Feedback for Activity 5 (factors affecting routes)
- Helicopters are not pressurised and as such the airframe does not have a life limit imposed. The helicopter as a finance asset may last longer (in theory) than the fixed wing. This longevity can make the asset attractive as a revenue stream;
- Large helicopters used for offshore transportation do not have a ready secondary market if the aircraft are no longer required by the oil and gas market. This tends to link the value of the helicopter to the buoyancy of the oil and gas market. When oil price is low the oil and gas majors do much less exploration for new reserves which in turn drives down helicopter values. The S92A has a sale price in the order of $28m USD and 10-year-old S92A’s were only selling for a few million dollars for parts. This aircraft type without a secondary market lost almost its entire value over a short period.
- In relative terms a helicopter is much more expensive to reconfigure to a new customer or a new role than fixed wing. When considering leasing helicopters this additional cost has to be factored into the life of the aircraft as an investment.
- From an engineering and design perspective the helicopter is more complex than fixed wing and the risk of the helicopter being grounded pending the outcome from an accident investigation is much higher. The operator is still required to make lease payments but cannot use the aircraft to generate revenue. Ultimately this makes the risk of a default on the lease contract much higher. This occurred following the accident to the AH225 in Norway where the aircraft was grounded for an extended period of time. All the large helicopter companies leasing this type ended up going through a bankruptcy protection process whereby the aircraft were returned to the owners. This issue in turn made one of the lease companies go bankrupt and caused a number of mergers. The acquisition of a helicopter as a lease asset is not without significant risks.
- Helicopter operators have made significant revenues from trading their used helicopters in the second-hand market and as such have a preference to own the asset themselves. This preference has inhibited the growth of the helicopter lease market when compared to the growth of the fixed wing market.