Aladdin’s Chopper – Brand-New Helicopters vs. As-New

Folk typically do not fantasize over buying second-hand used vehicles, least of all a chopper. However, sometimes needs must. Such will be the case in any situation where limiting cash-flow or cost-efficiency are driving parameters. In the mineral resource recovery sector, such is likely to be the case in exploration projects.

In highly profitable production situations, aircraft services, as part of a logistic support framework, are effectively a tax-deductible accessory. In exploration they are not – they are a ‘lost’ expense that could be better spent on the main aim of the project they are supporting. So, for the former, the newest and best, with all bells & whistles, can be considered: for the latter cost-efficiency should be a main driver.  

Also, in production situations, demand for air support is typically high due to the need to move large numbers of personnel and support equipment. In Exploration, personnel numbers are usually lower and the operations more self-contained. The former thus tends to high flight hours predicating the best equipment: for the latter, flight hours are generally low with air support mostly on immediate standby for emergency response, again predicating cost-efficiency as the main driver.  So, for the former ‘brand-new’ is a feasible option but the latter necessitates older, cheaper, aircraft. But ‘old’ need not mean ‘clapped-out’: as explained below, old helicopters can readily (i.e., over a few months) be refurbished to an ‘as-new’ condition.

Ball Park costings (per. Chopper) for the two options are along the lines indicated in the table below – in this regard, an ‘as-new’ aircraft is assumed to be more than 10 years old (as such, typically fully amortised and depreciated). The table shows that, while the operating costs of an older chopper may be some 35% higher than its new counterpart, the fixed financial charges – the more significant element – are some 60+% lower. As a result, overall, an ‘As-new’ aircraft has the capability to achieve the required project air support function with equal safety & equal reliability (as explained hereafter) but at some half the overall cost.

That said, bottom line (literally in the above table), while in monthly cashflow terms the Brand-new Chopper represents a very much higher financial outlay, in production situations, the total operational cost makes this fully justifiable as, with the utilization typically being twice that in an exploration environment, the total cost per flight hour (pfh) in each case is similar. If then, in addition, tax due on highly profitable production operations are taken into account, at least a third of the cost of the brand-new production chopper cost can be offset against tax that would otherwise be paid on said profits, thus making the net cost significantly less than that of the exploration team’s ‘As-new’ chopper. So, the highly profitable production world can treat themselves to the best which, in terms of net value, is still highly cost-effective.

But in the exploration environment, where profits are less certain, this argument does not hold, and cash-flow becomes the driving consideration. But does lower cost predicate lower quality & safety? We all know that in life, generally one gets what one pays for – as such, it is typically expected that expensive vehicles will not only be more luxurious but also more reliable and safer. The thesis of this article is to demonstrate that for helicopters, while high expenditure will buy (marginally) more comfort in brand-new types, with regard to reliability and safety there is no difference – indeed, as explained below, the older aircraft may even have an edge in this regard.

Helicopters (indeed, any unpressurised aircraft) over a period of a ‘couple’ of weeks, can be stripped down to a bare skeleton so that every frame can be readily inspected for corrosion or damage and replaced as necessary – effectively making its refurbishment more-or-less the same process by which a brand-new unit is built. Hull sections displaying weakness can be strengthened or replaced and any showing corrosion can not just be replaced but provided with additional corrosion protection to prevent reoccurrence. External panelling is taken down to bare metal (in older choppers with several layers of paintwork being removed, based on previous experience, weighing as much as 80kg!). Any badly corroded panelling is replaced with brand-new units from the OEM and the entire hull is covered with several layers anti-corrosion paint.

New lamps from old – how aging helicopters can be reborn ‘As-new’ with analogue cockpits digitized

With the helicopter thus stripped down to bare frames, ageing wiring looms, anyway, made by specialist companies not by the aircraft OEM, can now be readily replaced. At the same time, the installation of the automated wonders of digital early warning of critical systems’ failure, can be easily installed. Similar to HUMS in brand-new helicopter types, these systems comprise a couple of dozen sensors feeding data into a similar AVMS (Automatic Vibration Monitoring System) computer. At the same time analogue cockpit instrumentation (as shown above) can be readily upgraded to a digital computerised ‘Glass Cockpit’ standard.

The helicopter ‘Roteables’ – principally the engines, gearbox and landing gear (the rotors are a (very expensive) lifed consumable) – are actually not integral to the aircraft, each being designed and built by separate OEMs and each with its own maintenance schedules and documentation. If nearing their TBOs (time before overhaul) they too can be sent back to their respective OEMs (not the aircraft manufacturer) to be zero-houred (ie. also, to be rebuilt to an ‘as-new’ condition) – in passing, it is worth noting that all these items, if properly maintained, can have very long lives measured in dozens of years.

So, after some six months of work and an expenditure typically of some $3m, any aging helicopter, however poor its initial condition, can be bought back to an ‘as-new’ condition, typically with similar technical guarantees as a brand new one. In addition, there are a couple of big (and positive) differences between as new and Brand-new types.

• The first is the quality of engineering on each of these aircraft types. Brand-new aircraft are built on factory production lines, partially robotically, supported by ‘lightly’ qualified personnel essentially taken off the street and given a ‘couple’ of months training to do a single specific task. On each factory shift, typically, there are only a couple of licensed engineers (LAME) with quality control oversight over a score of aircraft.

An As-new unit, however, is hand-crafted with the same number of LAMEs on EACH aircraft overseeing technicians each normally with many years engineering experience. It is worth noting that a LAME is rather more qualified than a doctor in that it takes some 10 years to be awarded the generic licence (a doctor is 8 years). They then have to attend certificated courses on each aircraft type on which they wish to work (another 3+ months).

THEN they need to work on the type (if new to them) for a further 6 months, effectively as an unlicenced technician, in order to be awarded certification approval by the national Aviation Authority and subsequently by the AOC company for which they work. So, unlike OEM factory personnel, they know the aircraft inside-out, its strengths, weaknesses and piquilloes. In short, an As-new helicopter is a hand-crafted product, not ‘spat-out’ from a production line. I will let you draw your own subjective conclusion as to which is likely to be the ‘better’ quality product…….

• The second difference is an ‘As-new’ aircraft is a known quantity – a specification supported by some million hours flight time globally with each unit itself will have flown many thousands of hours. So, an ‘As-new’ product has no secrets. A brand-new production build however, while benefiting from the same proven specification, will only have flown a very few hours flight test before being put to work. As a very complex piece of electro-mechanical engineering, typically there will typically be teething troubles galore as the systems bed themselves in.

Worse still, a newly developed, brand-new helicopter type will add to these teething issues, the surprises inherent in an unproven specification – unproven because during the new type certification process, each prototype only flies a few hundred hours. As such, no one knows what the future holds as early in-service units rack-up a few thousand hours (in case you missed it, you can get a lot of additional information on this in PFT-7 ‘Aircraft Certification – an uncertain compromise’).

So, not only is an ‘As-new’ helicopter type easier on cashflow, but typically, it will also be more reliable (if a bit less capable) than Brand-new and, in that there are no ‘known unknowns’, arguably a little bit safer than its glossy counterpart. OK, with respect to a corporate image and individual passenger appeal, a glossy, brand-new aircraft has its attractions. And there is merit in the argument that in a high-utilization environment, brand-new is better. But, similarly, for all the reasons stated, in a low utilization environment, ‘as new’ is certainly optimum. As such, taken overall, if you want to get a job done predictably, cost-effiently and in a trouble-free fashion, an ‘as-new’, proven work horse, is still likely the better bet.