"This special report has evolved into a significant reference source for helicopter operators of all types."
Welcome to the 2007 edition of the Annual Reports edition of our magazine. During the past few years, this special report has evolved into a significant reference source for helicopter operators of all types. Just a quick glance through the Executive Outlook section that follows below will let you see that it is not your imagination — our market is poised for a very good year, with significant opportunities for growth in a number of areas.
The Company Profiles section, with a mix of advertising and vendor-supplied company reports, provides a forum where helicopter users can learn a great deal about the key suppliers in this market. New product launches, expansion plans, new personnel — these and all kinds of important information can be found as you read through the following pages.
We expect that many of you will use these reports as the basis to begin your search to find out more about a particular product or company. Consider pursuing that search on our Web site, rotorandwing.com, where you will find this report in full and in a format that is completely searchable by any keyword or topic. As you move about rotorandwing.com, you will see that we have already made a major overhaul of this Web site. We will also be continually upgrading and adding features throughout 2007.
I suggest you begin at rotorandwing.com because we have built that site on our exclusive TID-VIS technology, Targeted Interactive Database and Vendor Information System. In the simplest terms, TID-VIS links vendors to the topics and markets they serve, and then automatically delivers pertinent supplier information, along with salient editorial from the archives of Rotor & Wing, every time a reader searches our site for a particular topic. Not a bad system when you are looking for new suppliers!
The TID-VIS framework is already in place — the full supplier data is being entered and linked, even as you read these words. Stay tuned as we roll this system out extensively in the coming months.
With the challenges of high demand and scarce critical resources, we asked industry leaders:
"What important trends do you see on the horizon that might significantly impact the helicopter market in 2007?"
"Rallying To Meet Worldwide Demand"
A series of natural disasters, including the Asian tsunami, Katrina and the earthquake in Pakistan, highlighted the key role helicopters play in disaster-relief efforts. These events also emphasized the shortcomings experienced by several countries and world organizations in their handling of such disasters.
These shortcomings and other factors have led to a surge in demand for helicopters throughout the world. In 2007, the industry will rally to address these deficiencies. The arrival of more affordable enhanced-vision systems, electronic flight bags, and newer generations of on-board GPS, among others, will contribute to enhancements in situational awareness that are key to supporting the increasingly vital role played by helicopters.
Jean-Pierre Mortreux, President and CEO
"New Products Are Stimulating Demand"
The trends in the helicopter market are very much the same as in the general and business aviation markets, as well as the overall aerospace industry. New products are stimulating demand. Orders continue to be strong, buoyed by non-U.S. markets. Customers expect the latest technology, increased reliability, reduced cost of ownership, and utmost safety.
The industry is feeling the strain from stretched resources. Manufacturers are increasingly focused on systems rather than individual components. Security issues and fuel prices remain wild cards. Unison has strategic sourcing agreements in place to help manage raw materials. Our footprint includes facilities in Saltillo, Mexico and Rayong, Thailand that provide low-cost capacity. Our design expertise and Tier 1 capabilities enable us to offer system solutions. And as a GE subsidiary, we have financial stability and the resources to invest in the future.
Christy Alvord, President
Aerospace Filtration Systems:
"Enhance Performance, Increase Safety, Reduce Operating Costs"
Advanced-technology products defined our industry in 2006, as they will in 2007. New opportunities for companies ready to respond with solutions that benefit operators will emerge. For example, in response to customer demands for life-cycle cost reduction, AFS continues to introduce a wide range of new products. Technically sound inlet barrier filter designs have been certified for the AgustaWestland A119, Bell 205/UH-1H, and Eurocopter AS350. Filters for the Bell 212/412, MD Helicopters MD900, Eurocopter EC130, and additional AS350 models are well on their way for 2007 certification. Fully integrated barrier filters for the Bell 417/Armed Reconnaissance Helicopter and 429 light twin progressed into flight testing.
The demand for products that enhance performance, increase safety, and reduce operating costs will continue to fuel growth and product offerings. In particular, increasing use of high-technology solutions by first responders and law enforcement signals a strong year ahead for the rotorcraft industry.
Michael Scimone, President
Aerospace Filtration Systems
"Investment In Development of New Aircraft Will Increase"
2006 proved to be a very good year for the U.S. turbine helicopter commercial market, and we expect the trend to continue for 2007, with the largest growth in the air medical and offshore segments.
The air medical market is sustaining its rapid growth, with the EC135 and EC145 becoming de facto standards. The offshore sector continues to boom. High oil prices are driving deep-water exploration and creating even more demand for helicopters, as was predicted. Governments at all levels continue to put more emphasis on homeland defense, both in response to potential threats to homeland security and natural disasters. Overall, the future remains bright and production and investment in development of new aircraft will significantly increase.
Marc Paganini, President and CEO
FFC — Floats & Fuel Cells:
"Positioned To Meet The Most Stringent Customer Deadlines"
We feel the overall outlook for the helicopter market in 2007 and beyond is extremely promising. Fuel prices are a major factor in two areas: one, in a more positive manner, as they drive the need for more domestic oil and gas production and exploration (of which helicopters play a major supporting role) and two, in a less than positive light, they result in higher operating costs. Excluding the fuel factor, the other major drivers include the increased globalization of helicopter use and a healthy economy.
We have repaired all types of fuel tanks (lightweight bladder, crashworthy, and self-sealing) and floats for more than 30 years. If the economy remains healthy, 2007 can really be a special year for not only FFC, but also everyone in the helicopter industry.
Fred Tavoleti, President and COO
FFC — Floats & Fuel Cells
"Anticipating Another Year Of Successfully Serving The Industry "
From our vantage point as a full-service helicopter maintenance and completion center, Keystone Helicopter is uniquely positioned to see the range of trends and changes that are shaping our industry as we enter 2007.
Regulations are one notable area of change. We see the FAA continuing to move into an oversight-only role by developing more programs such as Organization Delegation Authorization. Internationally, we expect more harmonization with EASA. Skilled and experienced aerospace engineers and engineering resources will continue to be scarce, and we anticipate an ongoing decline in the availability of experienced aviation maintenance technicians. There will undoubtedly be more in-house training and "grow your own" programs to ensure that supply will continue to meet demand. New technology, safety and security are driving operators to make upgrades in equipment. Many are requiring installation of cockpit video cameras, flight data and cockpit voice recorders, as well as enhanced vision systems. Sophisticated, integrated entertainment systems that include aircraft audiovisual briefings, and cockpit, forward flight and security cameras are also growing in popularity.
David Ford, President and COO
"Predicting Another Year Of Growth, Cooperation, Performance"
Great products that are well supported are an important first step — but only a first step — toward success in a very challenging business. At MD Helicopters, we are fortunate to have great products that are well respected within the industry and rapidly improving customer support. Actually, to say that our products are well respected is an understatement. There exists a resilient passion for the MD product line that remains critical to its enduring success. Likewise, our collective commitment to the industry crosses competitive lines and remains strong. This commitment fuels our business during good times and bad, and it inspires us to achieve great things.
Chuck Vehlow, President
"Timely Delivery A Significant Impact"
Timely delivery of products from manufacturers of aircraft, avionics and mission-related equipment is a trend that will significantly impact the market in 2007 and beyond. The ability of customer-service facilities, completion and customizing centers to maintain delivery schedules to support customers and keep helicopters flying depends significantly on the effectiveness of the supply chain.
Another trend is the rapidly expanding role of technology in the cockpit. Nearly every aviation-related publication this past year has addressed this issue. The net result is that customers are increasingly aware of available options and are pressing completion and customizing centers to provide additional options and to integrate more equipment.
Ed Pears, President
"Communication Was King In The Rotorcraft Industry This Year"
The much anticipated homeland security funding came to fruition, and purchases of communications equipment have skyrocketed. This is true both domestically and internationally, where anti-terrorism programs are growing. Business levels should normalize in 2007 as public service operators define their roles and responsibilities and how they can best work together. Communications upgrades will continue, but are likely to become more focused. Another change: We’re seeing the end of the "us vs. them" mentality as technology providers work together to integrate systems for the common good of the customer. For many operators, today’s integrated cockpit must feature tactical radio products, yet these customers don’t want to learn and manage disparate systems. Wulfsberg tactical radios are unique because they work independently or can be integrated into specific command and control platforms, workstations and radio management units.
Scott Hovelsrud, Product Manager
Tactical Radio Products
"Sophisticated Helicopter Simulators Are In High Demand"
Helicopter training has traditionally used aircraft over simulators. However, this has changed due in part to insurance rate incentives for better trained pilots, general safety concerns, and recent global disasters where helicopters proved to be of tremendous use. As well, both EMS and law enforcement agencies have shown an increased interest in reducing accident rates by training pilots to respond to emergency situations better. Another trend that is evolving is the use of portable training devices, which allows for training in multiple locations with a transportable unit. In addition, helicopter manufacturers are now incorporating higher-fidelity avionics displays and monitoring systems that replace the traditional instrumentation packages. This is why the helicopter simulator market is on an upswing and we anticipate this to continue for many years to come.
John Frasca, Vice President
"2007 Will Be A Banner Year For The Helicopter Industry"
The linchpin will be the industry’s renewed focus on safety and accident reduction, especially the human factors that affect helicopter operation. In recent years, the helicopter has come into its own as a mature and viable business tool. This is largely due to our steadily improving safety record. For a long time, the attention was on improving rotorcraft mechanical performance, and the industry made enormous strides as a result. However, as mechanical failures become increasingly rare, the spotlight has turned to resource management, and regular effective pilot and crew training that acknowledges the unique, mission-specific safety issues that challenge helicopter operations.
Greater emphasis on the human component will continue to pay dividends and remain a critical factor in sustaining the growth and health of this great industry.
George Ferito, Director
Rotorcraft Business Development
"Offshore, EMS, Military Will Fuel Growth"
Following a strong year of growth in 2006, we believe that the turbine-powered helicopter market will continue to grow in 2007. We see the specific growth segments for our companies as well as the industry, in the offshore support, EMS, and military segments. Continued focus on natural-resource exploration, increased expansion of the urban population in the United States, and an expanding world military market will continue to grow aircraft utilization rates. This will increase the need for the products and services we provide. Our business model of Inventory Supported Maintenance Repair and Overhaul (ISMRO) requires us to constantly focus on our customers’ needs. In response to those needs, in 2007 we will make substantial investments in inventory, capabilities expansion and facility improvements.
David B. Mast, President
"Rotorcraft Markets Will Continue Strong Growth"
With our newly named center for innovation and manufacturing, HeliworX, Kaman Helicopters is meeting an urgent supply-chain need as a high-capability supplier that can manage a far wider array of design, development and manufacturing tasks. Our workload is building as prime manufacturers seek reliable, on-time support for flight-critical helicopter components and assemblies. We also see increasing demand for unmanned aerial systems (UAS), and Kaman’s BURRO+ logistics UAS demonstrator is attracting attention from lawmakers and military customers alike. Kaman’s Super Seasprite and K-MAX helicopters are serving military and commercial operators worldwide, and Seasprite upgrades are under way to bring a higher degree of commonality, reliability and far greater capability to all fleet operators. As always, companies such as Kaman that innovate, adapt, and deliver will continue to lead the future of vertical flight.
Sal Bordonaro, President
"On The Forefront Of Innovating New Technologies"
The rapidly growing acceptance of new technology is changing the helicopter industry and fueling record growth for companies like Sky Connect.
Technology is raising industry expectations and these higher expectations are, in turn, driving the development of new and improved technology. Offshore oil and EMS operators are discovering that satellite-based tracking, voice, two-way text messaging, and mapping capabilities enhance flight safety and boost peace of mind. Because a repeater network may disappear in a hurricane or geographic obstacles may preclude remote dispatching, the universally available satellite communications provided by Sky Connect deliver unparalleled world-class reliability. Technology is making helicopter operations easier, safer and more effective than ever before.
Wiley Loughran, Senior Vice President
Sales & Marketing
"One Word: Stability"
Thanks to the steady demand for helicopters for air medical, offshore, corporate, charter, sightseeing, and utility applications, prices for new and used helicopters have stabilized and are expected to remain so for the foreseeable future. Of course, if you’re buying a helicopter, all stability means is that you know what you’ll be paying a few months down the road. It doesn’t change the fact that you need capital to make the purchase. Such money can be hard to raise from traditional lenders, who just don’t "get" the helicopter market. But Center Capital Corp. does and that’s why we expect to be busier than ever in 2007, helping our customers get the new and used aircraft they need on payment schedules that work with their businesses.
Greg Renna, Senior Vice President and GM
General Aviation Div.
Center Capital Corp.
Pratt & Whitney Canada:
"Keeping Pace With The Accelerated Momentum"
P&WC has increased its share in the helicopter market during the past several years, securing a solid leadership position. The PW200 family powers all new light twin-engine helicopters, and our new-generation PW210 series for large singles, intermediates and medium twins is on track to power its first application, the Sikorsky S-76D. The PT6 also continues to set industry standards with the latest technologies. Keeping pace with this growth is our helicopter engine support, recently ranked No. 1 for the seventh year in a row.
In 2007, we are looking forward to a strong global helicopter market, with new product introductions adding to the excitement. Our customers hold a solid civil helicopter order book, the Asian market continues to evolve rapidly, and demand is on the rise in the military rotorcraft market.
Keyvan Fard, Vice President
Regional Airline and Turboshaft Engines
Pratt & Whitney Canada
"Expect Expanded Use Of Rotorcraft"
Within the electrical power distribution sector, the unique capabilities of the helicopter as an effective tool for the maintenance of existing lines, and for construction of new lines, are being realized. During the next few years, we will see expanded use of rotorcraft in this market. Within developed countries, the power grid is aging and needs routine maintenance more often. Helicopters used here are not only force multipliers, but also provide access to areas no longer easily accessible by conventional ground equipment, and the utility companies are waking up to that fact. As undeveloped countries build their networks, helicopters will play a major role. Survey, construction, supply and personnel transport are all tasks accomplished efficiently using the helicopter. Operators that pursue these opportunities are finding it much easier to secure the work than they have experienced in previous years.
David George, Director of Sales
"Another Upward Surge"
With stabilizing petroleum prices, I expect that overall market growth will level somewhat, but with EMS operators continuing to show strong growth. Many of our customers experienced the problem of not finding a helicopter to buy when they needed one — helicopters in essence became commodities. I expect a lot of the activity in 2007 will be in filling these residual requirements. Also, there are multiple new helicopter models still in development. It looks like U.S. interest rates are going to remain relatively low, and that the global economy will be fairly robust for the next 12 months. So, I expect another upward surge in the helicopter market as these new aircraft achieve certification and start to enter the market place between the end of 2007 and throughout 2008.
Keith Steiner, President
"NVGs Create Business Opportunities"
The past few years have seen enormous growth in the application of night-vision goggles (NVGs) in civil rotorcraft. This has created multiple opportunities for those of us who have supported this technology as it matured in military service. In addition, we believe that it has been a healthy shot in the arm for rotorcraft in general. The NVG phenomenon has created business opportunities in training, crew station modifications, equipment sales, and service that did not exist four years ago.
For more than 20 years, Hoffman Engineering has been an important participant in the integration of NVGs into aircraft crew stations. Additionally, our company offers a wide variety of instruments to assist in assuring continued safe operations through use of inspection scopes and instruments capable of accurately reading starlight values.
Andy Sadlon, President
"More Performance Options"
Our strategy is simple: to provide the airframe manufacturers with more performance options backed by a strong global network of product support. Wherever our customers fly, they have noticed one thing: helicopter transportation is in greater demand than it has ever been. In many ways, this is the best of times to be a helicopter operator. At Turbomeca, we understand that this strong upturn in demand for helicopter services does not come without its share of operational challenges for our customers. Turbomeca is fully committed to meet and conquer the challenges we are facing today in order to provide our customers the best support. As our customers’ partner in providing safe, reliable, and cost-efficient transportation, we are continually improving our processes to provide them with the highest standard of customer support. In 2007, Turbomeca’s engine repair capacity in North America will be twice as big as in 2003! At Turbomeca, we consider it a priority to put our resources closer to our customers.
Emeric d’Arcimoles, Chairman and CEO
"Helping Fleets Operate Efficiently And At Maximum Capacity"
Aviall became a wholly-owned subsidiary of Boeing’s Commercial Aviation Services business unit in September 2006. One key benefit of the acquisition is an even greater capacity to serve our helicopter customers worldwide.
Also in 2006, Aviall expanded its customer service operations in Amsterdam and New Jersey and introduced an innovative cooperative stockroom in Keystone Helicopter’s Pennsylvania headquarters. In early 2007, we will complete a major expansion, doubling the capacity of Aviall’s headquarters in Dallas. Customers operating helicopters benefit from Aviall’s efficient supply capabilities and broad product offering, including genuine Rolls-Royce Model 250 engine parts. This helicopter program, known as LIFT, allows them to focus their working capital and time on staffing, training, fuel costs, quality, and safety. As the U.S. economy continues to grow and demand for helicopter services increases with it, Aviall pledges to continually enhance its support.
Dan Komnenovich, President and COO