Offshore operators’ continuing difficulties with fielding their heavy helicopters could create new opportunities for the super-medium market.
Supply chain woes continue to adversely impact offshore helicopter operators, according to a notice recently issued by the International Association of Oil and Gas Producers’ (IOGP) aviation subcommittee (ASC). In a recent IOGP ASC safety notice to members, the organization branded the situation as “serious and deteriorating,” saying that it presented “significant safety and operational risks.”
While the problems were particularly acute with regard to the Sikorsky S-92, with 86 percent of its fleet flying offshore energy, the ASC said the situation pervaded the entire industry. Consultancy Air & Sea Analytics warned, “The ability of the industry to keep enough serviceable aircraft to meet demand is now in question.”
Nearly two-thirds of the 300-strong S-92 fleet serves the offshore oil and gas industry, and the majority of those are owned by leasing companies, with AerCap unit Milestone Aviation being the fleet leader at more than 80.
The market’s only other heavy commercial twin, the Airbus H225 series, largely exited the offshore market after a series of high-profile crashes culminating with a 2016 in-flight main rotor separation in Norway that killed all 13 aboard and triggered a worldwide grounding of the fleet, a large portion of it for more than a year. The aircraft’s reputation with offshore oil workers never recovered, and the S-92 moved into a dominant role in the industry.
The S-92, with its unique capacity to carry 19 passengers and service deepwater clients, drew the majority of the ASC’s attention based on operator surveys. The resulting metrics are alarming.
Data from the three largest civil operators of the model who represent 61 percent of the fleet—Bristow, CHC, and PHI—revealed that 20 aircraft (13 percent of the combined fleet) are AOG while waiting for replacement main gearboxes. Three other operators reported another 11 S-92s are also AOG. The overall AOG number is likely to double by the end of 2024 given Sikorsky's low aircraft production rates—just four of its civil helicopters were delivered in 2022. One operator reported S-92 AOG days at the parts level increasing from 214 in 2022 to 3,009 year-to-date. Overall fleet dispatch reliability now hovers at 80 percent, as opposed to the industry average of 96 percent.
The situation has triggered a variety of adverse maintenance practices according to the ASC, including parts cannibalization, up by 50 to 106 percent, with over 50 parts being taken from an aircraft entering maintenance “not uncommon.” Maintenance extension requests to the OEM have increased by an average of 850 percent year-to-date. The time to complete a 1,500-hour inspection has increased by 75 percent, to 75 days; requires 25 percent more manpower; and triggered a 57 percent increase in overtime. The ASC concluded that the climate created the “potential and conditions for a serious safety event that is clearly growing unless action is taken.”
Operators are forced into contracts that apply “punitive financial penalties for not meeting aircraft availability targets.” The ASC warned that such provisions “will not improve availability, but will worsen the operators' position further and potentially add further stress and risk to their maintenance departments.” It predicted that S-92 parts availability “has the potential to deteriorate further in the coming 12 months, leading to further reductions in aircraft availability.”
The organization reiterated operator “resilience strategies” suggested earlier in the year, including raising stakeholder awareness and transparency, temporary sharing of contracted aircraft assets, and not punitively adding to operational risks via contract penalty clauses. The ASC concluded that “effective local action and engagement between individual clients and contracted operators is essential if the safety risks are to be mitigated and our normal very high levels of safety performance maintained.”
In a statement provided to AIN, Sikorsky president Paul Lemmo said the company is taking various actions to address the “unprecedented” S-92 spares situation, in part driven by a “22 percent increase in S-92 aircraft flight hours over the last three years. This increased utilization has added to the fleet operating hours but also created more pressure on parts required.”
“Sikorsky experts have provided S-92 suppliers technical and operational support so they can accelerate delivery of parts” and that the company “has been assisting S-92 suppliers throughout all tiers of the supply chain to source specialty metals, components, and other raw material.” Lemmo said these efforts were beginning to produce results, noting, “We have increased main gearbox output by 40 percent in 2023 compared to 2022. We have delivered 31 year-to-date and project providing 40 in 2023 versus 28 delivered in 2022.” He said Sikorsky “will continue these efforts for as long as it takes to accelerate delivery of the parts our customers need.”
Earlier this year, Sikorsky executives speaking at Heli-Expo said the company was working to resolve supply chain problems. Leon Silva, Sikorsky's executive vice president of global, commercial, and military systems, admitted that ongoing supply chain problems had dragged down S-92 fleet utilization rates and dispatch reliability percentages “into the high 80s.” He said the company “continues to work diligently on the supply chain” and had established what amounts to an emergency center at Sikorsky’s Trumbull, Connecticut facility to work with suppliers to resolve issues.
But, aside from ongoing supply chain woes, Sikorsky’s commitment to the civil market remains suspect after the company was acquired by defense contractor Lockheed Martin in 2015. It has discontinued production of the S-76, rather than manufacture it with a federally-mandated crash-resistant fuel system. Earlier this year, the company announced that it was shelving the S-92B program and moving the anticipated certification date of its A+ upgrade for the helicopter into 2025, some three years later than originally planned.
As a result, deliveries of A+ kits ordered today would not happen until 2026. While several helicopters in the installed fleet of more than 300 S-92s have nearly reached their 30,000-hour life limit, Sikorsky has no plans to extend it. And, while Sikorsky continues to take orders for new S-92s, it cannot deliver one for at least two to three years—if it can find any buyers at a reported price of near $40 million per new production helicopter.
The scenario opens the door for what had been a largely nascent offshore market for super-medium helicopters to move more aggressively into this market space, if for no other reason than the fact that operators have no alternative.
Bell already has at least four oil and gas configured, fly-by-wire 525 super-medium twins on its final assembly line in Amarillo, Texas, and the company likely will pick up production following certification late this year or early next. By way of program update, Bell told AIN that a variety of key flight testing with the FAA including avionics, airspeed/altitude, and cold weather has been completed and that handling qualities/flight characteristics testing with the FAA is well underway. The 525, with its array of sophisticated systems, is expected to be more expensive than competitive aircraft—Air & Sea Analytics estimates the price premium at 50 percent—but it may not matter in an environment with operators desperate for lift.
Offshore operator PHI, a long-standing S-92 operator, inked a deal with Airbus Helicopters for 20 super-medium H175s in September. Another veteran S-92 operator, Bristow Group, is integrating more super-medium Leonardo AW-189s into its contract search and rescue offerings that used to be the exclusive purview of the big Sikorsky.
But the likelihood that OEMs will significantly boost production to alleviate scarcity across all helicopter categories remains low, according to industry experts interviewed by AIN. Earlier this year, Jaspal Jandu, CEO of helicopter lessor LCI, said the offshore supply problem was exacerbated by owners and operators who ran their helicopters harder and longer during Covid and substantially delayed fleet replacement plans by three to four years, creating a “bow wave” of demand. Going into 2024, the question is: Does the bow wave lift the industry or just continue to overtax the bilge pumps?