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Tuesday, November 1, 2011

Single-Engine Ops Thrive

By Pat Gray

Upon completing my last assessment, I’m still comfortable in declaring that the Gulf of Mexico coastline has a larger concentration of helicopters than any comparable piece of real estate, at least in the U.S.

That said, I will turn my attention to a profile of at least one operator who somewhat defies the standard image of the large multi-engine operators who seemingly dominate aerial transportation for the offshore energy industry.

Tucked away in an old sugar cane field in Broussard, La. resides Rotorcraft Leasing Company (RLC). They have a very nice spread of administrative buildings, maintenance hangars and training facilities. Two maintenance-oriented individuals, Cyril Guidry and Loyd Marks, came together about 1984 and thought it would be a good business idea if they bought some older helicopters to refurbish, upgrade and then dry lease the aircraft to various operators. The business met with success. As time went on the partnership split and Rodger Bagwell joined Marks and they decided they could get a piece of the commercial flying market and so the company applied for and received a part 135 operating certificate.

Fast-forward to today’s offshore market. RLC now owns and operates 80 helicopters, of which 75 are single engine and five are light to medium twins. These helicopters are scattered along the Gulf Coast at 10 different operating bases from Mobile, Ala. to Rockport, Texas. Each of the 10 bases is owned or leased by RLC and is an approved heliport location that is used to embark and debark passengers who work on offshore oil/gas rigs. The bases are staffed with pilots and maintenance personnel who do all inspections and light maintenance, with heavy maintenance done at the Broussard facility.

It’s important to note the type of helicopters RLC operates—single-engine. For a number of years now, all of the major oil producers, for example Exxon-Mobil, BP, Chevron and Shell, have mandated the use of twin-engine helicopters for overwater operations, both in the U.S. and overseas. This is a safety statement and it would be hard to argue that point. So, if RLC is in the same market, how do they compete and still make money with single-engine helicopters?

Let’s start with price. Obviously, a single is cheaper to operate than a twin, so they can bid lower for contracts. Next, the knowledge of which and how many different companies are drilling for a product and how many companies are in the production business—two separate operations. The actual owners of the wells almost always contract with a specialty company (usually called a production company) to get the product, oil or gas, from the well to a pipeline. There are a number of production companies and entities in the Gulf that use single-engine helicopters, such as the federal government through the Mineral Management Service and the U.S. Coast Guard.

Dru Milke has been appointed CEO of the newly energized company and he brings a wealth of experience to the table. He spent more than 20 years with Offshore Logistics, holding just about every management job in that company, including president of the Air Logistics arm.

In an interview with Milke, I asked if he thought RLC was in a niche market and the answer was no, saying that there are quite a few other single-engine operators in the Gulf, but that the company was the largest privately owned company with a 21-year track record of superior service and customer satisfaction. He went on to say that RLC mirrors much of the business model he used at Offshore Logistics, one of the most successful companies in the Gulf.

“RLC has just secured a strategic investment from Sankaty Advisors, a private manager of fixed income and credit instruments. With this funding, the company will have the financial stability to continue providing the service our customers have come to rely on,” Milke said.

In talking with Larry Adams, the company’s COO, he presented a few operating statistics, noting that the company has 100 pilots who have an average of 6,000 flight hours each. The pilots and mechanics work a "one-for-one" schedule, for example seven days on and seven days off, or six days on and six days off.

The company is proud of its 2010 safety record, with Adams pointing out two recent awards that showcase that record: the HAI Operator Safety award, given for 72,000 accident-free hours, and the California PXP Offshore Safety award, given for no lost time accidents or incidents. It seems like those single-engine overwater operations can be done safely with the right management approach.

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