North America, Latin America, Europe, Asia, the
Middle East and Africa.
For the past five surveys, over half of all European purchase
expectations have been for twin-engine models. This year’s findings
show 53 percent of purchase plans falling in the multi-engine
helicopter class. Regulations requiring twin-engine aircraft on
flights over congested areas and other use limitations continue to
shape the preferences of the European operators. Nonetheless single
engine models were nearly as strong for the second year in a row at
47 percent of expected purchases compared to an average of around 30
percent prior to 2006.
In North America, where there are no current or pending regulations
requiring twin-engine aircraft, 70 percent of planned purchases are
for single-engine aircraft. In Latin America, 57 percent of planned
purchases are for single-engine models. In both regions this share
has remained relatively stable in recent years. Operator preferences
in Asia, The Middle East, Africa and Oceania strongly favor
twin-engine machines with a 65-75 percent share in the 2007 survey.
“Honeywell’s global demand projections now stand at over 8,000new
Helicopter deliveries in the period 2007-2017 reflecting industry
conditions that have never looked stronger in recent history,”
Over 40 percent of New Turbine Demand Projected in North America
North America continues to provide the greatest share of demand for
new helicopters, accounting for 42 percent of planned future
purchases, a similar share to last year’s outlook. Buying plans were
up modestly in this year’s survey compared to 2006, with most of the
improvement traced to increased purchase plans for general utility
Survey responses indicate that North America will predominate in the
purchase of light single-engine helicopters. On average more than 70
percent of future new aircraft purchases in this region are expected
to be light singles, and no regulatory activity is on the horizon
which would likely change this.
Avionics capabilities, operating costs, aircraft age, performance,
payload, cabin volume and engine power were the most frequently
mentioned factors by North American operators as to their reasons
for planning to purchase new aircraft.
European Fleet Replacement and Expansion Plans Recover
The survey shows an improvement in European purchase expectations,
recovering to nearly 20 percent fleet replacement/expansion rate in
2007 over 15 percent in 2006. A broad pattern of stronger buying
plans slightly favors multi-engine machines compared to last year.
As we moved further beyond the implementation of the single engine
operations regulations in Europe, the spike in planned orders and
deliveries of twin engine helicopters has softened and interest in
less costly single-engine models has gained in the past two years.
Even so, 53 percent of five year planned European purchases are for
multi-engine models. Survey responses suggest that about 16 percent
of world new turbine-powered helicopter sales will occur in Europe
during the next five year period, almost identical to the share
recorded in the 2006 survey. European operators cite regulatory
requirements and avionics capabilities as the top reason for
acquiring a new helicopter. Other important factors are cabin size,
performance, operating cost reductions and payload needs. The
general utility and corporate use categories were most frequently
mentioned by European respondents followed by EMS, fire fighting and
Asia, Pacific, Africa and Middle East to Replace or Expand up to 37
Percent of Fleet
On the basis of the equivalent percentage of fleet to be replaced or
expanded, Asia, Oceania, Africa, Middle East together have
maintained consistently high purchase expectations for the last five
years. Operators in these regions expect to purchase new helicopters
equal to 36 - 37 percent of their current fleets during the next
five years for replacement and fleet addition. This compares to 20
percent in Europe, 22 percent in North America and 30 percent in
Latin America. Over the next five years, we estimate that up to 22
percent of total world new helicopter sales will be to customers in
Asia / Pacific, Africa and the Middle East.
About 65 – 75 percent of future demand in these regions is expected
to be for multi-engine craft. As in other regions, operators cited
avionics capabilities, performance and power, payload and lower
operating cost plus warranties as key reasons for replacing current
In Asia / Pacific, close to 30 percent of expected purchases will be
for corporate applications, closely followed by oil exploration and
support helicopters at 24 percent. Utility and law enforcement trail
at 18 and 16 percent respectively. In Africa / Middle East, oil and
gas exploration applications were most frequently mentioned at over
53 percent, followed distantly by corporate uses at 23 percent.
Latin American Purchase Expectations Declined
Latin American expectations fell more than 10 points in this year’s
survey after posting a record level in 2006. Even though overall
buying plans in the region are still relatively high, the drop in
purchase expectations as a percentage of current fleet, coupled with
the relatively smaller fleet in this geographic zone, brings Latin
America’s total share of projected world new helicopter demand to
just under Europe’s.
This region is expected to account for about 15 percent of expected
five year world demand for new helicopters, off around 10 percentage
points from the 2006 survey projection. Approximately 57 percent of
expected new aircraft demand in the region is for single-engine
helicopters. Once again, avionics features, performance and lower
operation costs are driving the plans to purchase a new model.
Surprisingly, oil and gas support did not show up as a strong
potential application for new purchases. Latin American operators
did continue to cite improved economic conditions especially in
Brazil, and Mexico. Both economic policies and oil revenues are
still mentioned as contributing to the improved outlook.
Civil Turbine Helicopter Survey Results
The 2007 Turbine Powered Civil Helicopter Outlook is based on
Honeywell’s recently conducted customer expectations survey, an
assessment of consensus forecasts, review of factory delivery rates
and analysis of future new helicopter introductions. The 2007
outlook excludes uniformed military demand for civil helicopters
resulting in civil figures which do include government and security
This year’s survey queried 919 chief pilots and flight department
managers of companies operating over 2,400 helicopters worldwide.
The survey detailed the types of aircraft operated and assessed
specific plans to replace or add to the fleet with new aircraft.
The 2007 outlook presents a snapshot of the helicopter business at a
point in time and does not reflect unforeseen events such as an
unexpected economic downturn, sharp increases in fuel costs, a fuel
crisis, imposition of heavy user fees or other unfavorable
regulations / taxes that could affect results in future years.
Demand for new helicopters is also highly price sensitive. Decisions
by aircraft manufacturers to offer discounts or raise prices can
significantly influence sales activity on affected models.
Demand by Helicopter Size Category
Light Single-engine Helicopters: Operators continue to express a
strong preference for light single-engine helicopters in their
purchase expectations, choosing this class of aircraft 51 percent of
the time, roughly the same level seen for the last five years.
Popular helicopters within this class include the Bell 206 series
and 407, AgustaWestland A119, Eurocopter EC120, AS350/EC130 and MD
500 and MD600 series. Regionally, the light single class is highly
popular in North America, cited in 70 percent of new purchase
expectations. Latin American operators also reported a strong
preference for this class of equipment with 57 percent of regional
demand. In Europe, regulations requiring multi-engine aircraft limit
the appeal of single-engine models. Prior 2006, the average share of
planned single-engine purchases in this region had been 30 percent.
In the 2006 and 2007 survey, this percentage jumped to 47-48
percent, driven by continued strong planned demand for the AS350 /
EC130 series. Demand for single-engine models in Africa, Middle
East, Asia and Oceania is relatively low compared to the Americas
and Europe falling in the 25-37 percent range.
Light Twins: Purchase expectation groupings for new helicopters in
the light multi-engine class are exemplified by the Bell 427 and
429, Eurocopter EC135, AS355, AgustaWestland A109 series, and MD
902. Expectations for the future purchase of aircraft in this
segment during the next five years rose moderately to just over 16
percent compared to 15 percent recorded last year.
The largest regional demand for light twins will be in Europe, with
a 30 percent projected share of total regional purchases. Demand for
light twins remains small in North America (12 percent now versus 6
percent a year ago). Asia/Pacific and Africa / Middle East also
recorded similar levels of interest in the 12-13 percent range. Most
of the twin-engine interest outside Europe is for the next larger
intermediate class of aircraft, reflecting a desire for more
payload, performance, cabin volume and range.
Intermediate Twin Helicopters: New intermediate twin-engine
helicopters as a class received strong purchase expectations,
ranking second behind light single engine craft in share of buyer
interest at about 29 percent. This result is similar to the last two
years and reflects the very strong attractiveness this segment holds
based on the balance of payload, cabin space, power, range and speed
in this class. The most popular models mentioned included the Bell
412, and 430 models as well as the Eurocopter BK117/EC145, AS365
series, the EC155, the Sikorsky S-76 and AgustaWestland A139.
Heavy Lift Helicopters: Heavy lift helicopters continue to exhibit
relatively low purchase expectation scores relative to the other
classes of aircraft, with share of mentions rebounding to four-five
percent in this year’s survey after a weak rate of under two percent
in 2006. As discussed in our previous outlooks, this low level of
demand is to be expected, both as a function of higher prices for
larger helicopters as well as the more narrowly defined applications
such craft typically serve. Additional demand for this class
aircraft often comes from governmental or “parapublic” sources that
this survey may not always reach. Geographically, the bulk of
projected demand for heavy helicopters is concentrated in Asia, and
Africa/Middle East with a 9-12 percent share of regional demand.
Europe follows next with nearly three percent of buying plans
focused on this equipment class.
Trade up Patterns
Projected trade-up patterns remained remarkably consistent compared
to previous survey results, with operators electing to replace
aircraft with the same size class currently operated about 82
percent of the time. Trade-ups to larger helicopters and trade-downs
to smaller aircraft were chosen just 11 percent and 7 percent of the
time, respectively. The strong propensity to trade within segments
(rather than trading up) supports longer ownership intervals for
aircraft purchased new. Average age at which current aircraft are
replaced ranges between 12 years in the U.S and Canada, Europe and
Asia up to 14-17 years in Africa and Latin America.
Demand by Primary Use of New Turbine Helicopters
Corporate and Law Enforcement: Corporate and law enforcement
remained the leading applications for which operators said they
would purchase new helicopters in the 2007 survey. The corporate
segment, the largest use category, totaled 26 percent of the
projected new turbine helicopter sales. Substantial demand exists
for new corporate use helicopters in nearly all world regions. Over
70 percent of all demand in Latin America is for corporate-use
machines, followed by Asia at 30 percent, Europe, Africa / Middle
East each at 23 percent and lastly North America at just 11 percent.
Mentioned second most frequently as a use category for new aircraft
purchases, new helicopters buying plans for Law Enforcement
applications comprise 19 percent of total demand off from 25 percent
in the 2006 survey. The most interest in Law Enforcement helicopters
is in North America, accounting for 34 percent of regional demand.
EMS And Utility: Expectations for the purchase of new helicopters
for EMS usage rose slightly from 14 percent of total demand last
year to 16 percent in 2007. Expected demand for utility helicopters
also rose from 11 percent of total in 2006 to 18 percent in 2007.
The highest expected demand for utility helicopters occurred in
Europe with about 36 percent of expected total future purchases in
the region. European operator’s interest in acquiring new utility
helicopters grew from 19 percent of planned purchases in 2006 to the
36 percent level in the current survey.
Asia and U.S. / Canada also recorded a good amount of interest in
acquiring utility machines with 18-20 percent of regional buying
plans slated for this general application.
Oil and Gas Support: The oil and gas production and exploration
segment’s share of new aircraft nearly doubled to 14 percent
compared to the 2006 survey level of 7.5 percent. Regional interest
in new helicopters for this industry continues to be highest in
Africa/Middle-East at 53 percent of that region’s demand followed by
Asia/Pacific at 24 percent. Obviously high energy prices have
stimulated additional activity and recapitalization plans in this
Operators in other segments such as Television News, Tourism,
Firefighting and Training continue to report projected requirements
for new helicopters over the next five years at levels well below
the applications discussed above. Overall, this business segment is
projected to comprise six-seven percent of the new helicopter
purchases anticipated in the 2007 - 2011 period.
Moderate Turbine Helicopter Utilization Rate Recovery
Overall, respondents reported using their turbine-powered
helicopters between 400 and 550 hours during the past 12 months.
This varies by region, with the highest utilization rates in Africa,
Middle-East and the lowest in Europe. Compared to the 2006 survey,
reported usage rates recovered in North America ( + 15 percent),
slipped in Latin America (-6 percent), increased in
Africa/Middle-East (+3 percent) and in Asia / Pacific (+28 percent).
Usage in Europe was virtually unchanged. Easing fuel costs
experienced during 2006 may be a factor in the utilization rebound
as well as the Asian construction boom, and global oil exploration
Survey data clearly indicate that on a global basis, the vast
majority of operators plan to use their aircraft at least as much as
or more than they did during the past 12 months. In North America
and Europe, 95 percent of respondents expect their utilization to be
the same or greater than the prior 12 month period. Looking ahead,
nearly all Latin America operators polled indicated that utilization
would remain steady or rise again this year. Estimates for aircraft
utilization growth in Africa and the Middle East and Asia/Pacific
operations run in the 93-96 percent range.
Based on survey responses and the fleet distribution in each region,
Honeywell projects flight hours will remain at relatively healthy
levels assuming fuel costs remain near current levels or fall, with
some growth likely compared to last year depending on regional
economic conditions. This assumes that no new legislation or
regulations are enacted that would further restrict airspace access
or create new economic burdens on operators.
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Based in Phoenix, Honeywell’s aerospace business is a leading global
provider of integrated avionics, engines, systems and service
solutions for aircraft manufacturers, airlines, business and general
aviation, military, space and airport operations.
Jafar said: "Despite a net surplus when the region is taken as a
whole, the reality is that several Gulf countries today have a
significant and growing gas deficit, including the UAE, Kuwait,
Bahrain, Oman and Saudi Arabia as well as countries like Lebanon