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Saturday, February 1, 2014

Air Methods Diversifies with Purchase of Blue Hawaiian, Sundance Helicopters

By Woodrow Bellamy III, community editor for Aviation Today

Air Methods CEO Aaron Todd.
2013 was another big year for the largest EMS helicopter provider in the United States, Air Methods, as the company added a second aerial tourism operator to its business with the purchase of Blue Hawaiian Helicopters in December. Rotor & Wing recently caught up with Air Methods CEO Aaron Todd to discuss the integration of Blue Hawaiian into the Air Methods umbrella.

The Hawaii-based operator is the second tour operator Air Methods has acquired in the past two years, as the company also purchased Las Vegas-based Sundance Helicopters at the end of 2012. Blue Hawaiian will keep its name and independent management team under its new parent company, as Todd said Air Methods would take a similar strategy as with Sundance, keeping the marquee branding and popularity of the operation while adding some managerial advantages.

“Blue Hawaiian and Sundance are operations that are several thousand miles apart – so operationally speaking they will function very much as independent operations – but where Air Methods delivers a value is we bring some purchasing power,” explained Todd, adding that similarities in the Blue Hawaiian and Air Methods fleets bring some added advantages to the operation.

Photos courtesy of Air Methods
With the acquisition of Blue Hawaiian, Air Methods now has a combined fleet of more than 450 helicopters, with a combination of the Eurocopter EC130 and AS350 families, along with several Bell models as well. Given their leadership position in the aerial medical services industry, moving into aerial tourism was a natural shift, according to Todd, as the chief executive sees a lot of similarities in the pilots who fly within both industries.

“One of the key advantages is that while these companies and Air Methods operate similar aircraft, their pilots fly significantly more flight hours than ours, and in many of our new higher-level classes, we often find pilots that are transferring from tourism into EMS operations, and we felt that there would be real opportunity to capture that talent stream by having a common umbrella over both the EMS and tourism operations,” noted Todd. However, the expansion currently outside of EMS for Air Methods is likely to be limited to aerial tourism, as the CEO said that although they’re interested in some opportunities outside the borders of the U.S., there’s nothing he can publicly acknowledge at this point.

With the acquisition of Blue Hawaiian, will Air Methods be looking to upgrade or replace their rotorcraft fleet?

Traditionally a provider of air medical services, Air Methods
has expanded into air tour operations with the acquisitions
of Sundance Helicopters
and Blue Hawaiian.
The fleet features the Eurocopter EC130 and AS350, as well as the Bell 407, Hughes 500 and Robinson R44. But Todd feels the fleet has done well in converting to the EC130 T2, although Air Methods will look to migrate the AS350 fleet into the EC130 T2. One aspect of the entire Air Methods fleet that will be a focus is the migration into single-engine platforms, which have much lower maintenance costs than twin-engine rotorcraft.

“The twin-engine platforms continue to dramatically outpace the rate of inflation and the cost to maintain, and at the same time, have been unable to perform at the high and hot levels required to provide services in various parts of the country, or to have the useful loads needed. I think the most effective thing at this point in time is to continue to migrate the fleet to a single-engine platform,” said Todd.

Air Methods is also embracing all of the latest helicopter avionics currently available on the market, and has incorporated night vision goggle (NVG) capability across its fleet. The company will also be looking to equip its entire fleet with helicopter terrain and avoidance warning systems (HTAWS).

“We’re placing HTAWS on all of our aircraft. Certainly you see conversions where TCAS [traffic collision avoidance system] is becoming part of that. Right now our focus is more on some of the technology that will allow for the monitoring of systems and cockpit operations that will allow us to have greater corporate awareness.”

Air Methods was also able to achieve Level 4 of the FAA’s voluntary Safety Management System (SMS) program, the highest level of the program. Todd said the biggest factor in achieving that accomplishment was featuring predictive systems that allow management to identify risks early and anticipate risk factors before they occur. To achieve Level 4 compliance, the company implemented some of the following programs, which are more commonly used by commercial airlines, including Aviation Safety Action Program (ASAP), Maintenance Safety Action Program (MSAP), Line Operations Safety Audit (LOSA), flight data monitoring, and flight operational quality assurance (FOQA).

Looking into the future, Todd sees the HEMS industry facing challenges that other segments of the aviation industry will be facing as well – a shortage of pilots, the ability to deal with the simultaneous occurrence of fleet expansions and a reduction of the utilization of operators per aircraft. “Over the past 10 to 15 years the average utilization per aircraft is nearing half what it used to be, and when you’re dividing that flight volume by four pilots at each base, one of the things we have to always be sensitive to is whether the pilots are receiving enough flying time in order to maintain good competency and familiarity,” said Todd. “I think that speaks to a broader issue, with the draw-down of troops in the Middle East, and with drone flying reducing a lot of the flying time of the pilots coming out of the military. I think finding pilots over the next 5 to 10 years, both fixed and rotary wing, is going to be a very significant challenge.”

Todd also said the industry will face a struggle finding a balance for there to be ever-increasing access to air medical services while the costs required to provide those services continue to rise. “As the U.S. fleet has more than doubled over the last 10 to 15 years, to continue to increase that access to more and more remote parts of the U.S. comes at a very significant cost per patient transported because of the high fixed-cost nature of these services,” explained Todd.

“It will be interesting to see how the American public chooses between that delicate balance of ensuring that there’s adequate access and redundancy within the system, but also affordability, as there’s focus on trying to bend the cost curve within the healthcare system. So far there continues to be a strong bias toward increasing or maintaining strong access to service at the expense of higher costs for the services.”

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