Xanax anyone?
During the winter of 200, one of my co-pilots keyed the mic and said
“It’s a shame we missed Vietnam; you understand what I mean, right?”
I knew exactly what he was thinking and I’m sure dozens of other helicopter pilots can immediately relate. He wasn’t talking about warfare but instead about being part of a moment in history where helicopters were coming of age and it was sun’s up, collective up and hurry up. In 1965 the helicopter industry was an 18 year old leaving school swamped with exciting opportunities. No road? Ocean in the way? Mountain blocking your path? No problem, find a helicopter and get out there to fall those trees, mine that gold and drill that oil.
As the 2019 summer meanders along, a glassy eyed 55 year old industry rolls itself out of bed, downs a Xanax and faces a sober reality that it could be soon redundant if the skies of Amazonian drones and UBER’s flying taxi have their way. Making a living in Helicopter Aviation has always been a grind and it feels like we’ve been so busy just surviving, that not a lot of thought has gone into what happens when the resources dry up.
One thing for certain is that the utility sector has copped an inoperable gut wound from flying Oil and Gas (OEG) shrapnel with the recent carnage at the top of the rankings leaving banks in no mood to play. After decades of money diving head first into the leasing orgy, helicopters are relegated to the lending sin bin and it is making life hard for everyone. I’m not reading Jeremy’s blogs and hearing about mass redundancies at leasing companies but I am hearing from flight crew, engineers and owners who tell me that it’s no longer fun and hard to breathe with the fat kid sitting on their chest.
So who’s to blame if anyone is to blame?
You have to take a hard look at the leasing model which (correct me if I’m wrong) was to gear up some debt, deposit on slots for the “in vogue” aircraft mandated by the unions and OEG market; control all the options while the OEM celebrates a sale to drive enthusiasm and the bubble. The helicopter operators send their procurement teams into the market seeking suitable aircraft for contract and scrap it out as the OEG provider gets a world class deal. Leasing company wins regardless and rates drop to a new precedent for “compelling” which drives cost cutting on the front lines of pilot and engineer wages and support industries.
Once the lease company inks the deal, those leases are bundled into tranches and sold to traditional financial institutions. Aviation’s is like porn to bored bankers and enthusiastic investors who believe the phenomenal returns evidenced by high value assets underpinned by a blue chip leases. Champagne lunches for everyone until the mood for petroleum products wanes and countries like New Zealand shut down the energy industry by slapping a new cap on drilling for oil and gas in our waters to combat climate change.
As everything goes quiet the collective hits the floor - the leasing company deploys the bankruptcy chute while the operator and banks blow the floats and hope to remain upright while they think of what to do next?
What to do next:
Typically companies and individuals evolve through VFR (the bush) operations where they find a way into anything with blades and eventually evolve into bigger machinery while struggling through one to ten years of poverty and difficult banking relationships. Somewhere along the path everyone learns that the reliable income is around supporting the harvest and not doing the planting. Performance is always great at sea level and those nice IFR twin engine helicopters come with OEM support and lifestyle schedules that help to attend PTA meetings, plan camping trips and trend nicely towards retirement or a buy-out. More white collars, epaulets and nothing without two engines - thank you very much.
Contrary to history that is no longer a defined formula for success. Humans are energetically working to bail out of reliance on Oil and that retreat has compounded the implosion of the OEG sector causing lessors to dump IFR aircraft into the VFR Utility Sector. In corporate speak this is called ‘looking for sustainability’ which is code for somewhere to use our helicopters that will pay us or at least the insurance. We're hearing about S92, EC175, AW139 and EC225’s allegedly leased at compelling rates, re-purposed for UN operations or fire-fighting and delivered to 3rd world countries [imagine insuring that… ]
The outcome of this from a sales perspective is witnessing a motivator for new models in the VFR sector being something other than legacy aircraft deemed surplus to Military or OEG being re-purposed into bush operations [i.e: UH60] It has been proven that if you make a EC225 lease rate to good to refuse, then change is inevitable and we must consider fleet expansion, up-skilling or retrain as drone pilots.
A great example of this re-purposing of modern formerly 'IFR' aircraft is the recently launched FIRE CAT AS332L1 from Austrian Helicopters and Cold Steam Helicopters in Canada. Designed to add weight to the fight against global wildfires, this 10,000 lb lifter is evidence of top pressure and a signal that people like myself and companies like Volation have a commodity called ‘real world experience’ and ideas to help leasing companies and our industry evolve to the next level.
Volation is re-purposing helicopters into new sectors and finding ideas to make them relevant again and we are here to help. Standing by…