Helicopter logistics demand falls as oil slump hit operations

Demand for helicopter aviation logistics mostly for the Nigerian oil and gas industry has dropped sharply as international oil companies reduce exploration and production, due to the collapse in oil prices.

BusinessDay checks revealed that the amount of helicopters flying in the country has dropped and some expatriates have been fired since operators cannot meet up with overhead costs.

“The effect of the decrease in oil price is tremendous because it has drastically reduced the number of hours flown by companies,” Femi Adeniji, Chief Operations Officer, Tropical Arctic Logistics Ltd, a helicopter Logistics firm told BusinessDay.

“The contracts were done with the old oil price, which is near $110 dollars per barrel but prices have since reduced to 37 dollars per barrel.”

Adeniji explained that the contracts the helicopter operator’s sign usually have a retainer ship and operational charges component.

The retainer ship is usually used to settle salaries, while the operational charges are used to offset cost of maintenance depending on the number of hours flown.

Oil companies are however now reducing the amount of hours flown from about 100 hours a month on average to less than 50 hours a month today, and we find two or more oil companies using the same helicopters to do their various operations to reduce costs according to Adeniji.

The cost of operations of the AW139 helicopter which is 1,750 dollars has not changed even with the drop in oil price, leaving operators with the challenge of coping with cost of operations.

In a bid to cope with the situation at hand, companies in this direction have had to adapt to the VIP version of helicopters, which includes the crane helicopters and the heavy lifting helicopters that can perform diverse functions across various sectors of the economy.

Harold Demuren, former Director General of the Nigerian Civil Aviation Authority (NCAA), said helicopter logistic firms in Nigeria have supported the oil industry and similarly, there are other industries that are growing now that will need the support of such firms.

“The mining and construction sectors are areas that need helicopter and small aircraft support. All over the world that is what happens. Nigeria has an excellent environment for helicopter business to thrive since they do not need major run ways, all they need is where they can land and take off, Demuren said.

He noted that all operators need to do is mapping the areas that needs to be mapped, adding this is a new frontier and new opportunities to enhance the economy.

Some helicopter logistics firms operating in Nigeria include Bristow Helicopters, Caverton helicopters, Alpha helicopters Ltd, Paramount Airlines and Travel Services Ltd, Domakafe Global Ltd, Alpha Helicopters Ltd and Germys Industries Ltd.

Experts have said if helicopter operations in Nigeria were not affected by accidents or major incidents, its business, especially in the oil and gas industry would generate $600 million (about N96 billion) for all commercial air transport operators.

The amount, according to Akin Oni, former managing director of Bristow Helicopters, would be generated by operations of over 83 helicopters being operated by six operators with Air Operator’s Certificate (AOC) in the country.

According to Oni, over 90 percent of oil production is onshore and offshore sections of Nigeria where only ‘helicopters provide quick and safe access for companies in the prospecting and production operations.’

“Onshore and offshore productions fields are considered hostile terrain with very limited land transport and marine transport…helicopters are vital to the business of Nigeria,” Oni said.

Oni disclosed that the helicopters currently being operated in the country consist of light, medium and large range, while the light ones consists of those of 4-5 seats; medium consist of 10-15 seats while large consist 15-19 seats operating into over 200 onshore helipads and 200 helidecks.

Ifeoma Okeke