Helicopter operators in Nigeria who had a premium and virtually exclusive market lifting men and equipment for the oil services industry are seeking other outlets as that industry shrinks on falling crude prices.
Nigeria’s largest helicopter operator, Bristow Helicopters (Nigeria) has diversified into fixed-wing operations and plans to acquire two Embraer airplanes, aech with capacity for 55 passengers for the short hop niche market.
Ayo Stilo, Base Manager, Bristow Helicopters (Nigeria), said the company is diversifying into fixed-wing operations and will provide scheduled services to Lagos, Abuja and Port Harcourt for its customers on a daily basis. “We wanted to provide a service that is different. We don’t have that type of service yet in Nigeria. Most of the time, you have people with private jets which is meant for the high and mighty.”
“We are looking at an area that is not yet saturated in the industry. When you provide this kind of service and make it available to certain people, it is open to people in oil and gas, it will bring people away from the known and join us,” Stilo added.
The company also disclosed plans to airlift passengers from Kaduna airport to Abuja airport, in the course of the Abuja runway repairs.
Caverton Offshore Support Group plc, which likewise provided helicopter transport and short hop services for the country’s oil industry is also looking at new markets. “We are working tirelessly to broaden our service offerings through diversification into other sectors, as well as geographically into newer markets, in a bid to boost our non-oil and gas revenues,” Bode Makanjuola, group CEO of Caverton, said.
Makanjuola disclosed that in the first quarter, the company successfully signed a new five-year contract in its helicopter operations to manage and operate a fleet of aircraft for the Lagos State Government.
He said the company is also making steady progress with the construction of its new Maintenance, Repair & Overhaul facility (MRO) at its Ikeja base, adding that the timeline for delivery of the MRO is still on track for end of 2017.
Another player moving in this direction is Omni Blu Helicopters which has also disclosed plans to diversify operations by putting one of its helicopters in the Kaduna airport to help fly passengers from there to Abuja, during the Abuja runway repairs. Omni Blu further disclosed plans to commence cargo operations.
However, the fortunes of helicopter companies are being affected by the challenges facing their oil services sector clients.
The third quarter financial result of Caverton Offshore Support Group, 2016 shows revenue of N14.45 billion, which represents a 19 percent decrease over the same period last year. The drop in revenue in the quarter was due to slower business activities in the Oil and Gas Industry.
Caverton Helicopters also let go no fewer than 150 staff in 2016.
Bristow Helicopters likewise saw a 50 percent cut in fleet size last year.
In addition to 89 expatriate engineers and 26 support staff let go in 2015, Bristow Helicopters experienced further drop in its activities in 2016 as a further 29 expatriate engineers and pilots and 16 support staff were laid-off. In that same year, 21indigenous pilots and engineers were relieved of their appointments.
The shares of Era Group, the longest serving helicopter transport operator in the US, dropped 58 per cent. Nasdaq-listed Petroleum Helicopters International declined 35 per cent, and CHC Group saw its over-the-counter shares plunge 97 per cent. Citic Offshore’s A-shares lost 31 per cent in the same period.
BusinessDay’s checks show that over 250 pilots and engineers lost their jobs since the inception of recession, along with the unrest in the Niger-Delta that has made oil production to plummet.
“The effect of the decrease in oil price is tremendous because it has drastically reduced the number of hours flown by helicopter companies,” Femi Adeniji, chief operations officer, Tropical Arctic Logistics Limited, 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 55 dollars per barrel.”
Adeniji explained that the contracts the helicopter operator’s sign usually have a retainership and operational charges component, adding that the retainership 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 two or more oil companies will often use 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 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 enhance margins, companies have had taken on the VIP version of helicopters, which include the crane helicopters and heavy lifting helicopters that can perform diverse functions across various sectors.
Harold Demuren, former director-general, Nigerian Civil Aviation Authority (NCAA), said helicopter logistics 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 runways, all they need is where they can land and take off,” Demuren said.
He noted that all operators needed to do was mapping the areas that need to be mapped, adding that this was a new frontier and new opportunity to enhance the economy.
