Circumstances are colliding that will have significant impact on new civil helicopter development programs for the remainder of the decade. In the West, new civil programs are typically the byproducts of defense spending. And when it comes to dropping defense dollars and euros on new manned helicopter programs, the party might not be over, but it is definitely winding down.

In the U.S., automatic and deep Pentagon budget cuts likely will not be felt until Fiscal Year 2013 under the debt ceiling expansion and spending reduction deal fashioned between the President and Congress last summer, after the bi-partisan congressional Super Committee failed to produce an alternative. However, the just-enacted FY12 National Defense Authorization Act is a reason for caution already. Helicopter defense spending is largely confined to programs that rebuild or modernize legacy airframes, including fitting some with unmanned control systems. One of the few exceptions is the $2.2 billion authorized for continued acquisition of Bell-Boeing V-22 tiltrotors. However, the V-22 will become a prime target for cuts or elimination under any future budget. If this happens, it would be a setback for Bell, which is counting on continued V-22 revenues to help fund its $1 billion, five-year accelerated R&D and facilities modernization program.

More significantly, Pentagon cuts could delay meaningful progress on its leading driver of new helicopter technology–the Joint Multi-Role (JMR)–deep into the next decade. The program is envisioned to field replacements for models that are currently the backbone of U.S. military aviation, including the AH-1Z Cobra and AH-64D Apache gunships, CH-47F Chinook, OH-58D Kiowa, UH-60M Black Hawk and the UH-1Y Huey. The Congressional Budget Office estimates the potential total cost of acquiring JMR aircraft at $57 billion, or an average unit cost of approximately $24 million.

In Europe, the defense segments of industrial giants EADS, parent of Eurocopter, and Agusta Westland (AW) owner Finmeccanica are already showing signs of strain thanks to decreased military spending and the ongoing euro crisis. Finmeccanica has already announced significant spending cuts and is pursuing restructuring after posting record losses. So far, this does not seem to be visibly affecting the company’s new helicopter development programs.

For now, Bell continues work on its Magellan program, which is characterized in the broad terms of technology research as opposed to any specific civil program. Sikorsky, at its own expense, is developing the X-97 Raider compound helicopter, a potential JMR candidate, and that technology could later drive civil models. Likewise, Eurocopter is working on the X3 and AW has taken over the 609 civil tiltrotor program after ending its partnership with Bell last year.

At the same time R&D spending becomes more strained, demand for current production civil helicopters in certain segments is dropping off. The U.S. helicopter EMS industry fleet currently numbers approximately 900 rotorcraft but with not all of them in service the market appears saturated and faces continued consolidation. There were several acquisitions last year, including Air Methods’ purchase of OmniFlight. Decreased local, county and state tax revenues also have caused the elimination or reduction of numerous helicopter law enforcement units.

However, the international market continues to show signs of growth, particularly among offshore oil and gas production (OGP) service operators, spurred on by $100 per barrel oil and expanding deep-water operations. After a pair of high-profile accidents, both Sikorsky and Eurocopter are redesigning the main gearboxes of their heavy lifters aimed at this lucrative market, the S-92A and EC225, respectively. Eurocopter also is bringing a new medium twin on line this year, the EC175, aimed at this market. AW is offering a line of new medium/heavy twins to serve it, most of the Sikorsky S-76Ds on order are destined for it, and it is believed that whatever comes of Bell’s Magellan will end up in a model designed to serve it. All this competition is good news for airframe buyers, who will continue to enjoy a wide variety of choices from both established OEMs as well as new/rejuvenated ones from China, India, Russia and other emerging players in a rapidly changing world market.

The international civil market may well have reached its nadir, with both the Honeywell and Rolls-Royce 2011 forecasts predicting modest sales increases for the remainder of the decade.

“While the market has not returned as quickly as the industry desired,” said Patricia O’Connell, Rolls-Royce business sector president, “basic indicators are beginning to support a positive environment for civil rotorcraft.”