YEAR END 2016 ASIA PACIFIC REGION CIVIL HELICOPTERS ASIA PACIFIC REGION CIVIL HELICOPTER FLEET REPORT – YEAR END 2016 I Beijing Seoul Penglai Chengdu Shanghai Shenzhen Hong Kong Bangkok Manila ABOUT ASIAN SKY GROUP ASIAN SKY GROUP (ASG), headquartered in Hong Kong with offices throughout Asia, has assembled the most experienced aviation team in the Asia-Pacific region to provide a wide range of independent services for both fixed and rotary-wing aircraft. ASG also provides access to a significant customer base around the world with the help of its exclusive partners. ASG provides its clients with the following business aviation services: Sales and Acquisitions | Market Research and Consulting | Operational Oversight | Luxury Charter Services The acclaimed Asian Sky Fleet Reports are produced by ASG’s market research and consulting team, in collaboration with Asian Sky Media — a branch of ASG focusing on media and publications. Asian Sky Media has a growing portfolio of business aviation reports designed to provide valuable information to readers for a better understanding of the market. Included in the portfolio is the Asia-Pacific Fleet Reports for both civil helicopters and business jets, and the Africa Business Jet Fleet Report for a breakdown of fleet within respective countries. Asian Sky Quarterly provides a reader-friendly look at market dynamics within the pre-owned markets of civil helicopters and business jets. ASG’s latest reports include, the Asia-Pacific Business Jet Charter Report, Asia-Pacific Training Report and the upcoming Asia Pacific Infrastructure Report focusing on respective industry segments showcasing the current status and challenges of the industry. DISCLAIMER The information contained in this report is provided free of charge for reference only. While such information was compiled using the best available data as of December 2016, ASG makes no warranties, either expressed or implied, concerning the accuracy, completeness, reliability, or suitability of such information. ASG is not responsible for, an expressly disclaims any and all liability for damages of any kind, either direct or indirect, arising out of use, reference to, or reliance on any information contained within this report. CONTRIBUTION Asian Sky Group would like to acknowledge the gracious contributions made by numerous organizations, including aircraft operators, OEMs, leasing companies, aviation authorities and JETNET LLC in providing data for this report. Should you wish to reproduce or distribute any portion of this report, in part or in full, you may do so by mentioning the source as: “Asian Sky Group, a Hong Kong-based business aviation consulting group”. For information about our aviation services, contact: [email protected] or visit www.asianskygroup.com. For information regarding ASG publications, contact: [email protected] or visit www.asianskymedia.com. CONTACT Suite 3905, Far East Finance Centre, 16 Harcourt Road Admiralty, Hong Kong Telephone +852 2235 9222 | Facsimile +852 2528 2766 www.asianskygroup.com CONTENTS 02 PUBLISHER’S NOTE 03 EXECUTIVE SUMMARY 04 MARKET OVERVIEW 11 SPECIAL FEATURE: OFFSHORE MARKET 15 OPERATOR PROFILE: HELIKOREA 18 SPECIAL FEATURE: LEASING MARKET 22 OPERATOR PROFILE: CHINA SOUTHERN AIRLINES GENERAL AVIATION COUNTRY PROFILE: GREATER CHINA 26 FOR ALL COUNTRY PROFILES VISIT: WWW.ASIANSKYMEDIA.COM 42 INTERVIEW: STEFANO ZALONIS LEONARDO HELICOPTERS VICE PRESIDENT, CHINA 45 AIRCRAFT SPOTLIGHT: AW169 & AW189 PUBLISHER’S NOTE After a year full of reports illustrating the state of business aviation in the Asia- Pacific region, ASG is happy to get back to its roots with our year end 2016 Asia- Pacific Civil Helicopter Fleet Report. It has been an especially volatile year for the civil helicopter fleet and the Asia-Pacific region was no exception. The continued downturn in oil and gas and other commodity prices, infrastructure limitations, strict regulations and overall economic and political uncertainties contributed to the regional industry again having to navigate through a tumultuous climate. For this year’s report, we’ve decided to focus on turbines only, unlike previous reports when pistons were included. This concentration allows us to focus on critical mission segments that have either been most impacted or are in various stages of growth. This turbine only approach allows for greater coverage of offshore operations, emergency medical services (EMS), search and rescue (SAR) and multi-mission segments, where many helicopters have or will be moving into use for firefighting, forestry, powerline and other onshore uses. When excluding single-engine pistons, you’ll see trend lines change, with the biggest example seen in Australia. In our year end 2015 report, the country showed a 3% growth from the previous year to 2,094 helicopters (both turbine and piston). Over half of those helicopters were used in the private, corporate and flight training segments – all of which typically use the single-engine piston. In our year end 2016 report, the growth is at 2%, when considering only turbine helicopters, leaving the country with 805 helicopters, most of which are engaged in multi-mission operations – all of which typically use a turbine helicopter. While a regional breakdown of the fleet is included, this report also delves further into the Greater China market. Greater China boasted significant growth in 2016 — the most of any country in the region. The growth comes as China’s Government adapts to the necessity and benefits of general aviation, with an initiative released announcing 500 general aviation airports, among other relaxed regulations. With the government now backing the industry, hopes for the future in China remain high as investments increase. In light of other changes that have taken place in the helicopter world – particularly the rise and establishment of helicopter leasing, ASG is introducing a new addition to the report — the Asia Pacific Helicopter Leasing Market Overview. This section showcases some of the largest lessors in the region, as well as the number of leased helicopters in each country and gives a snapshot of how established and significant the leasing business has become in Asia. In addition to the extensive data provided in this fleet report, ASG spoke with some of the most experienced professionals in the regional industry, including China Southern Airlines General Aviation’s Deputy General Manager, Johnny Jian, HeliKorea’s Managing Director, Scott Min and Leonardo Helicopters Vice President, China, Stefano Zalonis. Also included is a spotlight on Leonardo Helicopters AW169 and AW189. As always, ASG will have a complete breakdown of every country in the region, including top operators, top OEMs, and top mission segments served. For this, readers can now access our new website dedicated to ASG market reports and publications (www.asianskymedia.com). After clicking on a country, readers will find a comprehensive overview of business aviation within each country throughout the region. As always, we hope that the information provided is informative and helpful in understanding this sometimes volatile, but always interesting market. Sincerely, Jeffrey C. Lowe Managing Director, Asian Sky Group 2 ASIA PACIFIC REGION CIVIL HELICOPTER FLEET REPORT – YEAR END 2016 EXECUTIVE SUMMARY The Asia-Pacific civil helicopter fleet (turbine only) numbered 3,927 at the end of 2016, an increase of 4% over year end 2015. This increase is notably smaller than in past years, with only half of the 34 countries experiencing y-o-y growth. China remained the region’s growth driver – as it has for the past few years – adding 89 helicopters in 2016, an increase of 22% y-o-y. The Asia-Pacific region’s fleet continues to be largely positioned in four countries. In unit terms, 61% of the helicopter fleet is based in Australia, Japan, China and New Zealand. Australia represents the largest market overall and is the largest market for Bell, followed by Japan, the largest market for Airbus and Leonardo, and China, the largest market for Sikorsky. New Zealand follows these three, with the largest market for MD. In terms of Replacement Cost, the “big four” OEMs (Airbus, Bell, Sikorsky and Leonardo) collectively make up nearly 90% of the market, with Airbus at 43% and the other three making up 47%. Today, the Asia-Pacific fleet includes a wider variety of helicopter mission profiles than ever before, with 53% of the fleet in multi-mission use1, followed by 12% for corporate and private, 9% for offshore, 7% for SAR and 6% for EMS.In replacement cost terms2, offshore has become the largest segment, with 21% of the fleet, followed by SAR at 11%. A more recent shift in the Asia-Pacific fleet has been the usage by local operators of aircraft dry-leased from dedicated helicopter leasing companies. By year end 2016, Asia Pacific’s operators were using more than 170 helicopters dry-leased from third parties, with a replacement cost value of approximately US $1.5 billion. Australia had the largest number of leased helicopters at 60, operating in a variety of roles from offshore, EMS and multi-mission. India follows with 28, used mainly in the offshore segment and Indonesia is next with 25, with the majority used for multi-mission operations. The largest lessors in the Asia-Pacific region include Milestone Aviation, Waypoint Leasing, Australia & New Zealand Bank (ANZ), Airwork NZ, Lease Corporation International (LCI), and Eagle Copters.3 Note (1): The ‘Multi-Mission’ category is defined on page 48. Note