No Market for Fractional Helos? Sure There Might Be, Say Many

AlliedSignal's research may indicate no future for fractional ownership in the helicopter community, but that's not what five other firms told Show News.

"AlliedSignal's main data source was corporate aircraft operators. But 80% of fractional business, at least in the fixed wing community, has come from newcomers. They didn't survey the potential marketplace," said Sikorsky's Michael Moran.

"We think there is a terrific potential for fractional business in the helicopter community," Moran said. He claimed that two-thirds of the fractional newcomers are individuals, not corporations.
Such individuals want to own a share of a high-end aircraft, they expect top notch service, and they want to ride in an aircraft that's widely accepted, according to Moran. "You can't leave a customer who paid a lot of money for a helicopter standing out on the ramp," he said.

Talk of a fractional ownership program is not idle chat at Sikorsky. The firm recently acquired the Associated Aircraft Group based at Duchess County Airport, Wappinger Falls, NY, with the intention of potentially expanding into fractional ownership programs.

"The S-76 lives at the apex of the pyramid of affordability.
The current price for an S-76in executive configuration is $8,000,000." Moran said. "We sell ten executive configuration S-76 aircraft per year. Fractionals could increase that by 50 percent."
"Fractional ownership? Why not?" echoed Eurocopter's Patrick Gavin. "We haven't explored it because it's not part of our core business." Gavin said that an outside firm, such as a leasing company, could offer a fractional ownership program.

Agusta agrees. "It's just a matter of time before a helicopter operator puts together a fractional ownership program having the right formula for success," said Agusta Aerospace president Robert Budica. "There's no question that fractionals, broadly speaking, have promise."

"If you have a $3.4-million aircraft and you can buy one-fourth or one-third, it's going to be attractive to people who otherwise would not have access because of economics," Budica said.
Bell Helicopter-Textron isn't ignoring the fractional ownership market either. HeliFlite Shares already sells one-eight or greater fractions in Bell 430 aircraft. "Our market is non-operators, but we're also talking to corporate flight departments that need supplement lift," said HeliFlite president and CEO Mark Ozenick.

HeliFlite will have five Bell 430 aircraft in fractional ownership programs in Texas by the end of the year and it has ten more in the proposal phase. Next year, HeliFlite expects to sell eight aircraft into fractional programs in Colorado, California and New York.

A one-eight share of a 430 entitles the share holder to 125 hours per year of use. The share costs $688,000, the monthly fee is $9,761, and the hourly operating cost is $643. The guaranteed residual value is 60% or fair market value, whichever is higher.
Rolls-Royce (nee Allison) customer operations VP Tommy Thomason also is excited about the prospects of fractional ownership in places like New York, Los Angeles, Houston, Dallas, and San Francisco.

Thomason, no matter what AlliedSignal might think, believes that fractional ownership can expand the helicopter market.

By Fred George