The helicopter industry has been marked with notable ups and downs in 2013, both requested orders in transitioning economies and terminations in the West, such as in North America, the largest helicopter market in the world. The dialogue between industry and customers is therefore becoming increasingly challenging, blurring potential opportunities for OEMs on the short and medium term.
A new Frost & Sullivan Market Insight, “Global Helicopter & Systems Market: Capturing Growth Opportunities across the Rotorcraft Industry”, highlights the progressive decrease of helicopter deliveries across Western Regions, while substantial growth is registered in Asia-Pacific, Central Asia and the Middle-East – as part of these regions’ military modernization program and investments in civilian infrastructure.
“Platform deliveries in North America and Europe account for nearly 47 percent of the total units being procured in 2014 (nearly 2170 units in total) but are expected to lose at least 10 percent by 2022, whereas deliveries among other regions will represent almost 63 percent of the market in 2022 (at least 2375 new platforms to be delivered),” notes Frost & Sullivan Aerospace & Defence Research Analyst Alix Leboulanger. “Negative repercussions will concentrate in the military segment, the largest chunk of the helicopter market. The civilian segments, on the other hand, are expected to remain steady.”
In the context of the existing biggest helicopter fleets, North America and Europe hold the most significant opportunities when it comes to aftermarket support, with a notable CAGR of 2.59 percent in North America between 2014 and 2022. The cumulated market size across North America is expected to account for $58.05 billion, whereas European aftermarket support will reach at least $23.1 billion.
The ongoing platform renewal cycle initiated ten years ago is presently driving several opportunities among different services segments. In the light of shrinking budgets, platform retrofit is being preferred against new platform acquisition across Western military and paramilitary end users. As a result, system integration opportunities during platform upgrades are expected to rise steadily at a CAGR of 2.71 percent in North America and 4.3 percent in Europe. Both regions present an aggregated market size of $9.37 billion for 2014-2022.
On the other hand, helicopter maintenance and upgrades present interesting prospects in the medium term for new systems adoption, with avionics and mission systems. However, the line between platform acquisition and maintenance business models is becoming increasingly blurry in the Western regions, and market players are currently working on new business models options.
Emerging markets comprise significant opportunities among new helicopter procurements, with a forecast market size of $146.84 billion between 2014 and 2022 for military and civil new platform deliveries, and a related market size of $46.33 billion for service support during the same period.
Price sensitivity is one of the most significant challenges being assessed by potential buyers, closely followed by technology transfer issues. Budget constraints and foreign military sales (FMS) also trigger potential new strategies from U.S traditional FMS packages.
“The question now is to look at the current military helicopter market situation and assess how to grasp upcoming opportunities”, adds Leboulanger. “The two main strategies may be branding the offset and indigenization promises or leveraging on FMS and loan packages for swift deployment. Both approaches might preserve leading North American and European rotorcraft manufacturers, but what would the impact be for other OEMs?”
Reinforcing bilateral trade and R&D could be one way to meet offset and foreign investment policies for emerging helicopter OEMs and system integrators. Other approaches may include implementing the theoretical concept of open innovation at the platform system level, or strengthening ties across helicopter logistic and maintenance support through common distribution channels.