LCI CEO Warns of Helicopter Demand ‘Bow Wave’ – Aviation International News
According to LCI CEO Jaspal Jandu, the tight helicopter market requires OEMs, suppliers, owners, and operators to plan well in advance, significantly changing how the rotorcraft community does business. “For operators coming to us, [lead times] are increasing quite dramatically,” the leader of the global helicopter leasing company (Booth B2408) told AIN.
“Operators are speaking to us one, two, even two-and-a-half years in advance” of when they need a helicopter, he said, “looking at capacity requirements in 2024 and 2025.” And the competition for helicopters coming off lease can be intense. “We’re seeing multiple operators and end-users bidding for the same aircraft. There is competition out there for relatively scarce resources.” Scarcity and rising interest rates are propelling lease rates upward, Jandu said.
Jandu believes a fundamental demand pattern shift could subject the market to continuing supply scarcity for some time. During the oil price collapse and the pandemic “new orders and deliveries decreased and operators and end users started using the existing equipment a little bit harder and a little bit longer,” he said. As a result, “The entire replacement cycle got pushed out three or four years to the right. Now it has to be addressed.
“The replacement cycle is upon us and the mathematics are against us,” he said, noting that historic market demand forecasts typically indicated 60 percent for growth and 40 percent for replacement. Those numbers are now inverted, he said, with 60, even 70 percent of the demand for replacement, and the remainder for growth. “You can delay the purchase cycle, but at some point the hull gets too old, you start reaching service limits, or the end-user demands more safety features that the old units can’t accommodate. So I feel like there’s an entire bow wave that has yet to happen on the replacement side.”
Jandu expects these market dynamics will help the overall helicopter market, particularly the super-midsize category, which has been slow to gain traction. “We’re quite bullish on the super-medium category,” he said, while also noting that technological advances are also showing up in smaller helicopters, specifically the Airbus H145.
But none of this comes cheap. “Somebody’s going to pay for it,” Jandu cautioned. “We’re in the business to help end-users and operators and we want to drive this growth. But interest rates are moving up. Capital also has some requirements for ESG [economic, social, and governance compliance]. Ultimately the end user is going to have to come to the table and we’re going to have to arrange these [lease] contracts in a more aligned [fashion],” he said. “All this new equipment doesn’t come for free.”Back to News & Views