The AlixPartners A&D Minute 

The global commercial helicopter market is regaining altitude after a prolonged period of turbulence. In sectors like oil and gas, there are increasing demands for offshore transport capacity. Other medium-to-heavy lift rotorcraft will also see increased demand in specialized areas, such as search & rescue, emergency medical services, and transport. Light helicopter sectors are likely to be disrupted in the long-term by the increased push toward eVTOLs and drones. However, these sectors will likely increase demand on the supply base. 

Recent years have been marred by supply chain disruption, volatile demand, and unreliable forecasts that affect both operators and manufacturers. However, while pandemic-era conditions are yet to entirely fade away, most operators are finding creative ways to work around them.

As utilization accelerates, a lack of consistent spare parts availability could impact OEM margins and lead to revenue left on the table. Production and supply chain kinks stand in the way of taking advantage of favorable conditions.

OEMs must aggressively evolve their business strategies in response by considering new partnerships, boosting investment, strengthening the supply base, employing more rigorous risk & opportunity analysis, and minimizing downtime—all with the aim of protecting the long-term trajectory of an industry at a crossroads.

Commercial operators face fleet-readiness crisis

Operators are faced with a tough decision: As the demand on their fleets increases, do they find assets with low maintenance requirements, or work with manufacturers to develop solutions to support higher maintenance requirements, including spare parts? This challenge is a result of actions taken during the downturn in 2020. With demand in freefall, operators refrained from maintaining parts inventory due to cost concerns. This decision had broad consequences, forcing suppliers to lay off skilled labor, along with a substantial reduction in line production. Also, the longer a rotorcraft is down awaiting maintenance, the greater the impact for operators, as downtime results in higher operating costs, diminished profitability, and lost revenue due to Non-Mission Capable (NMC) time.

Returning to normal in such a complex industry has proven difficult. Suppliers, faced with increased demand, struggled to promptly restart and ramp up production lines. Operators, seeing a surge in demand, were hamstrung by supply chain production issues that undercut their ability to deliver on expectations. This crisis is magnified in the oil and gas industry’s safety issue. 

According to the aviation sub-committee of the International Association of Oil and Gas Producers, “dispatch reliability rates have fallen from an industry norm of 96% to around 80%,” driven by shortages in main gearbox replacements, and compounded by the reduction in available aircraft. The number of aircraft on ground (AOG) could potentially double by the end of 2024 due to low parts availability, an increase of flight hours, and low aircraft production, with Sikorsky delivering just 4 S-92s in 2022.

OEMs nurturing both supply base and reputation

Aftermarket supply shortages pose a risk to more than just end customers missing out on profit opportunities. Major OEMs are forced into a juggling act, supporting suppliers while protecting their brand image. Aiding suppliers as they get back on their feet is essential but requires more than just offering a pat on the back. OEMs need to take a more active role and collaborate with the supply base to improve parts availability.

For manufacturers, thoughtful intervention alleviates the risk of seeing a shortage of parts available to address the MRO demand risk. This reflects negatively on major OEM platforms, who are in jeopardy of looking less reliable, and even incapable of meeting mission needs. All OEMs and suppliers should be considering how they are preparing for ramping up production now. With volumes and spend lower relative to larger fixed wing contracts, working with suppliers to lock down capability and capacity is the only way to reduce the risk of execution problems over the next few years.

Proactive support

We are starting to see some OEM movement towards proactive support. There are several recent examples, one of these saw Airbus Helicopters take this approach to strengthen its supply base by committing to a $438 million investment in inventories and critical suppliers to improve deliveries. These efforts also included the acquisition of component manufacturer ZF Luftfahrttechnik in January. They are also pursuing a dual sourcing approach, which is critical to driving competition in the supply chain. This helps operators from a part availability standpoint, and in decreasing part costs.

Creating a successful flight plan

INVEST: OEMs must closely monitor and remedy downtime or lose customers to their competitors. For example, an increase in NMC time led to PHI deciding to replace a significant portion of its S-92 fleet with H175s. This amplifies the need to further expand investment in improving part availability to protect the long-term business. 

IMPROVE FORECASTS: To better insulate against volatility, operators need to partner with OEMs on forecasting and to improve fleet management. Strong forecasting models that balance the size, age, and usage of the fleet can help improve the plan for replacement hardware. Combining that model with current lead times and OEM performance could reshape how operators maintain their fleets. 

Additionally, there may be risk mitigation steps required, including diversifying the fleet, or holding additional inventory of critical path parts, and building out rotable pools. While this may add some initial costs, it can prove valuable for fleet readiness and to keep operations active, thus avoiding costs and lost revenue from out of service aircraft awaiting maintenance.

COLLABORATE WITH SUPPLIERS: Increased OEM collaboration with the supply base will yield benefits and solidify positions in the market. The current environment also poses a compelling case for mergers or acquisitions. OEMs should explore potential M&A to move key capabilities internal and become more vertically integrated. 

The entire commercial rotorcraft market is forecast to be 17% of overall commercial aviation, according to GlobalData, which puts OEMs in a bind when trying to prioritize rotorcraft part delivery above other initiatives. M&A activity and joint ventures can help OEMs leverage demand to drive delivery from suppliers. The defense market provides an additional rotorcraft consideration as the industry determines how the cancellation of the FARA program will impact OEMs, tiered suppliers, and the commercial market—which may be looking for advanced capability.

Taking advantage of friendlier skies

As the outlook for rotorcraft demand and utilization improves, so do the opportunities for OEMs and operators to protect brand integrity, increase profitability, and grow. As in many industries, the supply chain represents both a significant enabler to success, and a potential Achilles’ heel. Proactivity, collaboration, and rigorous discipline are necessary components of a successful action plan. 

Read the full PDF here.


For a deeper discussion about the challenges and solutions associated with this topic, contact:

Stefan Ohl

Global Co-Lead, Aerospace, Defense, and Airlines
[email protected]  

David Wireman 
Global Co-Lead, Aerospace, Defense, and Airlines

[email protected] 

Nicolas Beaugrand

EMEA Co-Lead, Aerospace, Defense, and Airlines
[email protected] 


Contact the authors:

Brian Jones
[email protected] 

Josh Lieberman
Vice President
[email protected]

Olivia White
Vice President
[email protected]