The military helicopter market is set to decrease due to budget constraints, but the commercial market will recapitalize in the coming years, according to a new study from business consulting firm Frost & Sullivan.
The report found that the Department of Defense spent $12.41 billion on helicopters in fiscal year 2012, but that number will be cut in half to $6.7 billion by FY 2018. Instead of investing in new helicopter technology, DoD will focus on maintaining and upgrading the fleets it already has.
Photo: Boeing
“It’s not just them wanting to rehabilitate them, the tightening of the budgets is forcing them to do that,” said Michael Blades, senior industry analyst for Frost & Sullivan.
Blades said military helicopter makers have two other options besides focusing on maintenance. They can consider merging helicopters with unmanned systems or increase their foreign military sales, he said.
Despite cuts in helicopter spending, DoD will continue procurement programs for the presidential airlift and combat rescue helicopters. Blades said this is possible because of the limited number of aircraft that would be purchased–roughly 15 for the presidential fleet and less than 100 for combat rescue.
The commercial helicopter market will see a value increase with inflation, but its spending will include investment in new aircraft. The commercial industry focused on rehabilitating used helicopters during the recession in 2008, but the used market has since dried up. With a boost in demand from the oil and gas market, new lightweight helicopters will grow in sales.
The commercial market saw $0.89 billion in FY 2012, which will increase to $1.07 in 2020, according to the study.
“Industry for the commercial side is really focusing on making helicopters that are easy to maintain,” Blades said.
Buyers will only accept the upfront cost of the aircraft if they are ensured low life-cycle costs, he said.
Blades said he based his study on the FY ’14 budget request and interviews with industry executives. He has not yet factored in the proposed defense bill, but he said he has not heard much in congressional debates that suggests helicopters will be shielded from cuts.
“There’s nothing on the board that’s doing anything to save helicopters,” he said.