How Hot is the Used Helicopter Sales Market?

Responding to market reports on used helicopter sales in 2019, YTD, industry professionals Mark Clancy and Michael Roberts discuss their perspectives with Matt Harris...

Matt Harris  |  09th September 2019
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    Matt Harris
    Matt Harris

    Matt Harris is Commissioning Editor for AvBuyer. He is an experienced General and Business Aviation...

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    VIP Helicopter on Snowy Ramp

    Recent market reports indicate the VIP used helicopter marketplace is holding up well so far in 2019. AvBuyer’s Matt Harris spoke with Mark Clancy, HelicopterBuyer and Michael Roberts, JETVEND to gain their insights…
    The used aircraft marketplace today paints a complex picture, and the market for pre-owned turbine helicopters is no different. According to data released by JETNET, turbine helicopter sales decreased 13.3% year-over-year (YoY) during the first half (H1) of 2019.
    At the same time, turbine helicopters took an average 31 days less to sell than they did in H1 2018, and the fleet percentage for sale dropped from 5.8% in 2018 to 5.3% in 2019.
    Additional information published in Aero Asset’s recent report covering pre-owned helicopter market trends says that as many as 63% of sales in Q2 2019 were configured for VIP operations. So, while transactions appear to be down for the year generally, it seems that VIP-configured helicopters are holding up well within the current marketplace.
    But why is this?
    “Demand for VIP helicopters has increased during the last two years, and it comes from private buyers purchasing light single-engine turbines through to high-net-worth individuals seeking to purchase twin-engine VIP configured medium helicopters,” explains Mark Clancy, president and CEO, HelicopterBuyer.
    Clancy, with 32 years’ experience in the aviation business and 20 years in helicopter sales, started out as an aerospace engineer, overhauling Garrett TFE731 turbofan engines and selling business jet and engine MRO services before offering Lycoming T53 and Rolls-Royce M250 helicopter engine MRO sales. Eventually, in 2000, he moved into the helicopter trading business, and established HelicopterBuyer.
    “The prosperous business environment today, especially in North America, is the impetus behind the trend for VIP sales,” he elaborates. “We have seen many small business owners interested in learning to fly and seeking to buy their own helicopter.”
    Though he didn’t have percentages to hand for VIP helicopter transactions versus other applications, Michael Roberts, president, helicopter and jet sales brokerage JETVEND believes plenty of potential exists for continued growth in the VIP helicopter sector.
    Roberts began his own fixed-wing brokerage in 2007, and when an opportunity arose to sell a Sikorsky which had been originally custom-ordered by the Sultan of Brunei he moved into rotorcraft sales, which forms a substantial part of his business today.
    “There are many more people in the world who could benefit from, and can afford helicopter travel, who are not currently using helicopters,” he notes. “Simply put, the potential is massive.”
    Medium Twin-Engine Trouble-spots

    Aero Asset suggests that although twin-engine helicopter retail sales have been up across all weight classes, that has not been the case in the medium-twin category - accounting for 30% of the pre-owned transaction volume, year to date (YTD).
    “I believe that the medium-twins in question are former off-shore or EMS Bell 412s and older Eurocopter/Airbus AS332s that generally have not been selling and are sitting idle,” Clancy suggests. “However, the trend over the last couple of years has been for these helicopters to find a second life in the utility markets.
    “For example, the older Bell 412s (412, 412SP and 412HP) are much lighter than the 412EP and are less expensive. There have been several examples of utility operators reconfiguring them for utility missions," he elaborates.
    “The Bell 412 hot and high performance is not as good as a Bell 205A-1++, 212S or 212 (for example), but not all utility operators need to fly in hot and high environments. The 412 is also much faster and smoother to fly than the older Bell two-bladed rotor system medium twins. The same could be said of former offshore configured AS332 L1s and L2s; several have been reconfigured for firefighting in Europe and North America.
    “The other reason why the medium-twins have not been selling well is due to growing interest in heavy helicopters for forestry and other infrastructure projects, such as power line construction.”
    Older Helicopters: Finding a ‘Second Life’

    Remarkably, according to Aero Asset’s report, only 2% of the YTD sales of VIP helicopters are for airframes older than 20 years. Clancy points out that while aircraft like the Bell 412 might find a ‘second life’ in a different sector, others are not so easily repurposed.
    “Older Sikorsky S-76s do not have much of a ‘second life’ opportunity as they’re not candidates for utility work,” he explains. “They’re too expensive to reconfigure to VIP/corporate and are too costly to maintain. Generally, they’re too much for the private operator to fly and hangar.”
    Nevertheless, some older Bell 206 Long Rangers and older AS350s are being transitioned from utility roles to private operators. “This type of transition first occurred years ago with the Bell 206B Jet Rangers and AS350Bs,” Clancy reveals. “Now, as commercial operators have shifted their preferences to the Bell 407 and AS350B3e, the Bell 206L3/L4 and AS350B2s are becoming aircraft of choice for private owners.”
    With a picture forming that some older helicopters have more traction than others on the pre-owned market, are there any big deterrents hindering more transactions of 20+ year-old helicopters in the current marketplace?
    Roberts implies that some of the trouble could lay in the pricing. “Unless an older aircraft is priced according to its age, its current status, and particular projected expenses, it will sit on the market,” he details. “Buyers choose newer machines for the same amount that many sellers of older machines would like to get.”
    “The key buyer deterrent relating to older helicopters is that most sellers are not thinking of the buyer when they decide to sell,” Clancy believes. “Sellers really need to consider the buyer more when marketing their asset. They can do this by ensuring the helicopter is airworthy; by updating components; and by addressing major inspections that may be coming due soon.
    “It’s also worth sellers investing in new paint and an interior refurbishment. And, they need to be realistic, ensuring they price the helicopter right for the target buyer-market.” (Check out a more in-depth helicopter seller's tips list from Mark Clancy.)
    Pre-Owned Helicopter Market Hotspots

    Having discussed a couple of the sticking points in today’s pre-owned helicopter marketplace, one market is catching Clancy’s eye for all the right reasons so far in 2019. “Bell 407s are probably the hottest helicopter on the market today as there is only 2.8% of the fleet for sale,” he says. “By comparison, many other models have 5% of the fleet for sale.”
    What’s behind the market activity for this particular model? “While Bell has been increasing its factory production capability, it has many domestic and foreign government priority orders at present.
    “This is pushing out commercial lead-times, driving the pre-owned demand and pricing,” he reveals.
    Sunny Horizon for Pre-Owned Helicopter Sales?

    Though used turbine helicopter sales during 2019 have been down YoY, do Roberts and Clancy expect an uptick any time soon? While Roberts sees potential for all categories within the helicopter sales marketplace to improve, Clancy points to the different factors that influence different segments.
    “Regional Gross Domestic Product growth and geopolitical stability drive the offshore helicopter markets, whereas private buyer demand is primarily a function of the economy,” he notes. “High-net-worth-individuals associated with the VIP markets are not affected by the economy, though.
    “Meanwhile, emergency medical markets are determined by private investment and government regulation, but utility markets are driven by a combination of economically-driven resource development and environmentally-compelling firefighting and disaster recovery support.
    “So, you see, depending on domestic and world events, and your point of view, you can develop your own sense of where the various global helicopter market sectors are headed going forwards…”
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