The top five OEMs—Airbus Helicopters, Bell, Leonardo Helicopters, Russian Helicopters and Sikorsky—are facing significant headwinds and anemic growth as a result of a major downturn in the global energy sector, which traditionally accounts for more than 40 percent of annual global demand.
The report states that civil helicopter deliveries and billings plummeted by 16 percent and 32.5 percent, respectively, in the first half of 2016 compared to the previous year. Industry OEMs are dealing with pricing pressures thanks to an oversupply-driven market with competition from used helicopter inventory. Most key civil helicopter OEMs reported a drop in revenues and profitability in the first half of 2016, according to the report.
Not surprisingly, uncertainly is a prevailing theme in the industry, a microcosm of the economic and political instabilities being experienced across the globe. The report cites the growing threat of terrorism and the economic challenges of Brexit as factors exacerbating this issue. The surprise upset of last year’s US Presidential election, while not specifically cited by the report, is no doubt another confounding variable.
On the upside, the long-term view of the market remains positive, with the expectation that the use of civil helicopters will continue to expand across user segments. Advances in civil helicopter technology are another source of optimism, specifically the development and commercialization of tilt-rotorcrafts and compound helicopter designs.
According to the report, China will lead the emerging markets with the opening of its low-altitude airspace, offering a new avenue for demand in the medium-term.
In response to near-term uncertainties, most key industry OEMs are opting to focus on the military helicopter market, which is stabilizing as defense spending is poised to grow over the near- to medium-term. In order to offset the demand slump in the oil & gas sector, OEMs are also emphasizing other segments in the civil market, including corporate/VIP transport and emergency medical services.
Other insights from the report include:
- Bell has gone back to the drawing board, conceptualizing and scouting new designs and technologies for the medium term
- Sikorsky is planning to pursue international markets aggressively with the S-92 platform, specifically targeting the VIP transportation segment
- Airbus Helicopters is steadily making inroads in China and other APAC civil helicopter markets
- OEMs are experimenting with hybrid propulsion systems for civil aircraft applications
- Regulatory streamlining is required in North America and Europe amidst the growing safety threat from drones
For more information, download the full report from the Reportbuyer website.