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Tuesday, April 1, 2008

Market Perception: Good Things Come

R&W Staff

Patience is probably not considered a virtue by the helicopter operator who is waiting on some aspect of customer support.

A review of Rotor & Wing customer perception surveys spanning a decade, however, shows that operators have seen improvements over that time in most areas of airframe makers’ customer support. Hence, our use of the cliché, "Good things come to those who wait" (even if that wait was somewhat involuntarily).

We might add to that group to whom good things come Jerry Mullins, president and CEO of Enstrom Helicopter Corp. Mr. Mullins wrote to us to express concern about the results we presented of R&W’s latest customer perception survey ("On the Rise," February 2008, page 35).

"I feel these charts have totally misrepresented the lower-volume manufacturers and do not reflect the true picture of experienced users of the products," he writes. "How can you expect a respondent to give an OEM a rating of 7 or better if they have not had experience with the OEM’s products?"

We fully understand Mr. Mullins’ position. This is why we fine-tuned our survey results last year to focus specifically on the views of respondents with direct and current experience on the aircraft they were judging. The resulting R&W Excellence Ratings, we believe, offer a unique and unprecedented measure of customer satisfaction in the helicopter airframe market. We’ll discuss those Excellence Ratings a bit further below.

In our effort to make those ratings valid measures of customer satisfaction, we excluded from the report those manufacturers for whom we had not received a minimum number of responses. The excluded group largely had small installed bases of products. Enstrom was among them.

We look forward to working with Enstrom and the other excluded manufacturers to ensure that our next Excellence Ratings survey includes a sufficient number of responses from people with direct and current experience in their products.

(Please note that the terms "customer perception" and "customer satisfaction" in this context are not interchangeable. Customer perception is limited to what people think about a manufacturer’s aircraft and support, whether or not they have had direct experience with either. Our Excellence Ratings are based on customer satisfaction, measured through the views of respondents who operate, fly, or fix a manufacturer’s products.)

That said, Mr. Mullins may be pleasantly surprised by this month’s report, which compares the results of customer perception surveys we did in 1997, 1999, 2001, 2003, and 2007. In each of the five customer perception areas we cover here, Enstrom Helicopter showed some of the greatest gains between the 2003 and 2007 surveys.

Enstrom Makes Headway

In the category Overall Aircraft Performance, for instance, the percentage of respondents rating Enstrom’s products above average or better increased 22 points last year compared to 2003’s survey. For Parts Availability, that percentage rose 20 points. For Factory Training, it improved 18 points from 2003 to 2007.

You’ll note that the accompanying charts cover only five of the nine support areas addressed in our February report and our Excellence Ratings ("Setting the Standard," December 2007, page 20). These five — Customer Support, Technological Innovations, Parts Availability, Factory Training, and Overall Aircraft Performance — cover responses to questions that were asked in a consistent form from 1997 on. The form of the questions for the other four — Direct Operating Costs, Maintenance Issues, Technical Documentation, and Technical Assistance — changed somewhat over the five surveys, which would muddle year-to-year comparisons.

In the Excellence Ratings we presented in December, as we said, we honed in on respondents with direct and current experience with the particular manufacturer’s aircraft. This meant that the results included only those respondents who said they have the individual manufacturer’s aircraft both in their company’s fleet and operating at the location at which they work.

Chart 1. Customer Support Perception Trends Percentage of respondents rating the manufacturer 7 or better on a scale of 1-10, 10 being "excellent"
  1997 1999 2001 2003 Revised 2003 2007
Agusta 18 25 35 12 30 47
Bell/Agusta       18 43 53
Bell 74 78 79 58 75 72
Enstrom 14 21 25 7 19 35
Eurocopter 33 49 50 32 48 51
Kaman       9 28 37
MD 24 31 39 21 44 36
Robinson 31 53 49 28 59 54
Schweizer 23 33 33 14 33 42
Sikorsky 40 52 47 30 58 62
Chart 2. Technological Innovations Perception Trends Percentage of respondents rating the manufacturer 7 or better on a scale of 1-10, 10 being "excellent"
  1997 1999 2001 2003 Revised 2003 2007
Agusta 39 36 54 20 48 66
Bell/Agusta       26 57 58
Bell 61 62 61 46 57 64
Enstrom 9 16 16 7 18 25
Eurocopter 60 74 79 57 82 77
Kaman       16 46 41
MD 71 60 70 34 69 54
Robinson 27 46 51 27 55 45
Schweizer 19 21 26 13 30 33
Sikorsky 60 58 58 38 72 73
Chart 3. Parts Availability Perception Trends Percentage of respondents rating the manufacturer 7 or better on a scale of 1-10, 10 being "excellent"
  1997 1999 2001 2003 Revised 2003 2007
Agusta 17 15 26 10 26 41
Bell/Agusta       16 39 48
Bell 75 81 73 55 72 69
Enstrom 15 20 29 6 16 36
Eurocopter 17 35 38 24 37 46
Kaman       8 23 31
MD 23 29 32 18 39 34
Robinson 33 45 51 28 60 56
Schweizer 17 31 27 13 31 41
Sikorsky 36 44 45 24 48 54

It is worth repeating that we know of no publication that has ever presented such a comprehensive or thorough ranking of customer satisfaction in the rotorcraft industry. Hence the label R&W’s Excellence Ratings.

You’ll note in this month’s report that the five charts include two columns labeled 2003. In 2003’s survey, we used the total number of respondents to the study as the base in calculating percentages. Every other year, including 2007, we have used the number of respondents to each particular question as the base. So we have re-computed the 2003 data with the same basis to make the comparisons direct. We present both the original and the re-computed percentages for 2003.

Keep in mind also that the number of respondents surveyed generally increased from 1997 on, so the earlier percentages may have greater variability.

To reiterate, our approach in R&W Customer Perception surveys was to look at a broader slice of operators’ views and to include all qualified respondents with opinions of the airframe manufacturers and their products and services.

Looking at this broader slice allows us to examine long-term trends.

Another difference in this data set is that we include all responses about all manufacturers. In the Excellence Ratings, we excluded manufacturers for which we had not received responses amounting to at least 2 percent of the total response group. Those manufacturers included Enstrom, Kaman Aerospace, Russia’s Mil Moscow Helicopter Plant, and Schweizer Aircraft.

The results we present this month again focus on the percentage of respondents who rated a manufacturer at 7 or better on a scale of 1 – 10, with 10 being "excellent." That amounts to a rating of "above average" or better. We compare those ratings over the series of surveys that started in 1997 and ran roughly every two years since.

Those results provide further evidence of the strength of the Bell Helicopter brand in the marketplace. A cursory review of the five tables reveals that respondents often rated Bell 10-20 points higher than its closer competitor in that category. Just as significant are the indications that the other manufacturers are closing the gap with Bell in terms of customer perception.

Closing the Gap with Bell

In 1997, for instance, in the category Parts Availability, respondents put Bell’s above-average-or better rating 58 points higher than those of Agusta and Eurocopter and 39 points higher than Sikorsky (the three closest competitors in that category). By 2007, AgustaWestland trailed Bell by 28 points in that category, while Eurocopter was just 23 points behind Bell and Sikorsky trailed by 15 points.

The change largely represented gains in the customer perception of the trailing manufacturers. Bell’s rating slipped just 6 points, from 75 in 1997 to 69 in 2007.

Chart 4. Factory Training Perception Trends Percentage of respondents rating the manufacturer 7 or better on a scale of 1-10, 10 being "excellent"
  1997 1999 2001 2003 Revised 2003 2007
Agusta 17 15 26 14 39 50
Bell/Agusta       16 41 54
Bell 75 81 73 56 78 74
Enstrom 15 20 29 8 22 40
Eurocopter 17 35 38 34 57 64
Kaman       9 30 39
MD 23 29 32 21 50 47
Robinson 33 45 51 29 65 61
Schweizer 17 31 27 15 37 45
Sikorsky 36 44 45 29 65 61

Indeed, in most of the five categories, Bell saw the percentage of respondents rating it above average or better remain relatively constant or dip slightly. Most of the other manufacturers saw the percentage of respondents rating them at 7 or better increase over the 10-year period covered by the survey results.

Bell trailed off, for instance, in the Customer Support category, dipping from a revised 75 percent in 2003 to 72 percent last year. It was at 79 percent in 2001. MD Helicopters also fell in this category, dropping 8 points, from a revised 44 percent in 2003 to 36 percent last year. It was at 39 percent in 2001. The decline likely reflects the decline in MD’s reputation in the year’s before New York investor Lynn Tilton bought the company in mid-2005.

By contrast, AgustaWestland saw its rating jump 17 points, from 30 percent in 2003 to 47 percent last year. Enstrom’s above-average-or-better rating nearly doubled, to 35 percent in 2007 from a revised 19 percent in 2003.

In the Technological Innovation category, AgustaWestland’s above-average-or-better rating rose 18 points, to 66 percent last year. Bell and Enstrom were each up 7 points (to 64 percent for Bell and 25 percent for Enstrom). MD’s rating in this category dropped 15 points, to 54 percent last year, while Robinson fell 10 points, to 45 percent, and Eurocopter dropped 5 points to 77 percent.

Those numbers may reflect a rising expectation in the marketplace for technological innovation from 2003 to 2007. AgustaWestland’s increase could be explained by its introduction of the AB139 in that timeframe (as could that of Bell, which was a partner with AgustaWestland on the 139 program then). But the technological content of the products of MD and Robinson didn’t decrease in that period, nor did that of Eurocopter’s aircraft. Perhaps respondents had come to measure manufacturers against a higher standard by last year.

In Parts Availability, as we said above, Enstrom’s rating was up 20 points in 2007 when compared to the revised 2003 value. MD’s rating fell 5 points, again likely a reflection of the mess its parts-supply chain was in between 2003 and mid-2005, when the new owners took it over.

For Factory Training, Enstrom’s above-average-or-better rating last year was 18 points above 2003’s revised level. AgustaWestland and Bell/Agusta saw double-digit improvements in the category, while Bell, MD, Robinson, and Sikorsky all saw their numbers decline compared to the updated 2003 figures.

Chart 5. Overall A/C Performance Perception Trends Percentage of respondents rating the manufacturer 7 or better on a scale of 1-10, 10 being "excellent"
  1997 1999 2001 2003 Revised 2003 2007
Agusta 17 15 26 19 53 69
Bell/Agusta       19 49 65
Bell 75 81 73 50 66 77
Enstrom 15 20 29 7 21 43
Eurocopter 17 35 38 49 76 78
Kaman       14 44 52
MD 23 29 32 28 62 62
Robinson 33 45 51 25 53 62
Schweizer 17 31 27 14 35 51
Sikorsky 36 44 45 33 69 75

Every manufacturer, save one, saw customer perception of its overall aircraft performance rise from the revised 2003 level to 2007, with most logging double-digit gains. The exception was MD, whose "above average or better" rating stayed at 62 percent. Eurocopter’s rating was up just 2 points compared to its revised 2003 rating.

Schweizer Aircraft’s "above average or better" rating in this category rose 16 points from its revised 2003 level, as did Bell/Agusta.

The Bell/Agusta data is problematic. Respondents rated that manufacturer in 2003, though it had no aircraft in the field at that time. We suspect they may have been commenting on Bell aircraft built under license by Agusta.

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