Just can’t get enough: Growth and opportunities in the vertical lift industry

For the last few years, the vertical lift industry has experienced an unprecedented period of growth across every sector, both civil and defence. But the reality of that demand is just beginning to bite, and some argue it is just the beginning. We look at the state of play.

This article was written by Editor Gideon Ewers and published in the December/January issue of RotorHub International. Apply for your complimentary subscription to RotorHub International today.

The times are good, or at least they are delivering high-quality problems.

Demand is up – and that is across every sector of the industry, for both civil and military operations. This is reflected in the lead times of the OEMs, which are extending across the board.

In its third-quarter results, Airbus for example revealed that its helicopter order backlog was up by 23 per cent at 922 compared with the same time in 2023. Meanwhile, delivery slots for Sikorsky’s UH-60 are 2027 at the earliest.

For Rotortrade CEO Philippe Lubrano, the trend is more than just an uptick. Rather, he sees the beginning of an era of strong demand.

“You have a growth in economic demand and more importantly the geopolitical situation has driven governments from their spending restrictions,” he says.

“They are looking to replace their fleets, which cannot deliver what their electorates need them to do. That could be fighting wars or fires – it could be anything.

“As a government, what are you going to do? You could contract out, but people will complain about that.

“You have all those forces flying older Hueys and they are looking for a twin nowadays, so they look at something like the H145 – everyone wants to buy it! Why not? Nice cargo, easy to maintain, skids. Big orders get good slots.”

Going large – The future for OEMs and offshore leases 

Lubrano says that the cumulative effect will be a shift over the next 10 years, which will see the order books of the big OEMs progressively inclining towards military and government customers with their larger contracts and away from the piecemeal tendencies of civil customers.

At the same time, that geopolitical instability has also forced governments – especially those in the west – to rethink their energy security, driving both oil and gas production and exploration.

This is something that has been the case even in the more environmentally concerned regions like Northern Europe.

As a result, the demand from energy companies for offshore support has come roaring back. Indeed, virtually all the slack in the system has been absorbed.

Lubrano says: “You have operators with five-, three-, 10-year contracts for public services, coastguard, border patrol, things like that. They will need the aircraft to fulfil the contracts.

“Look at Brazil, look at the oil and gas industry and the growth there. Plus you have the age limitations. In some parts of the world that’s not as much of an issue, but in others it’s more stringent.

“What are you going to do? You need younger aircraft. What about range? Everybody keeps talking about super-mediums, but you can’t use a super-medium when you need 200 nm range.

“So I see the S-92 coming back into production. They are smart people at Sikorsky, they know there is a market. I’ll tell you something else, the H225 is going to be a factor. Airbus are still selling Super Pumas and it was supposed to be dead in 2016 and the market for them is only going to get better.”

Lie of the land – Politics and its impact on the offshore support sector

It’s a compelling argument. Sikorsky has been speaking of a healthy order pipeline potential for new build S-92s and the orders for 43 H225s that Airbus has taken so far this year tells its own tale.

That is of course before factoring in the effect a change in government in the US will have on the offshore support sector.

The outgoing Biden administration has been at best neutral about offshore leases, preferring instead to promote an expansion of offshore wind operations.

Indeed, the US Bureau of Ocean Energy Management’s scheduled new lease offerings on the outer continental shelf of the Gulf of Mexico for 2025, 2027 and 2029 are the lowest number ever offered.

Meanwhile, no new offshore leases are scheduled in the Alaskan fields at all.

The Trump administration says its energy policy distils down to “Drill, baby, drill” – which implies that a spike in new leases may be in the offing, and with it a jump in demand for support of exploration and later production activities.

That said, it should also be borne in mind that during the first Trump term the number of drilling leases on Federal land were not wildly different. In fact, comparing the first two years of the respective administrations, the Biden administration issued 258 more leases than Trump’s.

So it’s hard to predict what the next four years will deliver, though there is not likely to be any drawdown in activity.

Sikorsky’s S-92 is predicted to be brought back into production due to escalating demand. Image: Sikorsky

Rolling renewal – Expansions in the HEMS and law enforcement sectors

In the North American market, but this time the HEMS sector, any pause in expansion that may have resulted from the knock-on effects of the “No Surprises” Act seems to be in the rear-view mirror, with a number of orders for HEMS aircraft having been announced during the recent AMTC conference in Las Vegas.

Similarly, in other relatively mature markets like Europe, there remains an ongoing fleet renewal programme, with operators like DRF Luftrettung and ADAC in the midst of rolling renewal programmes.

The same can be said of the airborne law enforcement sector – a combination of fleet renewal in regions with established operations and expansion where that capability does not yet exist.

At the same time, the increasing demand for rotary assets for firefighting shows no sign of lessening.

Lubrano argues that the net result of all of that will be a shortage of aircraft in the civil market.

“It will happen, I can guarantee it,” he says. “In fact, it is already happening. If you look at the number of aircraft on the pre-owned market three years ago it was around 1,600. Today, it’s less than a thousand and it will go lower and lower. The reason for that is you can’t get enough new aircraft.

“So what are the OEMs doing about it? Nothing, apart from put the price up! The price of every helicopter has gone up by 30 per cent in the last couple of years.”

Good news for the OEMs, certainly, but perhaps it’s also a positive for operators tendering for new contracts.

Of course, the world remains an unstable place, with wars raging in Europe and the Middle East – and in both conflicts the stakes are being raised.

So to use that caveat beloved of weather forecasters everywhere, the picture is … changeable.

We hope you enjoyed reading our Business feature. You may find these news stories interesting:

Heli-One and Ex-Change Parts partner on sale of four Super Pumas
Special Missions orders MD 530F for security and military training
Sikorsky increases S-92 inspection intervals