IBA data: Helicopter leasing rates exceed 10%, with more growth projected

Written by Ben Forrest and retrieved from Vertical Magazine | May 17, 2024

Leased commercial helicopters have surpassed 10 percent of the global fleet, thanks to rising overall demand for rotorcraft and increased preference for financing over outright cash purchases, according to new data from the IBA Intelligence aviation consultancy.

In a market update for industry observers on May 15, 2024, IBA reported 300 lease transactions last year, down slightly from 2022 but outpacing previous years.

“We are also witnessing a surge in demand in helicopter markets,” said Rami Abel Aziz, manager of IBA’s helicopters division.

“The growth is especially visible in HEMS [helicopter emergency medical services], firefighting, offshore and the wind sector, and these sectors continue to experience [renewed] interest and investment.”

Analysts project leasing activity will be comparable in 2024, with minor increases for the ultra-light, light and medium segments. IBA expects deliveries to remain stable at least until year-end, with projected deliveries “around the 500-unit mark,” said Aziz.

“Light and medium helicopters remain essential to leasing operations,” he said. “These helicopters continue to offer unparalleled flexibility and meet diverse operational needs and efficiency. Their adaptability in various roles make them a cornerstone in the industry.”

He also noted a “significant shift” toward operating helicopters in multi-role configuration, using the same aircraft for search-and-rescue (SAR), EMS and utility work.

North America and Europe are the largest markets for leased helicopters, with a focus on offshore oil-and-gas, EMS and SAR; but available financing and demand for EMS helicopters in Asia is another key growth driver, per IBA.

The ratio of leased helicopters, in comparison to owned helicopters, is highest in the heavy rotorcraft segment (35 percent), followed by super-medium (15 percent), medium (13 percent), light (nine percent) and ultra-light (seven percent).

TOTAL DELIVERIES

In terms of total ultralight deliveries since 2019, the Airbus H125 has the highest market share, followed by the Bell 505 Jet Ranger X and the Robinson R66, per IBA.

The light helicopter category (typically weighing between 2.5 tonnes and 4 tonnes) is dominated by the Airbus H145 and H130, Bell 407GXi and 429 Long Ranger, and the Leonardo 119Kx, with combined market share of over 90 percent, IBA reported.

Leonardo is far ahead in the medium (four to seven tonnes) category with the AW139 and AW169, followed by three variants of the Bell 412, as well as the Airbus H160.

In the super-medium category (seven to nine tonnes), the Leonardo AW189 leads in deliveries over the last five years, with the Airbus H175 in second place. Bell’s entry with the 525 Relentless is “eagerly awaited,” said Aziz, adding the platform is expected to “diversify the market, offering a new option and enhancing competition.”

He said there is also an expectation new super-medium helicopters will replace existing heavy-category helicopters, in part because they offer, “similar range at a lower cost.”

The heavy helicopter segment is facing significant supply chain constraints and escalating costs, largely due to high demand and a shortage of essential components, said Aziz.

“These factors are contributing to increased operational costs and delays in the helicopter deliveries, which further complicate the market dynamics,” he added

The Sikorsky S-92A and Airbus H225 are the two platforms working in that segment, and while analysts expect renewed interest with recovering oil production, they say a return to pre-2015 levels is unlikely.

“Overall, the potential for renewed interest in this segment underscored the critical role of having more competitors in offshore and specialized operations,” said Aziz. “The ongoing challenges [and] market response to them will be crucial in shaping the future of the heavy market.”

VALUE OUTLOOK

Helicopter values appear to have stabilized, with more stability expected through 2025 thanks in part to sustained demand and constrained capacity, said Aziz.

He acknowledged high inflation and interest rates are also affecting helicopter values, resulting in higher costs and debt, while supply chain issues remain a concern.

Heavy helicopter (S-92A and H225) market values still trail base values, IBA said, but the firm continues to forecast a “closing of the gap.”

“It is worth noting that the market dynamics … are complex, including factors such as demand, supply, technology advancement and economic conditions,” said Aziz.

“These projections should be considered alongside the broader market trends and specific factors … it is important to recognize the dynamic nature of the helicopter market and the need for ongoing analysis.”