PHOENIX, Feb. 26 /PRNewswire-FirstCall/ -- Honeywell announced today that its eighth Turbine-Powered Civil Helicopter Purchase Outlook projects deliveries in excess of 2,600 new civil use helicopters during the five-year period 2006 to 2010, 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 70 percent of all new civil rotorcraft sales during the five-year forecast period.
Some key findings revealed by the annual survey of civil helicopter operators' purchase expectations are:
* Civil helicopter deliveries were up 24 percent in 2005 and are likely
to rise again in 2006, as helicopter OEMs increase production to
satisfy strong demand for new aircraft.
* Civil helicopter sales during the five-year period 2006-2010 are
predicted to be at least 15 percent greater than in the five-year
period 2001-2005.
* Close to 6,000 new civil helicopter sales during the 11-year period
2006-2016 are projected.
"Honeywell Aerospace's survey work has identified engine power, safety/crashworthiness, useful load, aircraft price and direct operating costs as the top five criteria operators consider when selecting new helicopters," said John Todd, Vice President, General Aviation and Helicopters, Honeywell. "The decision to acquire new helicopters is driven primarily by age of current aircraft and an operator's desire for bigger cabins, more range, more power and better technology. Obviously, new model introductions help fuel that demand. OEMs report strong sales activity supporting our optimism about the long range prospects for helicopters in a growing global economy."
The near-term increase in demand is also driven by continuing strong worldwide demand for corporate, EMS, law enforcement and utility helicopters, expanding U.S. and Latin American economies and continued economic strength in Asia.
In North America, law enforcement applications received 42 percent of all mentions this year, exceeding all other use segments. In the 2005 survey, law enforcement trailed EMS as the most frequently mentioned helicopter use segment, after a continuing two-year slide from almost 40 percent in 2003. Law enforcement operators anticipate that expected funds to purchase new helicopters for increased homeland defense and border patrol requirements will begin to materialize.
EMS applications fell to 24 percent of planned new purchases in North America from 31 percent in the 2005 survey. This area is now the second- highest end use category cited by the survey respondents for new helicopters in the region. Although total world interest in purchasing new helicopters for corporate use increased in the 2006 survey, planned corporate purchases in North America fell slightly to 13 percent of the total.
"Honeywell Aerospace continues to expand product offerings for the helicopter industry. Our ability to offer customers avionics systems, turbine engines, and aircraft air and power systems, gives us a wide industry capability as a supplier for both helicopter manufacturers and operators," Todd said.
Purchase Expectations Survey
The eighth worldwide survey of civil helicopter operators' future purchase expectations indicates a strengthening of demand for new aircraft over the next five years. Purchase expectations rose about two points over the solid findings reported in the 2005 survey.
Interest in this year's survey for "all new or derivative aircraft" fell to about 12 percent of all the models mentioned for future purchase. Brand new or significantly enhanced model purchase plans remain down from prior surveys where 40 percent to 50 percent of model mentions usually fell into the "new" classification. This reflects the relative lack of recent new model additions to manufacturer offerings, and the fact that new models of five years ago no longer qualify as all new today. The survey continues to show that there is little trade-up expectation among the world operator base. Over 80 percent of new purchases will be made to replace older aircraft in the same size/capability and price class. Only about 16 percent of operators plan to trade up to more expensive and capable machines.
Buyer interest remains healthy overall and there is no indication that demand is likely to decline 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, between 63 percent and 86 percent of all European purchase expectations have been for twin-engine models. This has been caused by regulations requiring twin-engine aircraft on flights over congested areas and other use limitations. This long-term trend shifted in this year's survey, with single-engine models making a major comeback to 48 percent of expected purchases compared to a five-year average of around 30 percent. Unexpectedly strong demand for the AS350B3 in Europe appears to have been partially responsible for the shift in trend. Some European operators remarked that operating twin-engine helicopters is uneconomic in Europe. They also stated that they plan to switch back to single-engine craft, fly around areas requiring twins and work around the other limitations. It isn't known if this is a short-term aberration or a new secular trend. In North America, where there are no current or pending regulations requiring twin-engine aircraft, over 70 percent of planned purchases are for single- engine aircraft. In Latin America, 65 percent of planned purchases are for single-engine models. Operator preferences in Asia, the Middle East, Africa and Oceania overwhelmingly favor twin-engine machines with an 80-20 ratio in the 2006 survey.
North America To Account For Over 40 percent Of New Turbine Sales
North America continues to have the greatest demand for new helicopters, accounting for 43 percent of expected future purchases. Expectations increased in this year's North American survey compared to last year, with most of the improvement traced to increased purchase plans for law enforcement applications, offsetting reduced expectations for EMS, corporate, offshore oil and television news.
Survey responses indicate that North America will purchase more light single-engine helicopters than any other region. On average, over 70 percent of future new aircraft purchases in this region are expected to be light singles, and no regulatory activity that would likely change this is on the horizon.
Aircraft age, cabin size, range/endurance, engine power, newer technology and more speed 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 Declines Steeply
The survey showed a significant decline in European purchase expectations, slipping from an 18-percent fleet replacement/expansion rate in 2005 to 15 percent in 2006. Declines were concentrated in multi-engine machines compared to last year. Moving 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 appears to be improving. Still, 52 percent of five-year planned European purchases are for twin engine models. Survey responses suggest that about 15 percent of world new turbine-powered helicopter sales will occur in Europe during the forecast period, a reduction of about five points from the 2005 survey. European operators continue to cite regulatory requirements in force regarding the types of equipment that can be flown within populated areas as a significant factor in replacement demand. The sharp falloff in European expectations may be partly due to the lagged negative effect of the new, costly regulations on operators.
Aircraft age, cabin size and comfort, range, speed, new technology, versatility and the need for two engines were most frequently mentioned as reasons for planning a new European helicopter purchase. The corporate use category was most frequently mentioned by European respondents followed by utility, law enforcement and EMS.
Asia, Oceania, Africa and Middle East to Replace or Expand About 20 Percent of Fleet
On the basis of the percentage of fleet to be replaced or expanded, Asia, Oceania, Africa and the Middle East together have maintained consistently high purchase expectations for the last four years. Operators in these regions expect to purchase helicopters equal to 20 percent of their current fleets during the next five years for replacement and fleet expansion. This compares to 15 percent in Europe, 21 percent in North America and 42 percent in Latin America. The survey predicts that over 16 percent of total world new helicopter sales over the next five years will be to customers in Asia, Oceania, Africa and the Middle East.
About 77 percent of future demand in these regions is expected to be for multi-engine craft. Operators cited aircraft age, fleet standardization, cabin size/comfort, hot and high capability, warranties, speed and power as key reasons for replacing current helicopters. In Asia/Oceania, nearly 27 percent of expected purchases will be for corporate applications, followed by EMS at 14 percent and offshore at 13 percent. In Africa/Middle East, corporate applications were most frequently mentioned at over 26 percent; however, unlike Asia/Oceania, the second most frequently cited use category is law enforcement, at 22 percent.
Latin American Purchase Expectations Rise Strongly
Latin American expectations increased very sharply in this year's survey on top of strong improvement recorded in 2005. As a result, Latin America has vaulted from the lowest fleet replacement and expansion percentage of all world regions over recent years to the top of all regions again in 2006. Given the strong improvement in purchase expectations as a percentage of current fleet and despite the relatively smaller fleet in this geographic zone, Latin America's total share of projected world new helicopter demand is now second only to the United States.
This region is expected to account for nearly 25 percent of expected five-year world demand for new helicopters, up nearly 11 percentage points from the 2005 survey projection. Approximately 65 percent of expected new aircraft demand in the region is for single-engine helicopters. Aircraft age is the dominant reason for expecting to replace current aircraft with new ones, accounting for 76 percent of comments. The next most frequently mentioned reason was speed, accounting for 49 percent of responses. Cabin size, support, operating costs, range and performance were also significant factors in the replacement decision.
Latin American operators cited improved economic conditions, especially in Brazil, Mexico and Venezuela. Both economic policies and oil revenues were mentioned as contributing to the improved outlook.
Civil Turbine Helicopter Survey Results
The 2006 Turbine Powered Civil Helicopter Outlook is based on Honeywell's fourth quarter 2005 customer expectations survey, an assessment of consensus forecasts, review of factory delivery rates and analysis of future new helicopter introductions. The 2006 outlook excludes military demand for civil helicopters resulting in a "pure" civil number.
This year's Purchase Expectations Survey queried 995 chief pilots and flight department managers of companies operating nearly 2,800 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 2006 outlook presents a snapshot of the helicopter business at a point in time and does not reflect unforeseen events such as an unexpected economic contraction, 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, naming this class of aircraft 55 percent of the time, which is the same as a year ago. Popular helicopters within this class include the Bell 206 series and 407, Agusta A119, Eurocopter EC120, AS350/EC130 and MD500 and MD600 series. Regionally, the light single class is highly popular in North America, cited in over 70 percent of new purchase expectations. Latin American operators also reported a strong preference for this class of equipment with 65 percent of regional demand. In the European market, regulations requiring multi-engine aircraft limit the appeal of single-engine models. The historical five-year average share of planned single-engine purchases in this region has been 30 percent. In the 2006 survey, this percentage jumped unexpectedly to 48 percent, driven by strong expected demand for the AS350B3 ASTAR. Demand for single-engine models in Africa, the Middle East, Asia and Oceania is very low.
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, Agusta 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 18 percent compared to 16 percent recorded last year.
The largest regional demand for light twins will be in Asia/Oceania, with a 37 percent projected share of total purchases. Demand for light twins remains small in North America (9 percent now versus 6 percent a year ago). Most of the twin-engine interest in North America is for the next largest intermediate class of aircraft, reflecting a desire for more payload, speed 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 25 percent. This is the same result as last year and reflects the very strong appeal this segment holds based on the balance of payload, cabin space, power, range and speed. 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 Agusta/Bell AB139.
Heavy Lift Helicopters: Single or multi-engine heavy lift helicopters continue to exhibit relatively low purchase expectation scores relative to the other classes of aircraft, with share of mentions falling to 1.6 percent in this year's survey from 4 percent in 2005. As discussed in 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 of aircraft often comes from governmental or "parapublic" sources that this survey may not reach. Geographically, the bulk of projected demand for heavy helicopters is concentrated in Asia, with a 13 percent share of worldwide demand, and Europe with nearly 2 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 81 percent of the time. Operators expect to trade up to larger helicopters 16 percent of the time, and trade down to smaller aircraft 3 percent of the time. The strong propensity to trade within segments (rather than trading up) supports longer ownership intervals for aircraft purchased new. The average age at which current aircraft are replaced ranges between 16 and 21 years based on survey reports. North America and Europe tend to be on the lower end of the range while Latin America, Asia, Africa and the Middle East tend to be at the high end. Notably, there are significant numbers of operators in every region who plan to keep helicopters purchased new for 25 years or longer.
Demand by Planned 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 2006 survey. The corporate segment, the largest use category, totaled 31 percent of the projected new turbine helicopter sales. Substantial demand exists for new corporate use helicopters in all world regions. Over half of all demand in Latin America is for corporate use, followed by Europe at 43 percent, Asia/Oceania at 27 percent, Africa/Middle East at 26 percent and North America at 13 percent.
The second most frequently mentioned use category for new aircraft purchases was law enforcement applications, which rose to 25 percent of total demand from 13 percent in the 2005 survey. Almost all demand for law enforcement helicopters is in North America, Latin America and Africa/Middle East, accounting for 88 percent of world demand.
EMS and Utility: Expectations for the purchase of new helicopters for EMS usage fell from 22 percent of total demand last year to 14 percent in 2006. The largest drop in demand occurred in Europe, where expectations fell from 36 percent in 2005 to less than 8 percent in 2006.
Expected demand for utility helicopters fell from 15 percent of the total in 2005 to 11 percent in 2006. The highest expected demand for utility helicopters was measured in Latin America with about 25 percent of expected total future purchases in the region. European operators' interest in acquiring new utility helicopters grew from 10 percent of planned purchases in 2005 to 19 percent in 2006. There does not appear to be any market for utility helicopters in the Africa/Middle-East region.
Offshore Oil Support: The offshore oil production and exploration segment's share of new aircraft was 8 percent compared to the 2005 survey level of 10 percent. Regional interest in new helicopters for this industry continues to be highest in Africa/Middle-East at 17 percent of that region's demand. Additionally, Latin America was measured at 14 percent followed by Asia/Oceania at 13 percent. Demand in Europe and North America is negligible.
Operators in other segments such as television news 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 less than 3 percent of the new helicopter purchases anticipated in the 2006 to 2010 period.
Turbine Helicopter Utilization Rates Fall Sharply
Overall, respondents reported using their turbine-powered helicopters between 400 and 500 hours during the past 12 months. This varies by region, with the highest utilization rates in Africa and the Middle East and the lowest in Europe. Compared to the 2005 survey, reported usage rates fell sharply in North America (-23 percent), Latin America (-19 percent), Africa/Middle-East (-19 percent) and Asia/Oceania (-12 percent). The decline in usage in Europe was only 7 percent. Sharply higher fuel costs that were imposed during 2005 may be a major factor in the utilization declines.
Survey data clearly indicates that, on a global basis, the vast majority of operators plan to use their aircraft at least as much as, if not more, than they did during the past 12 months. Between 95 percent and 98 percent of respondents in North America and Europe expect their utilization to be the same or greater than the previous 12-month period. Looking ahead, nearly all Latin America operators polled indicated that utilization would remain steady or rise this year. Estimates for aircraft utilization growth in Africa and the Middle East are in line with Latin America. A very high percentage of Asia/Oceania operators plan to operate their aircraft as many hours as they did in 2005 or increase their utilization.
Based on survey responses and the fleet distribution in each region, Honeywell projects flight hours will remain at relatively healthy levels assuming steady fuel costs, with some modest growth, possibly at a slowing rate 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.
Honeywell International is a $28 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; and specialty materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, Chicago and Pacific Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor's 500 Index. For additional information, please visit http://www.honeywell.com/
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