DYNAMIC DECADE AHEAD FOR ASIA - Asian Sky
10 March 2022
Despite the human and business impact of COVID-19 across the globe, the pandemic has done much to illustrate the in-built resilience of helicopter operations and the often mission-critical areas they serve. Aside from a short-term decrease in flying hours at the outset of the pandemic, the vast majority of helicopter operations continued virtually unaffected, as governments and local authorities prioritised key missions such as emergency medical services (EMS) and search and rescue (SAR), despite countries in the Asia-Pacific region going in and out of lockdowns, and movement being at times severely restricted.
Over the last twelve months, LCI too has shown its resilience and growth in many areas. The number of aircraft on its leasing and management platform grew substantially to over 140 with LCI’s acquisition of Nova Capital Aviation (Ireland), it re-joined the fixed wing market with the acquisition of an Airbus A330-300, and longstanding majority shareholder the Libra Group demonstrated its confidence in LCI’s future by becoming its principal owner.
Over the past decade, the Asia-Pacific region has been a major contributor to the growth of the helicopter sector, and there is every indication this will continue for the next. By 2030, the regional economy is forecast to reach US$45.8 trillion – more than 40 percent of the global total. Against this backdrop of increasing prosperity, the demand for helicopters across the region is set to continue its fast rate of growth, which presents opportunities for the industry as a whole.
The Asia-Pacific region has long been a strategically important region for LCI. The region’s dynamism is best exemplified for LCI by its rapidly growing partnership with Japan’s Sumitomo Mitsui Finance and Leasing Company, Limited (SMFL). Initially formed in 2020 as a US$230 million joint venture with a fleet of 19 helicopters, this grew by 63% in 2021 with the addition of a further 12 helicopters worth over US$120 million. Their JV leases helicopters in Asia, and other global markets including EMS, SAR and transportation to offshore wind farms. As LCI’s Singapore-based Executive Vice President & Global Head of Marketing, Nigel Leishman says:
"Recent world events have shown that the helicopter industry provides essential services that carried on throughout the pandemic.
This has, in turn, generated interest among the Asian investment community, as helicopters have proven themselves as an attractive asset class. Globally, financial institutions are looking to the future and want to invest in renewable energies such as offshore wind, which is one of the sectors LCI is actively involved in in the Asia-Pacific region”.
Right across the Asia-Pacific region, LCI is seeing opportunities for growth in helicopter leasing emerging in many geographic markets and operating sectors.
HELICOPTER EMERGENCY MEDICAL SERVICES (HEMS)
The HEMS market in the Asia-Pacific region is well established in certain higher-income markets, such as Japan and Australia. However, in other countries, EMS is still in its infancy.
Asia’s largest HEMS market is Japan, where 40 of its 47 prefectures are served by at least one helicopter, and the larger prefectures are served by multiple aircraft. There are currently over 60 twin-engine helicopters in Japan’s Doctor Heli network, which dates back to 2001. Many of these helicopters are in the process of being replaced with newer generation aircraft, and this process will continue for several years to come.
The South Korean HEMS market is also recently well established, with 11 helicopters serving the country’s hospital network, and plans to add further helicopters in the near future.
In Australia and New Zealand, there is a strong demand for HEMS. Australian States provide HEMS services with larger twin-engine helicopters and LCI currently leases 12 AW139s to operators for government-backed HEMS contracts. LCI expects this to grow, with further contracts set to be awarded in the near future. In New Zealand, HEMS services have been reorganized into three operators which together operate around 20 helicopters. Many of these helicopters are now aging, with some over 35 years old. As a result, there will be pressure to bring in newer generation, reliable aircraft in the years ahead to ensure better patient outcomes.
In contrast, many Southeast Asian counties do not have a dedicated HEMS service, although EMS helicopters are available on an ad hoc, case-by-case basis. A dedicated HEMS infrastructure is likely to develop in the future as these countries experience increased prosperity and a growing middle class. The HEMS market in China experienced a rapid start with many helicopters entering the market in a short space of time. The initial surge was not sustainable however, and this has resulted in many of these helicopters exiting the market or being grounded.
Overall, however, LCI expects demand for HEMS in China to continue to rise and, in the years ahead, envisages this will increasingly be met by state-backed institutions as opposed to private operators.
As with China, in India there is a huge potential for helicopters to service the country’s hospital network, and it is only a matter of time before both these countries develop a dedicated HEMS network. As of now however, the HEMS market in India is underdeveloped, despite the efforts of several start-up operations over the past few years.
There is a growing demand for offshore helicopters in the region, as new projects come on stream and oil prices return to the levels last seen seven to eight years ago. However, the often restrictive age requirements set by either the local aviation authorities or the oil companies are limiting the availability of suitable helicopters. This, combined with headwinds in the finance markets in this sector, has led to a shortage of supply, which if left unchecked could lead to production bottlenecks in the future.
LCI is already actively supporting several offshore oil and gas operators, and in Asia-Pacific, helicopters are mainly supporting large natural gas production, for example in Australia and Malaysia. Natural gas is an important transition energy source as it is being used in North Asia to replace coal in electricity production.
The offshore wind sector is the fastest growing sector in the energy market and there is great potential in Asia. There are several large projects underway in Taiwan which will require helicopter support, as there are in China and in Japan. LCI’s VP Marketing for Asia, Christopher Lloyd explains:
"Currently the Chinese and Japanese offshore wind turbines are being serviced by vessels, but as the fields grow and expand further offshore, inevitably there will be a demand for helicopter support as we have seen in Europe where helicopters are recognised as safer, faster and having a lower carbon footprint compared with Crew Transfer Vessels (CTV).
Offshore wind support is an area that LCI has been involved with for many years, and we welcome the opportunity to work with operators in Asia as this market grows.”
The Parapublic sector is an area that is already well-developed in many countries in Asia, and includes police, coastguard and SAR services. Whilst it is often delivered directly by government agencies, this is an area in which private operators are increasingly offering their services to the government agencies, especially in markets such as Australia, Malaysia and China. With its expertise www.lciaviation.com in these sectors in several markets outside Asia, LCI looks forward to bringing these skills to Asia to help accelerate these highly effective private – public sector partnerships.
LCI’s CEO, Jaspal Jandu, concludes:
"LCI These are just a few of the areas of growth we see developing in Asia. In 2022, LCI will continue to invest in its presence and partnerships and is very much open for business in this region."
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