Built for Growth, Not
Decline
Prior to 2014, the global offshore helicopter industry was focused on keeping up with customer demand.
“Their biggest concern was having sufficient helicopters to do the job, which is why these carriers and leasing companies were ordering rotorcraft from helicopter OEMs well in advance,” said aviation consultant Brian Foley, president of Brian Foley Associates. “It was this same level of demand that motivated OEMs to
commit to building larger rotorcraft, such as Bell and its development of the 19-seat Bell 525.”
In a nutshell, “The oilfield services industry saw record levels of investment between 2010 and 2014, driven by oil prices at levels in excess of $100 per barrel,” Robertson said. “Activity levels were very high and a significant volume of additional capacity was ordered across the supply chain, including offshore helicopters.” But after oil prices crashed, “investment in offshore field development ground to a near halt,” Robertson said.
The demand for offshore helicopter transportation didn’t grind to a near halt; the existing rigs still needed to be operated. But that wasn’t enough to support supply. “The offshore oil industry substantially scaled back their rig and exploration activities, which greatly reduced the need for transporting people and equipment by air,” said Foley. “Suddenly, offshore helicopter operators found themselves faced with surplus capacity, while they were geared for growth.”
encouraged new high-cost producers to enter the market.”
Either way, the stars were aligned to keep oil supplies high and prices low in 2014 as demand began to slacken. The reason: the large, red-hot Chinese economy started to slow down along with the formerly-hot economies of Russia, India, and Brazil. “The same countries that pushed up the price of oil in 2008 with their ravenous demand helped bring oil prices down in 2014 by demanding much less of it,” stated Investopedia.
The bottom line: oil supplies remain plentiful and cheap, while demand has weakened. This is why oil prices remain depressed, and why the offshore helicopter industry has suffered as a result.
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