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Hunkering Down: Operators across Canada

By Ken Swartz

by Kenneth I. Swartz | November 6, 2014

Published on: November 6, 2014
Estimated reading time 28 minutes, 23 seconds.

Vertical speaks with operators across Canada to gauge the temperature of the industry — and finds a variety of responses to a natural resources sector in nosedive.

As Canadian commercial helicopter operators continue their transition to larger and more capable helicopters, the Bell 206B JetRanger still accounts for more than 300 units in the fleet. Airspan Helicopters of Sechelt, B.C., flies nine helicopters, including this JetRanger configured for long-line work. Shawn Evans Photo

The helicopter business in Canada often begins where the roads end. It’s a business historically built on flying to remote places and is sustained by customers that work in the field.

This year, Canadian helicopter operators were hunkered down for another slow flying season of cutthroat competition with “too many helicopters chasing too little work,” according to a chorus of operators that spoke to Vertical about the state of the market.

Boom and Bust
During the first years of the new millennium, the helicopter business soared, with rising commodity prices driving increased exploration and development activity across northern Canada.

The commercial fleet increased by 32 percent between 2001 and 2011 to 1,752 helicopters. In June 2014 it was hovering at 1,815 aircraft — despite a significant drop in demand in the five years since the world financial crisis of 2008-2009.


VIH Helicopters is now devoted to the international heavy-lift market with a fleet of four Kamov Ka-32A11BCs, after transferring its visual flight rules business to other family-owned operators. Ron Hackett Photo

According to the operators, it’s a lack of markets rather than a lack of natural resources that is keeping helicopters on the ground.

“In 2013, exploration and deposit appraisal expenditures in Canada dropped to C$2.3 billion, a significant 41 percent decline from the 2012 total of $3.9 billion and the all-time high of $4.2 billion recorded in 2011,” states the Natural Resources Canada Information Bulletin for March 2014. “Expenditures are expected to decline by a further 7 percent in 2014 to $2.1 billion, approaching the 2009 financial-crisis-induced low of $1.9 billion.”

Low commodity prices have led to a weak forest industry and the collapse of mineral exploration and development, which supports the helicopter industry across Canada.


After B.C. Hydro adopted twin-engine helicopter requirements for “low and slow” transmission line maintenance and construction work in 2008, several charter operators in British Columbia upgraded their fleets, including Blackcomb Aviation, which introduced the first of two Airbus Helicopters EC135 T2s in spring 2014 for transmission line work. Marc Witolla Photo

Unseasonal wet weather was more common than wildfires in Western Canada at the start of the summer, with some forests so damp that “you couldn’t start a fire with a blowtorch,” said Paul Horvatis of Avialta Helicopter Maintenance of Edmonton, Alta. — a helicopter maintenance and leasing company.

The Northwest Territories ended up having a record fire season, while British Columbia and Saskatchewan saw more hectares burned than the 10-year average. However, the fire season in the other provinces and territories was well below the 10-year average in terms of hectares burned.

One of the markets hardest hit by the utility downturn is the French-speaking province of Quebec, where the exploration slowdown, completion of major hydro-electric dam projects, and delays in the launch of the Plan Nord economic development strategy have resulted in an exodus of helicopters to other regions as they search for work.


Air Medic introduced two AgustaWestland AW109 SP GrandNew helicopters to the Quebec emergency medical services market this summer. The helicopters support the subscription-based air ambulance service which also flies Pilatus PC-12 fixed-wing aircraft. Ken Swartz Photo


A Bell 407 operated by Universal Helicopters Newfoundland and Labrador LP in Torngat Mountains National Park. The helicopter market in the province is very soft, according to company president Geoff Goodyear. Mike Reyno Photo

Survival Strategies
On the surface it might seem that the 2014 operating season is all doom and gloom, but many established Canadian operators have well-honed survival skills to navigate their businesses through seasonal and cyclical upsets.

“We are a debt-free company, which allows us to weather a slowdown in the industry,” said Bart Stevenson, president and operations manager of Forest Helicopters of Kenora, Ont. “We’ve been in this business long enough to know that it is a very slippery slope if you owe money to a bank.

“Canadian operators, especially those that are not involved in the oil-and-gas sector, are experiencing some tougher times. We were heavily involved in the mining industry and saw our utilization drop approximately 40 percent between 2012 and 2013 — and we are forecasting a further reduction in work in 2014. The competition for the work is ferocious.”


Below average forest fire seasons the past few years have hurt the helicopter industry’s bottom line. Medium Bell 205 A-1s and Bell 212s are favored for water bucketing and fire crew transport. Shawn Evans Photo

And that competition is forcing some to take drastic measures. Dan Munro, president of National Helicopters of Bolton, Ont., said he’d recently seen an operator offer a Bell JetRanger on floats for just $685 an hour. “The last time we saw rates that low was in the late 1980s,” he said. “It takes a long time for rates to go up once they are down and it doesn’t make any business sense to pursue work where you can’t make a decent profit.”

Horvatis said operators are getting squeezed from two sides. “The customers now want a lot of extras such as high-time pilots, long-line experience, mechanics on site, support trucks and trailers, but the charter rates aren’t high enough to cover everything,” he said.

Upsizing for Profitability
Canadian Helicopters Limited (CHL) was created through a management buyout of CHC’s domestic Canadian operations in 2000 that included visual flight rules (VFR) bases across Canada and instrument flight rules (IFR) Sikorsky S-76A emergency medical service (EMS) contracts in Ontario and Nova Scotia.

Over the past five years, CHL has transformed itself from a domestic operator to an international player with an expanding offshore business.


Cougar Helicopters provides dedicated 24/7 search-and-rescue support to the offshore oil industry from St. John’s with specially-configured long-range Sikorsky S-92s. Offshore exploration and production is expanding in the North Atlantic off Eastern Canada. With the awarding of new offshore contracts to Cougar, the company could operate up to 10 S-92s post 2016. Mike Reyno Photo

The transformation began in early 2009 when it began a U.S. military contract to provide logistics support in Afghanistan with a fleet that peaked at four Sikorsky S-61Ns and six Bell 212s flying about 200 hours each a month.

Increased revenues helped fund CHL’s purchase of Helicopters (NZ) of New Zealand in 2011, which added counter seasonal operations in New Zealand, Australia, Antarctica and Southeast Asia as well as valuable international offshore oil and gas experience.

The renamed HNZ Group Inc. now operates more than 130 helicopters through Canadian Helicopters and HNZ Global.

Downsizing for Profitability

Since the world financial crisis, VIH Helicopters Limited of Sidney, B.C., has downsized Canada’s oldest privately-owned helicopter company from a fleet of about 50 VFR helicopters to four.

“The transition to the business we are now was a fairly simple one,” says Jen Norie, general manager, VIH Helicopters Ltd. “We transferred many of our light and medium type helicopters as well as crews as a business unit to another family-owned operator.”


Phoenix Heli-Flight introduced a new Airbus Helicopters EC135 T2e painted in a Northern Lights scene in mid-2014 for the 24/7 HEMS service it provides in the Fort McMurray region. Mike Reyno Photo

What remains is a leasing business with eight aircraft flying with other operators across the globe, and VFR heavy lift helicopter operations with the Kamov KA-32A11BC. One Kamov is on a multi-year aerial construction contract in Peru, another is on a long term power line construction in Saskatchewan, while a third is working throughout Canada performing logging, equipment moves, aerial construction, fire suppression and power line construction. The fourth Kamov is in Victoria being returned to flight following a hard landing last summer.

“The refocusing has been extremely successful and we are planning to add additional heavy lift aircraft to our fleet in the coming 24 months,” said Norie. “In addition, we imported a Sikorsky S-92 from Korea that our sister company VIH Aerospace is going to overhaul and refit to SAR [search-and-rescue] configuration for a customer.”

Offshore Oil & Gas Support
The most capital-intensive segment of the Canadian industry is flying in support offshore exploration and development projects off the coast of Nova Scotia and Newfoundland and Labrador.

Cougar Helicopters has had the market to itself for a couple of years but its S-92s will soon be sharing the sky off the shore of St. John’s with a pair of S-92s flown by crews from CHC Helicopters Canada Inc.

The new CHC Canada S-92s are going to be flying for Statoil supporting an 18-month drilling program by the West Hercules platform scheduled to begin drilling this fall. Most of the S-92s’ missions will be about 300 miles (500 kilometers) offshore over the hostile North Atlantic.

Statoil, in partnership with Husky Energy, made its third deepwater discovery of crude oil in the Flemish Pass Basin last year. The Bay du Nord discovery is the largest discovery Statoil has ever found outside of Norway, with other discoveries at Harpoon and Mizzen.



A National Helicopters Bell JetRanger on the frozen surface of Lake Erie, supporting crews repairing an underwater natural gas pipeline during the winter. National Helicopters Photo

CHC Canada is now leasing the three S-92s and an Airbus Helicopters AS332L Super Puma from CHC Helicopters, which provides helicopters to Statoil in the North Sea.

Cougar (now partially owned by the Bristow Group), the established offshore operator in Canada’s Maritime provinces, has its S-92 fleet performing crew change flights from St. John’s Airport to the Hibernia, Terra Nova and White Rose oil fields off Newfoundland; from Halifax Airport to the Sable Offshore Energy Project (SOEP) and Deep Panuke gas fields; and providing SAR coverage out of St. John’s. The St. John’s offshore production support contracts were recently renewed for another six years.

Canadian offshore helicopter demand will increase steadily over the next few years beginning with the development of the Hebron-Ben Nevis field off the coast of St. John’s, which will begin pumping oil in 2017.

Shell Exploration (Canada) launched a 3D seismic survey off Nova Scotia in 2013 and will start deepwater drilling in the Shelburne Basin with ConocoPhillips and Suncor Energy in 2015. BP also has a 3D seismic program underway off Nova Scotia and will start drilling in 2017. And in the Arctic, the National Energy Board recently approved a Norwegian consortium’s proposal for a five-year program of seismic tests in the Davis Strait off the east coast of Baffin Island.

Last year, Imperial Oil’s seismic survey program in the Beaufort Sea was supported from Inuvik, N.W.T. by a CHC Helicopters Canada Super Puma and a VIH Cougar AgustaWestland AW139. Imperial Oil plans to launch exploratory drilling 110 miles (175 kilometers) offshore in the Beaufort Sea by 2020.

Emergency Medical Services
Many of the helicopter emergency medical services (HEMS) operations in Canada got their start when commercial helicopter operators took the risk of starting a service before provincial health agencies were prepared to pay the cost for an air evacuation.

Phoenix Heli-Flight took delivery of a new Airbus Helicopters EC135 T2e in early July for its 24/7 HEMS service in Fort McMurray in northeastern Alberta. The program launched the previous July with a leased EC135 P2 to serve the local community and the tens of thousands of people working at the large scale oil sands projects that surround the remote northern community.

“Financial support is slowly picking up,” said Phoenix president Paul Spring. “The Regional Municipality of Wood Buffalo has agreed to provide 50 percent of the standby costs for the program and we expect the oil industry to contribute another 20 percent. Alberta Health is paying hourly fees for evacuation flights, but the provincial government is not yet making any contribution to the standby costs.”


A Lakelse Air Airbus Helicopters AS350 B2 working in northern B.C.’s Coast Mountains near its home base of Terrace. Jeff Gosnell/Lakelse Photo

In Quebec, Airmedic recently introduced two new AgustaWestland 109SP GrandNew helicopters in early summer that are based at Saint-Mathieu-de-Beloeil near Montreal and at Chicoutimi/Saint-Honoré Aerodrome in the northern Saguenay region of the province.

The air rescue service began as a non-profit organization chartering helicopters from various operators but was restructured as a corporation in May 2012 with the financial support of Stéphan Huot, a developer who also owns Capitale Hélicoptères, a charter company.

Airmedic now has its own operating certificate for the helicopters along with three Pilatus PC-12s used for long-distance medical transports. The HEMS service is supported by 76,000 members and 130 “Airmedic-certified” organizations, but it does not receive any financial support from the Province of Quebec’s health ministry at this stage.

Entrepreneurial efforts by CC Helicopters of Kamloops to develop a HEMS program serving south-central British Columbia began as a company-funded humanitarian initiative that is now supported by a provincial government contract.

“We started a pilot program with a Bell 212 to prove the need and then obtained an air ambulance contract that allowed us to upgrade to a Bell 412 certified for winter IFR operations,” says chief pilot Keith Palmer.

CC Helicopters is merging with Summit Helicopters with the operational integration targeted for late October, at which time the combined company will have 15 helicopters based in B.C., Alberta, and the Northwest Territories.


A Summit Helicopters Bell 412. Summit is part of the expanding Ledcor Group of Companies, and is set to merge with CC Helicopters, at which time the combined company will have 15 helicopters based in B.C., Alberta, and the Northwest Territories. Summit Helicopters Photo

Western Canada Perspectives
“Mining and exploration support used to account for 75 percent of our business and now it’s around 25 percent,” said James Carr, operations manager at Lakelse Air in Terrace, B.C. “We’ve moved with the market, from mining to hydro-electric projects, and now oil-and-gas work.”

Located in the coastal mountains of northern B.C., Terrace is one the bright spots in the Canadian helicopter industry with about 40 helicopters in the area, up from about a dozen two years ago.

Five competing consortiums want to build pipelines across the wilderness of northern British Columbia to transport B.C. and Alberta oil and gas to the Pacific coast for export to Asian markets. Most of the proposed right-of-ways converge in the Terrace area with each proposal requiring a very detailed data package that requires extensive use of helicopters.

The combination of pipeline and hydro-electric transmission line work has also made the Terrace area the light twin-engine helicopter capital of Canada, with about 10 based in the local area. Several oil companies require twin-engine helicopters for low and slow survey work and B.C. Hydro, the provincial hydro-electrical utility, now requires light-twins for most transmission line patrol, maintenance, and construction work.

Elsewhere in the region, the coastal and inland communities throughout mountainous British Columbia are home to numerous helicopter charter bases.
“The dynamics of the helicopter business in western Canada have changed a lot over the past 40 years,” said Charlie Mooney, director of corporate development at Yellowhead Helicopters, which has its head office in Valemount, B.C. “There is still a lot of work to support local bases and seasonal summer contracts, but government agencies no longer give any preferential treatment to a helicopter operator who has invested in establishing a year-round base in a remote community.”

Yellowhead Helicopters doubled its fleet to 33 aircraft in the past two years when it acquired aircraft and bases from VIH Helicopters, which exited a market it had served since 1955.

“We’ve expanded our presence in the heli-skiing market and the oil-and-gas sector with most of the pipeline right-of-way routes passing through our network of charter bases,” said Mooney. “Right now there is a lot of overcapacity in the market since the helicopter fleet is at about the same size as it was before the recession. Rates for mineral exploration contracts are about 25 percent lower than they were in 2007 before the recession which is hard to touch if your helicopter business is focused on continuous improvement and meeting more exacting OGP [oil-and-gas producers] helicopter operating standards.”

April O’Brien is a corporate director and senior sales and marketing associate at Highland Helicopters, a company her grandfather and his brother purchased in the 1960s. She said Highland had invested in year-round employees and in facilities in the communities in which they work.

“There are always operators that come into an area on a seasonal basis, so we work very hard to retain the loyalty of our customers,” she said. “Many of our larger clients have projects across our base network and see the benefit of hiring one helicopter company that can serve them with a fleet of 35 aircraft from 18 base locations.

“The Bell JetRanger used to be the backbone of our business but demand has now shifted to the AS350 B2. There is still a market for the JetRanger, but we are selling off aircraft as the utilization goes down.”

Eastern Canada Perspectives
National Helicopters’ Dan Munro said he was seeing an increase in business in certain markets. “We are doing more corporate charters, flight training, aircraft management, helicopter maintenance and sightseeing tours over Niagara Falls,” he said.  “The industry is going to face a on-going challenge trying to convince end users to pay more to charter new technology helicopters. They are so used to paying vintage rates that it is a hard sell to get a client to upgrade from a LongRanger chartering at $1,500 an hour to an EC130 for $2,100 an hour.”


A Bell 412 from Wildcat Helicopters takes to the sky as a wildfire looms in the distance. Rob Stevens Photo

Further east, the helicopter market is very soft in Newfoundland and Labrador as a result of a retreat in mineral exploration, according to Geoff Goodyear, president of Universal Helicopters Newfoundland and Labrador LP. “The market did a complete 180-degree turn last summer as commodity prices and demand dropped for base metals, diamonds and rare earth metals. The junior mining companies [without producing mines] that raised money on the stock market are sitting on their cash and waiting for better times.

“Cost control is the most important thing for a company to do in a downturn, but you don’t want to cut too deep and loose the high standards and quality you have developed.”

Goodyear said the region has long-term economic promise with large mineral deposits to be developed, and construction of a 1,100-kilometer (680-mile) transmission line planned to carry hydroelectric power from the new Muskrat Falls dam on the Churchill River to southern markets.

More Power and Performance
The single-engine market in Canada is changing and this is reflected in the aircraft portfolios of helicopter lessors.

“We need to stay one step ahead of our customers,” says Paul Horvatis, of Avialta Helicopters. “Today’s operators want aircraft with more lift capacity on the hook, higher internal gross weights, and higher cruise speeds for more efficiency.


Yellowhead Helicopters has doubled its fleet to 33 aircraft in the past two years. Yellowhead Helicopters Photo

“We’ve been adding more Airbus AS350 B3s and Bell 407s to our portfolio and reducing the number of JetRangers and LongRangers we own. We see the Bell 407 filling a niche where an operator needs to fly longer distances.

“The AS350 B3 is becoming very popular because it can carry a good load on the hook and you are starting to see it cannibalize the medium lift helicopter market. I think that eventually every operator will have a B3. If you are supporting a mining company, you want a helicopter that can lift the heaviest diamond drill component, not just some of the drill components.”

Canada, the world’s second largest helicopter market in terms of fleet size, is obviously an important market for all helicopter manufacturers, although many operators have long-favored used aircraft. AgustaWestland has been gaining strength in the private corporate and helicopter emergency medical services, and Airbus Helicopters is strong in the utility, corporate and law enforcement sectors.

Bell Helicopter recently won a contract to provide the Canadian Coast Guard with 15 offshore and utility configured Bell 429s, and the Robinson R66 is gaining ground.

Eric Gould of Aerial Recon Inc. (Robinson Helicopter’s longtime dealer in Canada), believes the R66 will give commercial operators a boost to their bottom line.

“Commercial operators need a helicopter that will allow them to pocket more of the hourly rate,” said Gould. “We did a lot of rides last summer for commercial companies and every one of them was pleasantly surprised with the performance.

“We just finished the Transport Canada test flying of the R66 with new primary cargo hook made by DART, which included 1,200-pound test lifts at the factory and 1,100-pounds here in Canada. The helicopter has lots of power available and the factory is working to increase the external gross weight and develop left side slinging capability for utility missions.”


An AS350 B2 operated by Canadian Helicopters (part of HNZ Group) is outfitted with a Simplex Aerospace Aerial Cleaning System to clean transmission line insulators and other hard-to-reach structures, which in this case is a frosty wind turbine. Canadian Helicopters Photo

Helicopters continue to play an essential role in Canada’s natural resource based economy, and industry veterans know its commodity driven sector goes through a boom-and-bust cycle every seven to 10 years.

The current downturn in business is the deepest in recent memory, challenging the survival skills of many companies. Helicopter operators have diversified and specialized to weather the storm in different regions of the country. Pilots and aircraft maintenance engineers who have invested years in the industry may have to work a little longer before retirement becomes a possibility, while some more junior members of the community are pursuing international careers in the IFR offshore oil-and-gas industry as an alternative to northern utility work and bush flying.

If nothing else, the current struggles demonstrate the underlying strength of Canadian commercial helicopter operators — their ability to continually reinventing themselves in an ever-changing marketplace.

Ken Swartz is an award-winning helicopter industry journalist who has covered the market for 35 years. He has spent most of his career as an international marketing and media relations manager with airlines and a leading commercial aircraft manufacturer. He runs Aeromedia Communications, a marketing and PR agency, and can be reached at kennethswartz@me.com.

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