Australasia still doing OK. Five year forecast
Australasia - five year forecast
2006 - 2010
By Rob Rich, President. HAA.
Today I was looking at the Australian Newspaper, the first run of jobs have been published for 2006, now that their staff are back again. There are several pages of jobs available; especially in the aerospace industries, many higher level jobs for those who want to progress their careers. One point sticks out, unless you have advanced education qualifications you will not get a high paying job in this sector.
Back to drivers: We still have an instructor shortage in Australia. The NZ industry does not have the same shortages at present, however, they are doing well overall.
I would like to share a research paper - looking at the future. Every week two extra helicopters are added to the Oz register and more than one in NZ.
The fleet is now growing at 8% pa, it will double again in less than seven years. (We doubled over the past eleven.)
Australasian aviation industry.
By way of introduction, the population of Australia is 20 million, New Zealand 4 million and Papua New Guinea 5.7 million. These three Australasian nations operate over 16,000 civil and military aircraft. There are 12,724 aircraft on the Australian CASA Register of which 1,300 are helicopters. By comparison, New Zealand has about 3,700 aircraft of which 660 are helicopters. Not bad for a population of only 4 million! PNG has an estimated 60.
Well over half of the Australian fleet is piston powered. Both Australia and New Zealand helicopter registers are growing at twice the rate of the economy – at about 8% of the GDP.
To put the pessimists on edge, both countries slightly increased their rate of growth towards the end of 2005.
Helicopter fanatics will be heartened to know the GA aeroplane world is only edging ahead at about half GDP, the situation is worse in Australian than New Zealand.
A point often missed by media commentators is private ownership. A comparison of aeroplane and helicopter ownership shows that 65% of GA aeroplanes are privately owned; whereas only 15% of helicopters have private owners. High cost of ownership, slower cruising speeds, more demanding training and currency needs, with operating costs double that of light aircraft makes private ownership only for the really wealthy.
In the single engine sector, the piston fleet has a very dominant product. The Robinson Helicopter Company cannot keep up with the demand, and despite this there are 560 Robinsons on the Australian register, of which 400 are R22 and 160 R44 models. The rapid increase in the R44fleet, especially with private owners is following a world wide trend. Trailing the Robinson fleet in Australia is the Bell 47 with 114 and Hughes 269 family at 54. New Zealand also has a sizable piston fleet which is over shadowed by the single engine turbine machines.
Piston engined helicopter are rare in PNG, although the few R44 owners are happy with their performance at higher altitudes. Overall, PNG needs turbine machines capable of sling loading and long line work at construction sites. The absence of night operations and IFR routes suitable for helicopters limits this category of operations in PNG.
Single engine turbine sales now favour the French products. In New Zealand, the Eurocopter Squirrel AS350 has pushed the Hughes 500 to second place. This is followed by the Bell 206. Tourism is helping to boost AS350 sales. The Bell 206 LongRanger, although cheaper to run than the AS350, has rearward facing seats, a smaller cabin and is now less popular. However, in Australia the Bell 206 still dominates this segment of the market with 200 of all models in service. It is being chased by the Eurocopter fleet of which the Squirrel AS350 now number 88. This gap is closing as the French are providing a larger range of single engine turbine models. Although Bell is making an effort to compete, the French in the long term will be hard to toss.
Over the past decade we have seen strong growth in the twin engined fleet. Most NZ machines are single engined turbines. The growth of the twin fleet in Australia is three times faster than the single engine rate, which is very good at 8%. This market is being driven by SAR and HEMS orders, and recently corporate buyers have appeared. Most twin engine providers can claim a dozen in service in Australia. The leader in the Australian twin fleet is the Sikorsky S-76 with 24 in service, closely followed by the BK117 at 21, then Bell’s 412 with 14, the Super Puma and Agusta 109 with 11 each. This very expensive and competitive market sees a new player on the block, the new US designed Bell light twin may give the French something to worry about, if published specifications are any guide.
One interesting trend in the region is the dramatic increase in number of up market twin engined helicopters, predominately in the emergency services sector, which has grown to over a dozen bases in NZ and over 30 in Australia. Overall this segment has fared the best, a 700% growth in eleven years. There are now over 85 twins in Australia and about 35 in NZ. The civil sector now has more twins than the military.
Every week in Australia our CASA register increases by two helicopters, ew Zealand has over one per week increase.
The growth is accelerating!
World ranking
Australia is now about sixth in helicopter ownership and New Zealand recently entered the top ten. By world standards our military helicopter fleets are small at around 200. Due to the fact we have had 14 years of steady economic growth, and have avoided world recessions to a lager degree, this had led to the ideal breeding ground for new helicopter owners. There is an old saying: “The helicopter industry is first into and last out of a recession.”
This steady growth without any hiccups over the past eleven years has seen the Australian helicopter fleet grow from 649 to 1,297. Single engine helicopters increased by 90% and twin engined helicopters by 700%.
Today our fleet sizes are:
Australia: 1,297 civil and about 164 military.
New Zealand: 660 civil and about 35 military
Papua New Guinea: Estimated 60 civil and two police machines.
The world helicopter fleet is 20,000 helicopters of which 12,500 are based in the USA. We have about 10% of the world’s helicopters. However, as we have so many light helicopters, money invested in helicopters is probably only about 5% of the world total. Even so, considering our small population this is an achievement!
The next five years
Based on the fact we grew from 649 a decade ago to 1,297 today then we should see our fleet grow to about 1,900 machines in 2010. An increase of about 603, or an extra 105 helicopters per year. Assuming a working helicopter flies 400 hours per year, the Australian fleet will fly an extra 235,000 hours in five years than today. Assuming pilot flies 450 hours per year, we will need an extra 520 pilots. Plus the normal attrition of 15% due retirement, sickness and change of careers.
New Zealand has also shown a strong expansion similar to Australia’s. Starting with 660 machines today, we should see 860 in 2010, or an increase of 200. These machines will fly an extra 80,000 hours, needing an extra 200 pilots. (NZ pilots fly fewer hours than Australians due the latter’s mustering activities.)
We doubled our fleets in about a decade and will do it again in less than seven years.
Asian wild card
From the HAA’s attendance at various Asian trade shows, it is interesting to note the pressures in the region to get the Asian helicopter industry up and running. Most Asian players look to Australia and New Zealand for future assistance.
However, closer study reveals some serious problems. Our region is entering a skills shortage in all industries, due in part, to the trend to bypass technical apprenticeships and push young people into university. We are now seeing a severe shortage of engineers, and a shortage of employable aircrew.
Thus our capability to help our Asian neighbours may be limited - we will be struggling to run our own show with meagre manpower resources!
By comparison to the 2,000 helicopters in our region, our neighbour’s civilian fleets are:
India – 270 helicopters of which 140 are light piston engined machines. They expect to double in less than six years due to the scramble to find more oil and gas. India will become the fourth largest economy in the world in this decade, according to the UN.
China – Only 160 helicopters. Following permission to allow a Chinese GA aviation industry, the first privately owned aircraft is an R44 helicopter! As China is heading towards being the number two economy, ahead of Japan in a decade, the pressure to get civilian aviation airborne is immense. International manufactures are now building assembly plants in China. One government official stated in 2005 they would like an industry of about 3,000 helicopters in ten years time. This includes 1,000 SAR/HEMS helicopters.
Malaysia – 75 helicopters and only two schools. Stagnated growth rate due to political and investment problems. The tourist industry appears to be a good growth area, held back by anti-tourist Western terrorists. Oil search is picking up also.
Indonesia – not known. Despite economic problems, this country is fighting to remain an independent democratic Islamic nation. It has been suggested that anti-terrorist agencies will be the growth area for helicopter sales. The loss of tourists to this land of 4,000 islands would hamper their struggling economy.
Thailand – 70 helicopters and no flying school. A nation of 62 million with great economic and tourist potential suffers from a government policy introduced after 11 Sep ’01. No foreign nationals can train at a Thai flying school. This has drained the resources of an embryo industry.
Things that can go wrong
There are four major factors which can have an adverse effect on our industry. The US dollar, the beef industry’s health, overseas tourist trade, and shortages of engineers. The growth of our industry is dependant on the US dollar because we do not have any manufacturing facilities, although Australian Aerospace (Eurocopter – an EADS company) has the capability to assemble civil and military helicopters. When the Australian dollar becomes stronger there is a rush to order new equipment; however, due to the world wide improvement in the rotary wing industry, the demand has pushed out waiting times at some of the overseas factories.
Both Australia and New Zealand rely on exports to generate wealth. At present tourism and rural exports are neck and neck in New Zealand to be the number overseas currency earner. Both these factors have a major influence on helicopter usage. Based on hours flown, Australian mustering operators fly more hours than the all other segments combined. Thus any slowing of our beef export market would have an adverse effect on many in the bush.
If we continue to expand as predicted, then we will run into manpower problems. The average age of a helicopter pilot is 48 years and an engineer around the same age, if not older, according to CASA. As a result, it is well known that maintenance engineers are in short supply. The training industry also is suffering from a shortage of instructors, who are moving onto the turbine types to fill those vacant crew seats in SAR/EMS bases. However, the worst hurt is yet to come. The predicted expansion will create severe shortages in manpower.
In particular, the growth of the airline industry in Australia and nearby Asian countries has resulted in our bush based engineers packing up their tool boxes and moving to a more comfortable life style in the airline industry.
Although our tourist based operators are in a growth phase, this underdeveloped market is very sensitive to the number and wealth of inbound tourists. The industry is very seasonal, especially in the hot northern areas of Australia. New Zealand also has clearly defines peaks and troughs. The tourist industry is very price sensitive and the availability of cheaper helicopters with lower operating costs is hampered by the strong US dollar. It is felt by many in this segment can grow steadily provided the industry pools its marketing resources and sells itself with a united front, putting aside factions within the industry.
Opportunities
The Australasian region can easily cope with more SAR/EMS bases, especially in Australia. The establishment of a civilian operated Coast Guard service and provision of inexpensive police helicopters in regional areas should be exploited.
At present, caution must be exercised in New Zealand where the provision of SAR/EMS and emergency services has outstripped demand, and a restructure of their industry with government input is underway. For example, the lack of a police helicopter service in Queensland, Australia is a worthy case study. The state capital, Brisbane has 1.6 million people and is the third largest city after Sydney and Melbourne. Yet they have no police helicopters. The regional cities could also use more ENG helicopters if a low cost option was available. The 2UE helicopter in Sydney (R44 ENG machine) is a case study here.
As the military expands into the civilian industry and the civil fleet becomes more up market, there will be a need to train more pilots and other aircrew. The night and IFR capabilities (or lack of) in training schools could be a boost to those who can grasp the concept and translate it into hardware and business.
Although the stronger US dollar makes purchases more difficult, our training costs are much lower here than in the USA or Europe. NZ in particular, is sitting on a gold mine because their dollar is weaker than the Australian dollar, and they should exploit this commercial advantage.
Military joint ventures
The Australian Army has recently invited the civilian industry to take over much of the basic helicopter training within the Armed Forces. This will be expanded later to include the provision of a fleet of modern helicopters and advanced training. In this way Australia can release ADF manpower to fulfil our overseas peace keeping commitments. The complex tendering process has yet to be completed; however, even the most pessimistic helicopter industry critic will admit that there is one question that remains unanswered:
In these times of skills shortages, where will the civilian resources come from to service one of the largest helicopter contracts offered to the Australasian industry??
Food for though?