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Cultivating Resources

January 16, 2013  By Matt Nicholls

"Trimmed out for fair sailing.”

"Trimmed out for fair sailing.” It’s the perfect phrase to describe how many Canadian operators are preparing for another challenging season. And given the uncertain economic conditions of the past couple of years, it’s understandable why many smaller operators are working to establish stronger relationships with existing clients and concentrating on tried and true markets while at the same time carefully analyzing new opportunities.

Operating in Canada’s far north, Trinity Helicopters is expected to utilize 13 to 15 aircraft in 2013 to serve its northern clients.
(Photo courtesy of Trinity Helicopters)


In Helicopters’ annual look at key market segments, industry trends and “crystal ball” forecasts for the next 12 months and beyond, we found many smaller operators are generally happy with their progress over the past year, but are holding their cards close to their chests when it comes to operational enhancements, fleet growth, diversification opportunities and future investments.

Surviving, and ultimately thriving, in fickle, unstable, and at times volatile, market conditions can be a challenge: operators must find ways to keep the blades turning, keep costs in line, and maintain the highest safety standards possible while adapting to the “new normal.”


Helicopter Association of Canada president Fred Jones, who is in close contact with operators from coast to coast, notes that while most operators are cautiously optimistic and carefully positioning themselves in reaction to market fluctuations, there are reasons for optimism that the industry is coming out of its doldrums.

“We’ve started to see a small recovery this past season and the summer before this one, but the year or two before that, it was really quite bad,” says Jones. “We’re still seeing the Oil Patch activities, for sure, but generally oil and gas has been down. Seismic has seen a rebound and fires are a roll of the dice from one year to the next, but it’s the bread and butter for many of our members who still largely depend on it. There has been some exploration but there is a huge shortage of drill pilots that is, in some ways, holding back the industry. As well, there is a real shortage of engineers.”

Jones adds that while some organizations may be new to understanding the effects of slower market conditions, more experienced industry veterans are aware situations can change as the wind blows – and they plan for said fluctuations.

“We’ve been through some lean years and I think that has made operators who might otherwise be drunk with prosperity say hold it, ‘we came through some of the two or three most difficult years in our industry in memory and maybe we’d better be conservative until we’ve really moved out of the doldrums here,’ ” he notes.

Taking a slow and steady road to growth is an important organization philosophy at Goose Bay, N.L.-based Universal Helicopters, where president/CEO Geoff Goodyear and his team are set to celebrate 50 years of business. Universal commenced operations in 1963 as part of the Okanagan Helicopters group and is now a successful separate organization with bases in St. John’s, Pasedena and Gander. Universal operates some 20 aircraft including Bell 407, 206L4 and 206LR and Eurocopter AS350Ba and B2 machines.

Universal's longevity in the industry is impressive and Goodyear realizes surviving the troughs and valleys is about never taking things for granted – working hard to build a safe, nimble operation while solidifying client trust. It was his apt maritime phrase noted at the beginning of this article that captures the spirit of operators heading into the new year.

“I don’t see us heading for any significant storms, nor do I see us arriving ahead of schedule,” Goodyear says. “I know that sounds like the cowardly way out, but I don’t see the year presenting any extra opportunities with regards to utilization nor do I see it as a potential disaster.”

Universal is coming off what Goodyear calls an “OK” 2012 that saw the “bloom off the rose” in many sectors, including mineral exploration – a trend experienced by some operators in Canada. Mining represents some 30 to 40 per cent of the organizational market makeup at Universal, followed closely by provincial government support work, including environmental assessment work. The remaining breakdown includes casual and/or support work for other government programs, mainly federal.

To accurately illustrate the sometimes precarious nature of how key political decisions can turn the operating environment on a dime, as Helicopters was going to press, Newfoundland premier Kathy Dunderdale gave her stamp of approval to the Muskrat Falls hydroelectric project, a joint venture between Newfoundland Crown corporation Nalcor Energy and Nova Scotia private equity firm Emera Inc. The hydro mega project in Labrador is expected to cost the province $6.2 billion and will bring hydro power from the lower Churchill River in Labrador to Newfoundland and then Nova Scotia. The project has been discussed for years, but with its go-ahead, it will garner potential contracts for operators in the region.

“Once this starts, it will spread a lot of supplementary environmental assessment work as well as the obvious support that is required for the infrastructure projects themselves,” Goodyear says. “The involvement for helicopter support will be marginal when they are building the dam, but from our perspective with power line construction, these tenders are something we will be watching very, very closely because they rely almost exclusively on aerial support.

“The levels of activity will likely carry on for four or five years. They are talking about producing electricity in 2016 so even beyond that there will be power lines to finish off or subsea cables to lay.”

Universal has been involved in the project for the past year or two in some of the initial environmental assessment work. They are hopeful that there will be more work once the infrastructure contracts start to come out in early 2013 for a March/April start. “We’re hoping, and there are no guarantees, but we will be jumping for the ball just like other companies,” Goodyear says.

A Northern Perspective
Taking a humble approach and realizing there are no guarantees in operational success is a philosophy shared by Trinity Helicopters’ president/CEO Rob Carroll. Based in Yellowknife, N.W.T., Trinity has 24 pilots servicing Canada’s far north. The company’s fleet consists of a combination of Bell 206, 407 and Eurocopter AS355 and AS50 light and intermediate series helicopters, a diverse mix to service a large clientele across an immense geographical area.

Newfoundland’s Universal Helicopters is set to celebrate 50 years of operation this year. Surviving the troughs and valleys is about never taking things for granted – working hard to build a safe, nimble operation while solidifying client trust,” says president/CEO Geoff Goodyear. (Photo courtesy of Geoff Goodyear, Universal Helicopters) 


The good portion of Trinity’s operations are based around the oil and gas market in the north, north of the Sahtu region, along with base metal, diamond exploration heli support and forestry. They are also heavily involved in government transport.

Carroll knows all too well about the dangers of expanding too quickly, and the importance of establishing key partnerships and sticking to your core competencies. He started the organization in 2009 with one key partner, had a falling out, expanded too fast and adjusted his business model when the mining market went south late last year. A new partner is now on board and his team is looking at 2013 as a stabilizing year with the prospect of some growth.

“We did expand fairly aggressively, but when the markets went down in base metal exploration by 30 per cent, we quickly adjusted in July, made a restructuring plan for the season itself and went down from 19 to 15 aircraft, so we were able to adjust. For us, in 2013, I think 13 to 15 aircraft is a good number.”

With more than two decades’ experience as a pilot with Canadian Helicopters and rival northern competitor Great Slave Helicopters, Carroll is quite aware of the importance of being cautiously conservative but ready to make necessary changes when markets turn. “Throw in the fact we are a three-year-old company and we’ve gone from two to a hundred in a few seconds, so you just have to be smart.”

Changing It Up

Adapting to changing market conditions and diversifying product offerings is a trend that will be more pronounced moving forward, notes Jones. However, he cautions that creative diversification must be tempered and cultivating core competencies is crucial.

Valley Helicopters' general manager Brad Fandrich says his company’s clients are concerned about price, yes, but will pay the price for assured professionalism and consistency. (Photo courtesy of Valley Helicopters)


“The economic conditions have caused many operators to start thinking about ways to stabilize the peaks and valleys,” he says. “And that’s generally what you see in the industry, some companies are getting out there in what is, in an agricultural term, cash crop business mentality – get in, make your money and get out. That’s what a good fire season can do for an operator, and particularly the upstarts.

“But once you’re in the industry for a while, you realize it’s a bit of a mugs game when you depend entirely on a fire season that may or not materialize. Then, you must think about ways of stabilizing that revenue in other industry segments like HEMS, oil and gas to a degree, some government work . . . companies that generally will pay their bills and provide work year over year. And when economic times are bad, it tends to exaggerate that phenomenon where operators are saying we can’t tolerate a season like 2008.”

Diversifying products after a significant change in market conditions is just what Oliver, B.C.-based Transwest Helicopters did after the B.C. logging industry went south in 2008. Notes Transwest president Ernst Ulrich-Mass: “We basically shut down by the end of August 2008. All the logging contracts were cancelled after the major logging companies got out, so I had to do some fast pedaling.”

Fast pedal the industry veteran did, transforming his operation from a flying-heavy logging support operation to a maintenance and repair facility. The organization dropped from some 60 employees to 12, but it’s now back to a healthy 28 – “a full house,” he says.

Transwest is a Bell and TCCA authorized overhaul facility and is also a Honeywell Service Centre. Its engine test facility is capable of full functional and performance inspections of the Honeywell/Lycoming T55 series engine, servicing clients from across Canada. Ulrich says he hopes to expand operations to Africa in 2013.

In addition to its solid MRO operation, Transwest has a small fleet of Bell 214B, Bell 412, and AS350 B2 machines. The company is still actively involved in the firefighting and fire suppression markets.

“It actually didn’t take us a long time to establish ourselves as a maintenance facility, but it was a shock to the system initially,” says Ulrich-Maas. “The ups and downs of the business are a little more painful than they used to be because there are greater sums of money involved. And it’s now a far more global business. Things have also changed in Canada. Not long ago, if you worked in Saskatchewan, that’s where you flew, Alberta, B.C., whatever. Now, you work all over the place. And in the spring, there’s the great Canadian helicopter race from B.C. to Ontario looking for fires. Everyone migrates back and forth, descending on anything that smokes.”

Goodyear cautions that while there are distinct advantages to expanding operations under the right circumstances, the impetus to delve into other avenues can’t come at the cost of hurting your tried and true core competencies. In the end, it’s all about value.

“You can diversify, but if you are in a trough, you can diversify all you want but the chances are, you are going to see a reduction in your utilization,” he says. “And the only way you can deal with that is controlling costs and, from our perspective, making sure that if you are going to spend any money you get good value for it.

“There has to be a return on it – and it’s not necessarily something tangible or exoteric. It can be an esoteric value. For example, your employees. It could be an investment in your workforce.”

The Ties That Bind

Maintaining strong client relationships is imperative in today’s environment, and the need to do so is getting even more pronounced as client demands rise. Implementing airtight SMS systems; adopting new technologies such as flight data monitoring systems, electronic ticketing, or the latest in satellite technology; enhancing training initiatives – it all helps to win (or keep) clients.

Jimmy Emond, operations manager for Alba, Que.-based Panorama Helicopters, says 2012 was a very solid one for his operation. He's hoping for even more success in the new year. (Photo courtesy of Panorama Helicopters)


“The oil and gas industry is probably the best example of this,” Jones says of a new client/operator playing field. “Situations like multiple audits from different customers, different standards, that’s been a real challenge for the industry but in some ways it has also raised the bar for companies that want to stay in the game.”

Carroll maintains the trend extends to other industries. “I can tell you that it’s not just oil and gas,” he says. “It’s changing all the time in forestry; it’s changing all the time in base metal exploration and government transport as well. Everyone’s looking for technology enhancements, such as satellite tracking. It’s a standard now, you have to do it but it’s an expensive standard.”

It’s not just a case of clients asking for more, they are demanding it, notes Goodyear. But in the end, the ultimate payoff will be a safer industry as a whole. Working with clients to understand the helicopter world – one that is slowly moving toward a performance-based operating standard – is a necessary part of ironing out the ground rules.

“In many cases, particularly in the construction world, our clients live by very prescriptive rules, yet our industry is moving to more of a performance-based environment. Having the two of those mesh is sometimes difficult . . . Higher safety standards are always better, but when you’ve got client industries that are really not experienced in how we do certain things, that are not aware of the CARs that we have to live by, they’re setting rules and regulations that run headlong into the rules and regulations we have to live by and follow . . . it’s this lack of experience coupled with their authority that I find sometimes a little disturbing. It speaks to a need for really good client/operator relations before things come off the rails.”

Mark Wickmann of Thunder Bay, Ont.-based WiskAir Helicopters says transparency and honesty still go a long way in ensuring the operator/client relationship is a healthy one. The president/CEO has more than 30 years’ experience flying in northwestern Ontario and his firm has made its mark with hundreds of clients in various sectors including mining exploration, forestry services aerial construction and more. WiskAir Helicopters has had a longstanding involvement in the Ring of Fire in northwestern Ontario – the mineral-rich swamps in the James Bay Lowlands that is rich in nickel, copper and palladium.

“The key with us is we don’t baloney anyone,” Wickmann says. “If we make a mistake, we put our hand up and correct it instantly . . . the attempt is to always remain clear and transparent to the clients. And that earns you loyalty.”

Jimmy Emond, operations manager with Alma, Que.-based Panorama Helicopters, is competing in the ultra competitive Quebec market, where loyalty and strong client interactions make a marked difference. He says keeping his organization’s safety standards high has helped the organization secure new clients and stay profitable. Emond was, in fact, happy to say his operation did very well in 2012 and he’s buoyed about the prospects of an equally lucrative 2013.

“We are still upgrading our safety procedures in the company and we feel this is the best way to grow and secure future customers,” he says. “And for the most part, it’s not really expensive to improve your safety procedures per se; you just need to have the time and personnel in place to do it. Our big challenge this winter is to improve safety procedures while still saving money.”

Brad Fandrich, general manager with Valley Helicopters of Hope, B.C., adds the final caveat when it comes to client relations – always give personalized service. “To be honest, that’s how we have been able to compete in the past,” he says. “We don’t do well when it comes to winning the lowest rate game. We are not the low bidder. Most of our work is with customers who want a certain type of product whether that’s consistency in the same pilots coming back or higher experienced technical jobs that the pilot can provide. The old saying goes that your best customers are not your cheap customers.”

B.C. Hydro is the perfect example, Fandrich says. Valley is on B.C. Hydro’s approved vendor list and the client is well aware it can’t get Valley for lowest price if it wants the value the firm brings. “They realize what they are asking for comes at a cost and when you ask for technology in a helicopter, it can cost a lot of money.”

Staying True to the Cause

It’s easy, in competitive environments and challenging economic circumstances, to head off course from your original bearing. Operators we spoke to are adamant they are keeping their eyes on the prize and despite fickle markets, are not in panic mode. And while few are overly optimistic, they aren’t exactly hitting the distress button, either. In a word? It’s just so “Canadian.”

Thunder Bay, Ont.’s WiskAir Helicopters has had a longstanding involvement in the Ring of Fire – the mineral-rich swamps in the James Bay Lowlands area that is rich in nickel, copper and palladium. (Photo courtesy of WiskAir Helicopters)


“Two or three years ago, you might have had a lot more enthusiasm with the various interviews that you do from operators,” says Goodyear. “I find that it’s ironically comforting that other operators see the same uncertainty we do. The economy is very much about psychology and if everybody is in a bad mood, it becomes a self-fulfilling prophecy. But for those of us who have been around a while, and I don’t want to suggest that I am getting old, I have seen these cycles three or four times in my relatively short career. It allows you to prepare if you realize ‘it’s doing that again; it’s not necessarily something to be feared, it’s something to be dealt with.”

Emond concurs, adding that a more robust market is not too far on the horizon. “I believe the industry will be strong again in two to three years,” he says. “Since the crash, the seasons have been fine. In two or three years, the best companies will still be there.”

Properly trim the sail, and the journey will be more than fair. It’s a great motto to live by.

Driving Business Home
Key projects that could mean strong opportunities for industry in 2013:

Continued Oil Sands Development
PetroChina is poised to move ahead with taking full control of the Dover oil sands project now co-owned with Athabasca Oil Corp, while Indian companies are also trying to get a foothold, notes the Financial Post. On the natural gas side, Encana Corp. could lock up some joint-venture partners, while Exxon Mobil Corp. and its Canadian affiliate, Imperial Oil Ltd., may enter the race to export liquefied gas from the West Coast.

The Keystone XL Pipeline
The controversial project will be granted the go-ahead sometime in 2013 by U.S President Barack Obama. Once completed, the pipeline will transport some 900,000 barrels of oil per day from Alberta to the Gulf Coast. TransCanada Pipelines will commence work immediately if it gains presidential approval.

The Northern Gateway Project
Enbridge, the driving force behind the Northern Gateway pipeline project that could pump oil from the oil sands to the West Coast, will likely get word on its proposal by the end of the year. The project could mean steady work for helicopter operators.

Muskrat Falls Hydroelectric Development
The controversial Muskrat Falls hydroelectric development was given the go-ahead in Labrador and Newfoundland on Dec. 18. The development of dams and a 824-megawatt generating station has been talked about for the lower Churchill region for some 50 years, and will mean years of contracts for operators in the Newfoundland region.

MacKenzie Valley Gas Project
A decision on the long-discussed MacKenzie Valley Gas Project could come in 2013. First proposed in the 1970s, the 1,196-kilometre line would transport natural gas from the Beaufort Sea to North American markets. Project leaders include Imperial Oil and an aboriginal group funded by Calgary-based TransCanada Corp, Exxon Mobil Corp., Royal Dutch Shell and ConocoPhillips. The project cleared the final major regulatory hurdle last August.

Enhanced Opportunities in Natural Gas
Canada’s natural gas sector could be one of the main economic drivers in Canadian resource development long term with $386 billion in investments by 2035, according to a report released in December by the Canadian Conference Board of Canada.


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