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June 22, 2012


Robinson Helicopter Market Update – New Helicopter Demand Returning


by Andres L. Kerllenevich



Three years ago, I wrote an article entitled “The State of the Used Robinson Helicopter Market.”  At that time, the factory was laying off workers and holding a huge inventory of cancelled orders, and the used market was severely depressed.  Anyone who has lived through a recession knows that the economy is cyclical.  However, at that time, it was very difficult to see the light at the end of the tunnel.


In the years since, the cancelled order inventory has been replaced with lead times and the used market has stabilized.  RHC is hiring again and buyers looking to purchase a new R22 or R44 must wait several months.


For the first time in years, I am getting the types of calls that I used to receive regularly: a buyer who wants a new R44 now and is willing to pay top dollar for it.  I am also seeing buyers placing new orders and waiting for them to be built.  It appears that, while the economy has certainly not fully recovered, the market for Robinson Helicopters has firmed up significantly.


The Pre-Recession Market


Prior to the economic collapse, dealers would regularly order new helicopters, for inventory, with the intention of re-selling them when they were completed.  The market supported full list pricing for helicopters with immediate availability so when customers looked for an R44, with immediate delivery, they could locate a dealer with one who would then re-order a new replacement helicopter.  Thus, there was a “pipeline” of new helicopter delivery positions and equilibrium existed between that “pipeline” and buyers seeking immediate delivery.


The Past Three Years


The economic collapse completely destabilized that equilibrium.  The credit crisis, combined with drastically reduced demand, resulted in many order cancellations and a huge cancelled order inventory.  The little demand that remained was more than satisfied by cancelled order inventory which took two years to sell off.  Even after the cancelled order inventory was cleared out, the depressed used market prices made buyers stay in the used market (and made dealers insecure about their ability to profitably resell new helicopters purchased for inventory).  This caused the “pipeline” to empty out.  For this reason, in my business, used sales far outnumbered new sales during this period.




While used helicopter prices have not recovered to pre-recession levels, they have stabilized to the point where, combined with the fuel bladder SB, the prospect of a main rotor blade replacement AD, crankshaft replacement, and the ever present twelve-year inspection, the reduced cost differential between new and used helicopters makes new helicopters more attractive.


In addition, my business has seen demand for new R44s, with immediate availability, spark back to life.  In the past three months, I have seen five new R44s sell at, or near, list price.  I am also now receiving regular calls for new R44s with immediate delivery from buyers prepared to pay full list price.


The import of this is significant.  For the first time in over three years, it again makes sense for dealers to buy R44s for inventory knowing they will be able to resell them at a profit.  Dealers can, therefore, now, replenish the “pipeline” of new helicopter delivery positions.


This is a very positive development for RHC, its dealers, and the industry as a whole.  Strong new helicopter pricing results in a stable market in which dealers can stock inventory and buyers can buy with confidence, all bolstered by a strong used market.  As the saying goes, “a rising tide lifts all boats.”


New vs. Used


The decision of whether to buy new or used requires analysis of many factors.  A used helicopter purchase allows for immediate delivery, lower purchase price, and lower insurance premiums.  However, purchasers of used helicopters must plan for potential required modifications (ie: fuel bladders, MRB replacement, and crankshaft replacement) as well as the twelve-year inspection and higher maintenance costs.  In addition, used helicopters require due diligence (ie: title work, inspections, travel, etc.) and may have their warranties expired.


Buying new, on the other hand, comes with a higher price and/or longer waiting time but it avoids all of the above issues as well as allowing for the buyer to choose colors and options and enjoy that intangible “new helicopter” experience.


Regardless of which option a buyer chooses, it is good news that buying a new helicopter is, again, a viable option.





Andres L. Kerllenevich is a factory authorized Robinson Helicopter Dealer and broker who operates the website R44Sales.com.  He can be reached at helodriver66@gmail.com or at 904-342-0630.





July 3, 2009


The State of the Used Robinson Helicopter Market


by Andres L. Kerllenevich



As a broker of used Robinson Helicopters, I receive two or three calls a day from prospective sellers and buyers inquiring as to the state of the market.  My response is always the same:  the market is active but depressed.  While this may seem like a contradiction, it means that while there are still many buyers out there with the funds and desire to buy, they expect to pay much less than they would have paid just nine or ten months ago.  Where a helicopter would have sold quickly for $375,000 last summer, the highest offer I might receive on the same ship today is $315,000.  The result is that there are a lot of ships for sale, a lot of buyers making very low offers, and very few sales taking place.


Buyers call me every day making low offers and seem genuinely perplexed when sellers do not gratefully accept.  They proclaim indignantly that the economy is in a recession and that the sellers have no choice but to sell at these prices.  One of the main points they are missing, however, is that the vast majority of these helicopters are owned free and clear of any loans.  As a factory authorized dealer, I know from experience that less than 5% of my customers borrow money to purchase their helicopters.  In this way, the used helicopter market is unlike the housing market where homeowners, who are behind on their mortgages, must sell quickly or face foreclosure.  In addition, where the housing market is awash in foreclosed properties, there is no such deluge of repossessed Robinson Helicopters.


In order for a sale to take place at rock bottom prices, a seller must find himself in a situation that requires him to take a significant financial hit.  Given that most sellers are not carrying debt on their ships, they can usually afford to park their helicopters and wait for the market to improve.  Unfortunately, when such deals do occur, the aviation rumor mill exaggerates and disseminates knowledge of them at light speed creating the unrealistic notion that sellers a lining up to give away their helicopters.


Buyers hoping to buy at rock bottom prices must be prepared to make dozens of low offers before, possibly, finding a seller that will accept.  In most cases, that seller will not be found.  Invariably when such a deal is found, the buyer has spent months calling every ad in the trades (as well as calling the author of this article) making one low offer after another.  As I tell prospective buyers looking for the deal of a lifetime, “you will earn that deal with your time”.  If a buyer needs or wants to buy a helicopter relatively quickly, it is unlikely he will find a steal in a short period of time.   


One sure way for a serious buyer to find a well priced helicopter is to purchase one of the canceled orders sitting at the factory.  These ships are not going for fire sale prices but they are significantly discounted and represent very good deals for the serious buyer who does not have weeks or months to spend making countless fruitless calls.


Sellers, on the other hand, have to be realistic in that if they want to sell quickly, they will have to accept a price substantially lower than they would have received a year ago.  If a seller is not in a hurry, he should set a reasonable price and hold out for a buyer who does not have time to waste or until the market firms up.  In any case, the seller must be prepared to receive countless ‘low ball’ offers and endure every bargain hunter’s detailed arguments as to why he must sell at fire sale prices.


One way for sellers to avoid the deluge of tire kickers and bargain hunters is to hire a broker.  The broker will field the dozens of low offers and filter out the time wasting bargain hunters and efficiently communicate offers.  The active broker will also have a network of interested parties to whom he can present the helicopter.  In addition, there is no public source of sales data for piston helicopter sales, and an active broker will have recent sales data.  He will also assist in negotiations, prepare purchase agreements, schedule pre-buy inspections, and coordinate the exchange of funds and title documents.


So where is the market going?


That is, of course, the million dollar question.  At some point, the economy will bottom out, the inventory of canceled orders at the factory will be sold, and pricing will return to normal.  Whether this takes one month, one year, or more, nobody knows.  In the meantime, anyone looking to buy or sell should do their best to obtain reliable recent sales data in order to make the best deal possible without wasting valuable time.







Andres L. Kerllenevich is a factory authorized Robinson Helicopter Dealer and broker who operates the website R44Sales.com.  He can be reached at helodriver66@gmail.com or at 904-824-5506.


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