Podcast: Where Was AAM? The Future Of Vertical Flight

Rotorcraft are ripe for disruption, but eVTOL makers were largely absent at the signature Heli-Expo show.

Listen in as Aviation Week's Joe Anselmo, Guy Norris and Tony Osborne discuss the key themes coming out of the show.

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Rush Transcript

Joe Anselmo:

Welcome to Aviation Week's Check 6 Podcast. I'm Joe Anselmo, Editorial Director and Editor-in-Chief of Aviation Week magazine.

The rotorcraft industry's improved fortunes were on full display when more than 12,000 people from 97 nations converged on Atlanta last week for the annual HAI Heli-Expo conference. The vertical flight extravaganza featured 639 exhibitors and 49 aircraft on display. Yet, anyone coming to see the latest advanced air mobility prototypes would've been disappointed. By and large, AAM exhibitors skipped the show.

But there was plenty of evidence that vertical flight is an industry ripe for disruption, driven by demand for high speed and specialized military operations. I attended Heli-Expo with two of Aviation Week's rotorcraft specialists, Tony Osborne and Guy Norris. They join me today to tell us what they saw in Atlanta and their views on where the industry is headed.

Tony, let's kick off with you. Oil and gas is a big driver of demand for helicopters. That industry has seen a lot of turbulence due to fluctuating prices. How is all that affecting the helicopter industry?

Tony Osborne:

Well, thanks, Joe. And it was good to see you and Guy in Atlanta. It was after a couple of years, especially disrupted by COVID, so it was nice to be back in the States for the first time for this London-based editor.

It was really interesting, the oil and gas industry was expected to make a return. You speak to all these CEOs of the helicopter OEMs and they were expecting big things I think from this show that maybe some big orders would be placed. They didn't really come, but I think Heli-Expo a bit like an iceberg. You only see the top 10% above the water and then there's a lot going on beneath the surface.

It's really difficult to over-exaggerate the importance of the oil and gas industry. Obviously the helicopters, they fly out to the rigs. They bring equipment and personnel out to the oil and gas platforms that are drilling the black gold that basically sustains all our lives. We put it in our cars. It feeds our plastic industry. It powers the power stations that run our homes, et cetera. So these are really important aircraft. And essentially, the industry hasn't really bought very many since 2015, when we saw quite a sort of collapse in energy prices. And essentially there ended up being a glut of overcapacity, considerable overcapacity in the market, which is finally now beginning to tighten.

What happened was, there were so many aircraft that basically the leasing rates really hurt the oil and gas operators, to the point where some of them went into Chapter 11, so between 2016-18. And now we have increased drilling, increased exploration, particularly as nations try to end their reliance on Russia, as nations look for energy sovereignty, those helicopters are now back in play, and those helicopters are being used and heavily utilized.

For example, Sikorsky's S-92 Fleet, the numbers from a consultancy called Air and -- Ooh, let me just remind myself of their name -- Air & Sea Analytics, apologies to Steve there. Air & Sea Analytics are saying basically that much of the S-92 fleet, some of which was stored, is now back in operation. So it's like 92% utilization. Airbus Helicopters, for example, has seen utilization of its H175 super-mediums increase by about 40, nearly 50%, between 2020 and now. Helicopters being heavily used on all these contracts.

So the expectation is that the industry would now probably need more helicopters, in part to encourage growth, but also as a replacement because there are a lot of old aircraft that need replacing. And that didn't really happen at Heli-Expo. We are waiting to see over the next year whether that's really going to kick off. Previously we've seen enormous orders, back in the late 2000s we saw really big orders for large helicopters. I suspect that after getting their fingers burnt, once those oil prices fell in 2015, that maybe they're being a bit more cautious about how to fund them, how to lease them, how to buy them and so on.

I think that's going to be the next big thing, is Heli-Expo will have probably paved the way for some of those orders to come over the next 12 to 24 months. But I think we saw beginnings of that. We saw leasing companies buying aircraft. We saw a couple of smaller operators, Abu Dhabi Aviation and Brazil's Omni Aero, buying Leonardo AW139s for exactly that role, for the oil and gas industry. So small orders, but I suspect we're going to see a bit more movement, but it just hasn't happened yet.

Joe Anselmo:

Guy Norris, let's bring you into the conversation.

Guy Norris:

Thanks, Joe. Yeah, I appreciate it. It was great to see Tony and yourself back at the helicopter show. It was a good event. And the one thing I was going to just add to Tony's comment on the oil and gas side of it was I've, on this side of the Atlantic, been following the Bell 525 saga for a few years now. And it's interesting that the timing of oil and gas, sort of the cycle of it, may well in fact coincide finally with certification timescale of the 525, which it's serendipity of course. Lucky for them in a way because it's been such a tortuous road towards certification. Which, if it does happen, it looks like it's coming by the end of this year they say. Good for them in terms of timing, so just a quick comment on that.

The other point I was just going to say to your introduction, Joe, was the ‘ripe for disruption’ comment. There's two aspects to it really. One is, I think that from the military perspective, obviously historically, when you go back in the history of rotorcraft, so much of what we see today has been driven by the needs of the military, from early technology developments of rotorcraft. And every advance in that industry, up to a certain point, it's a bit like business aviation and the way that it flips and flops with technology drivers for the commercial aviation business. One takes the lead for a little while in avionics and then vice versa. It's a bit like that with rotorcraft really.

But when you look at what you're faced with, with the U.S. military for example, that's a classic bellwether of helicopter technology. The V-22 is really the only all new U.S. military rotorcraft fielded in the past 30 years, which is extraordinary. The Huey, 1956, first flight. Black Hawk, mid '70s. There some 1960s generation airframes still flying. And Tony and I sat there through a couple of press conferences and with companies like Enstrom for example, I mean, I'm not saying anything derogatory about them, but the F-28 was a 1965 design. The 480 I think comes from ...the 280 and the 480 families emerged in the mid '70s.

So you've got this incredible legacy of course, but what I'm trying to say, not very well obviously, but what I'm trying to say is that there's this legacy of great designs stood the test of time, but surely we're talking 40, 50 years, 60 years in some cases later. This is ripe for disruption. And for now you've got these two aspects. You've got the advanced air mobility side of it, which we're all waiting to come into the helicopter world, which I almost think is seen as an existential threat in some cases by these manufacturers, because it's their market at the lower end of it.

And then the other aspect is the military. For example, I think Tony and I were at the Sikorsky event where they announced a teaming arrangement with GE on an advanced eVTOL design, and they call it hybrid eVTOL. So, that was perhaps their first indicator for an S-92 replacement program for the decades beyond.

So yeah, it was confusing. The other thing that I thought was a bit awkward was the fact that if you looked around the conference hall, I could only see Jaunt Air Mobility was the only AAM airframer who had any stand there. And when you looked at the engine makers, Safran was the only one of the little electric motor. Rolls-Royce, if you look really carefully, at the back of their display was a little model as well of their electric motor design, EPU. So, for all of the great hoo-ha about the revolution of AAM, it ain't coming anytime soon to Heli-Expo, that's for sure. So, I think if the wave is out there somewhere, but it's still on the horizon.

Joe Anselmo:

So what are going to be the near-term drivers, Guy?

Guy Norris:

By and large, when we look at the big airframers in rotorcraft, for example like Leonardo, and perhaps less so with Airbus, but particularly over in the U.S., Sikorsky and Bell, through Textron for example, I see a lot of their drivers towards this market is going to be through military type of roles. And so all of the advanced money that's going into these concept technology, it's more likely to be coming through DARPA or the U.S. Army for example. I see those as drivers towards seeing bigger roles for EVTOLs or advanced rotorcraft concepts.

Whereas with the commercial market, I just see these companies pecking away at the bottom of the market. I don't know, Tony might have a different perspective, but I think that when you look at, say, Robinson for example, Robinson would be the first company that would see a lot of erosion of its market because it's four-seaters, small helicopter, at the bottom end of the range. At the moment Robinson's making ... It plans to make 300 a year, which is on the low side really in some cases of its former production numbers. So where is this AAM revolution? It wasn't there this year, that's for sure.

Joe Anselmo:


Tony Osborne:

I've always had the opinion that actually, certainly in the American industry, that sometimes they focus far too much on the defense market and ignore the commercial market at their peril. I mean, Bell is obviously looking towards V-280 for the FLRAA program, but its commercial models have lagged behind a little bit and has resulted in the European OEMs really coming in and absolutely taking the American market by storm. I think Airbus can claim a 55% market share in the United States, which is just astonishing when you consider that probably 20 years ago it would've been dominated by the likes of Bell and MD.

And that's the other thing, is that some of these American commercial helicopter providers almost disappeared last year. Enstrom and MD, and I think if you can go back and read this in the latest edition of Aviation Week, or at least the edition that went to Heli-Expo, they talked openly about some of the challenges that they've faced.

So I've argued that maybe their focus has been too much on the military side. And MD, for example, who was heavily reliant on the IDIQ with the US Army for aircraft that went off to Afghanistan for example, really just generally ignored the commercial market for several years. And of course then went into bankruptcy, now has new owners. The new owners are trying to look for a balanced portfolio of commercial and military orders because they know that they need to look to both markets. And same for Enstrom, they realize that there's a balance needed there.

Sikorsky on the other hand, of course, massive Black Hawk provider. The S-92, they're literally building a handful a year. They're charging and will charge an absolute fortune for the next generation S-92, of which they only have a handful of orders for. And that's going to be from 2025 onwards. And all the other OEMs producing aircraft for the oil and gas industry are saying, ‘Where's Sikorsky? What are they doing? When are they going to start providing aircraft? Are they supporting customers,’ and so on. So I think there's an angle to both there.

As for the other point about bringing disruption. I think probably the most disruptive aircraft that we saw at the show is Leonardo's AW09. Now for those who are probably not familiar with this aircraft, this was the aircraft that was built in Switzerland by Kopter Group and previously the Merenco Swiss Helicopter. So it's a small, light, single-engined helicopter, but with a cabin sized for a twin-engined aircraft, which is quite revolutionary really. And it's the first new aircraft in this category for about 40 years, when you consider that here its competitors are Airbus's H125 Écureuil or A-Star, as it's called in the States, or the Bell 407. So it really could bring quite a significant change.

Leonardo are now actively marketing the aircraft. They claim they've already got 50 orders for it, with deposits in writing and so on. They reckon they'll have 200 in the next 18 months. That's a pretty sizable number for an aircraft that hasn't actually gone into production yet and is yet to receive certification, which is now on target for next year. So I'd say that was probably the most disruptive aircraft, and that's a commercial aircraft.

There are bright spots for the commercial industry looking ahead, and it can be disruptive in its own right. On the AAM side, yeah, I do wonder if maybe Heli-Expo needs to show itself more as a commercial industry helicopter show rather than an AAM show. Although we know that the organizers of the show are considering rebranding to be perhaps more reflective of that AAM industry, with the wider vertical flight industry, with all that potential out there with the eVTOL companies.

Guy Norris:

Yeah. And just to follow on from that, Tony, I was just going to say, I mean, obviously HAI did have an AAM panel, which they claimed was the talk of the show but ... Yeah, and it might have been at the panel, but as far as the actual conference or the convention floor, yeah, you're right. It was sort of like, Well, okay, they might be saying we are an AAM show, but you see more AAM manufacturers and exhibits at NBAA. Two years on the trot now we've seen that.

Joe Anselmo:

I was just going to make that point, Guy, you and I were at NBAA, the big U.S. Business Aviation show last October. And there were AAM prototypes there and AAM was a real piece of it. And I wanted to ask you, Tony, is that a sign that AAM has a better home with business aviation than the rotorcraft industry? Or is it just a matter of NBAA, the trade organization, being more aggressive for their show than HAI was for Heli-Expo.

Tony Osborne:

The skeptic in me might say, well, that's possibly illustrative of the market for AAM going forward. I mean, all the OEMs have said that this is an industry that will benefit everyone. And for the price of an Uber ride, you'll be able to fly across a city and shorten your journeys. And that's just not going to happen, is it? I mean, this is essentially a new toy for the rich. And it's going to get you from your business jet to your apartment in Downtown Manhattan, Downtown Shanghai or Downtown London, in a fraction of the time it would take if you took your limousine.

And that's ultimately where this is going to be, until they're piloted by themselves rather than a pilot. That’s my skeptical view, and I think that's possibly one of the drivers. I mean, helicopter companies, the companies that go along to Heli-Expo, some of these are Ma and Pa single-helicopter businesses that are looking for upgrades to their machine that they go off and do logging with or firefighting with and stuff like that. Or a small fleet of helicopters they do training with. AAM is not that market.

Joe Anselmo:

Guy, you want to take us to the finish line? What do you think about what Tony just said, do you concur? I mean, look, I've heard the same thing, that AAM, the business case is not going to close until you can have autonomous vehicles. As long as you have to require pilots there's not a business case for mass adaptation of it.

Guy Norris:

I think Tony's right. I mean, to be honest, it is something which we'll have to scale up dramatically before you begin to see the promised socioeconomic factors that are supposed to be the promise of this revolution to come. But I do think that there's a couple of aspects.

One is that the technology itself, this radical way of being able to have distributed propulsion and change the configuration of vehicles into things we've never seen before in day-to-day service, I think that will, with the development of hybrid and electric propulsion, proliferate throughout the industry and impact commercial, military, the rotorcraft business. And as Tony mentioned, it's a tide that'll rise and float all boats in that respect, whether it's military applications or AAM.

But I think that what we saw was the fact that this is an industry which is still very much traditional business, and this helicopter show was a classic example. And we're going to have to wait a couple more years before people are flying into the show with eVTOLs and landing in that little parking lot outside. But it was brilliant. Don't get me wrong. I loved it. I mean, where else can you go see a big Chinook or Boeing Vertol sitting inside a convention hall and stuff like that. It's great, I loved it.

Tony Osborne:

And just before we finish, I think the one thing that struck me about the show this year was, I was particularly heartened to see the return of Enstrom after its bankruptcy that we mentioned earlier.

But also MD Helicopters in possibly a more sensible form after many years of, dare I say it, after Lynn Tilton's management, we saw a company come back with a much more sensible approach to the business. Not just standing there and making a lot of claims, that actually I think a lot of them turned out to be false about where she was taking the company and new models and new plans and big plans to restore production of platforms.

They were very honest with their customers. They were honest with the journalists in the room about the direction they want to take the company. And they were brutally honest about the future of some of the products, in particular the very popular 902 Explorer with its famous NOTAR anti-torque system and the future of that aircraft, which looks rather bleak. But nonetheless, it was really good to see those companies back on form and taking part in the show, and actually being there and making big plans and big promises.

Joe Anselmo:

Tony Osborne, thank you for your time. Guy Norris, thanks as always to you for providing your insights. And a special thanks to our podcast editor, Guy Ferneyhough.

Don't miss the next episode by subscribing to Check 6 in your podcast app of choice. And one last request, if you're listening to us in Apple Podcasts and want to support this podcast, please leave us a star rating or a review. Have a great week and thank you for your time.

Joe Anselmo

Joe Anselmo has been Editorial Director of the Aviation Week Network and Editor-in-Chief of Aviation Week & Space Technology since 2013. Based in Washington, D.C., he directs a team of more than two dozen aerospace journalists across the U.S., Europe and Asia-Pacific.

Tony Osborne

Based in London, Tony covers European defense programs. Prior to joining Aviation Week in November 2012, Tony was at Shephard Media Group where he was deputy editor for Rotorhub and Defence Helicopter magazines.

Guy Norris

Guy is a Senior Editor for Aviation Week, covering technology and propulsion. He is based in Colorado Springs.