Helicopters: General News

By: US Agent - 6th August 2004 at 00:18

Military Helicopter Upgrade and Retrofit Markets Valued at $12B

(Source: Frost & Sullivan; issued Aug. 5, 2004)

Over the next decade it is estimated that the market for military helicopter upgrades and retrofits will remain strong.

Up to 1,500 major modification programmes for military helicopters are expected to be worth around US$12.6 billion worldwide. The upgrades will be necessary chiefly because of the age of a large number of military helicopters in service such as the UH-1 ‘Huey’, U-60 ‘Black Hawk’, Puma, Lynx and Mi-17 ‘Hip’ utility helicopters; AH-1 ‘HueyCobra’, Mi-24/35 ‘Hind’ and AH-64 ‘Apache’ attack helicopters, CH-47 ‘Chinook’ and CH-53 ‘Stallion’ transport helicopters together with the SH-2G ‘Seasprite’ and Sea King Anti-Submarine Warfare (ASW) aircraft.

A major segment of the upgrades market is expected to be engine retrofits which could be worth up to US$7 billion alone. The importance of powerplant upgrades will increase as military operators around the world improve their helicopter fleets to be more powerful and to travel further and faster. It is expected that by 2009 helicopter engine deliveries could reach 1,200 units per year.

The United States Army, Marine Corps, Navy, Coast Guard and Air Force all operate large helicopter fleets and in terms of size and value, the military helicopter upgrade and retrofit market is expected to be at its strongest in the US where several aircraft need life cycle and capability improvements. Furthermore, the cancellation of the Comanche attack and reconnaissance helicopter in Spring 2004 has released substantial funds (up to US$14.6 billion), which would have been spent on purchasing this helicopter, for expenditure on upgrade programmes for the US Army helicopter fleet. A total of 1,400 helicopters across the Army, Army National Guard and Army Reserve are expected to receive some sort of upgrade over the next decade.

The US Army is expected to upgrade its AH-64D Block I ‘Apache Longbow’ attack helicopters to the AH-64D Block III configuration, while the CH-47D transport will be upgraded to the CH-47F configuration. Meanwhile, the US Marine Corps (USMC) will receive improvements to its AH-1 and UH-1 attack and utility helicopters to the AH-1Z and UH-1Y configuration. The USMC CH-53 transport helicopters are also expected to benefit from a major upgrade to prolong their life cycle.

In terms of the type of upgrades which US military helicopters are expected to receive, many of the aircraft will have their capacity to perform Special Operations Forces (SOF) missions improved. The conflicts in Afghanistan and Iraq have illustrated both to the United States and to military operators around the world the importance of discrete SOF operations in isolated areas against small but heavily armed and highly mobile adversaries. For this role the transport helicopter with its lift potential, speed and flexibility is invaluable for the infiltration, exfiltration and support of SOF troops during such missions. However, the reliance on transport helicopters for these missions since the commencement of the US-led Global War On Terrorism has resulted in excessive wear-and-tear on ageing aircraft. For this reason, US forces and Allied countries involved in such operations will need to prolong the life of their medium- and heavy-lift helicopters while also configuring them to perform SOF missions.

A second major area for upgrades and retrofits vis-à-vis the United States its allies will be to improve the survivability of military helicopters in hostile environments. Whereas fixed-wing aircraft have suffered relatively few losses during operations in Afghanistan and Iraq, losses of rotary aviation to hostile fire have been higher. During Operation Iraqi Freedom up to nine US helicopters were destroyed by enemy action. Therefore, the aircraft survivability upgrade market could be strong over the next two decades if helicopter-intensive military operations continue around the world and if lessons are learnt from those operations.

One major US upgrade programme will see the modification of the Apache Longbow attack aircraft from Block I to Block III configuration. Commencing in 2008 the Block III programme will outfit the helicopters with increased cockpit and battle management digitisation, a Joint Tactical Radio System, improved engines and drive train, an ability to control Unmanned Aerial Vehicles (UAVs) and composite main and tail rotor blades.

The US Army’s UH-60A/L utility helicopters will benefit from the UH-60M upgrade. Like the Apache Longbow, the aircraft will obtain improved engines and rotor blades along with a new cabin and transition section and a glass cockpit. Plans have also been mooted to rebuild up to 255 UH-60 aircraft to a UH-60X configuration to increase the helicopter’s range, enable it to lift up to 4,536 kg (10,000 lb) and to install a new propulsion and drive train system. No firm decisions have yet been made by the US Department of Defense on this upgrade.

The Australian Army is also considering improving the capabilities of their S-70A Black Hawk helicopters. Despite being a much smaller market than its US counterpart, 35 units are expected to be upgraded to improve speed, handling and lift capacity while also installing a digital ‘glass’ cockpit, crashworthy external fuel tanks, self-defence systems and composite rotors. The Black Hawk upgrade is planned as part of the so-called ‘Air 9000’ initiative which will see the Australian Navy upgrading its SH-60 Seahawk aircraft, while the Army will improve its CH-47D aircraft.

Moreover, the US Army will also improve the capabilities of its CH-47D Chinooks. Over 300 CH-47D models will modified to the ‘F’ configuration to include a digital cockpit and digital command and control system, airframe strengthening and modifications to improve the air-portability of the helicopters. Meanwhile, the al-Quwwat al-Jawwiya Il Misriya (Egyptian Air Force) will upgrade its CH-47C helicopters to the ‘D’ configuration. This Foreign Military Sale, announced in July 2004, is worth US$132 million to the Boeing Military Aircraft and Missile Systems Group. The Egyptian Air Force has also contracted Boeing to upgrade 35 of its AH-64A attack helicopters to AH-64D configuration.

The USMC is planning an ambitious upgrade of its helicopters. The venerable UH-1N utility helicopters and AH-1W attack aircraft will receive improvements which will include a new composite main and tail-rotor for both aircraft and improved drive train, engines, tail boom, auxiliary power unit and avionics. This will see the designation of the aircraft changed to UH-1Y and AH-1Z respectively.

The Elliniki Aeroporia Stratou (Hellenic Army Aviation) is also looking to extend the life of 37 of its 84-strong UH-1 fleet with composite main and tail-rotors, a new tail-boom, engines and drive train along with new tactical radios. This US$44 million programme could extend the life of the aircraft until 2014; however, it must be noted that funds for the upgrade have not been factored into the Hellenic defence budget for 2005.

The Comando de Aviación del Ejécito (Argentine Army Aviation) is also considering upgrading its UH-1H and AH-1F aircraft for drug interdiction missions; however Argentina’s continuing financial crisis leaves doubts as to whether sufficient funds are available for the initiative.

While US prime contractors and second-tier suppliers will almost certainly gain from the upgrade programmes being pursued by the US armed forces, they are expected to receive strong competition from other contractors and suppliers in the global military helicopter retrofit and upgrade marketplace. Companies in Western and Central Europe, Russia, the Middle East and Southern Africa are all actively engaged in major upgrade projects around the world; a trend which is expected to continue over the next decade. For example, a large number Russian designed and constructed aircraft remain in service globally. There are a significant number of companies in Russia, Europe, the former Warsaw Pact and beyond which offer upgrades for these helicopters. Due to the age of a significant number of such aircraft many will require modernisation. The leading Russian helicopter in service today is the Mil-24/35 ‘Hind’ attack platform. The design has given impressive service in conflicts from Africa to Sri Lanka and many armies and air forces are keen to extend the Hind’s life and capabilities.

For example, the Bharatiya Vayu Sena (Indian Air Force) is currently engaged in upgrading 25 of their Mi-35 aircraft. Known as the ‘Mission-24’ programme, this will outfit the helicopters with a gyro-stabilised gun turret, Forward Looking Infra-Red (FLIR), video camera, Laser-Range Finder (LFR), night vision equipment, Multi-Function Displays (MFDs), moving-map display, improved countermeasures, global positioning system and the capability to deploy AT-6 ‘Spiral’ and Rafael Spike Anti-Tank Guided Missiles (ATGMs).

In Europe, the Bulgarski Voennovazdushni Sili (Bulgarian Air Force) is expected to embark on a major upgrade of their Mi-17 transport helicopters, together with their Hinds, in order to make both types NATO-compatible while also extending their life and installing improved avionics and mission management systems. It is unknown when the Bulgarian Government will make a decision as to the preferred prime contractor for the upgrades however both Lockheed Martin of the US and Elbit Systems Ltd of Israel have stated that they will jointly pursue the helicopter modernisation market in Bulgaria.

Known collectively as the ‘Visegrad Four’ the Czech Republic, Hungary, Poland and Slovakia are expected to upgrade a total of 115 Mi-35 aircraft which operate across their Air Forces and Army Aviation regiments. The Visegrad Four hope that any upgrade will keep their Hinds in service until 2020 while also making them fully NATO-interoperable and able to conduct 24-hour combat operations. A key requirement of the Visegrad Four is to have 70% commonality across their combined fleets. However, there will be some differences.

For instance the Lotnictwo Wojsk Ladowych (Polish Army Aviation) has asked for a small number of its Hinds to be outfitted with a Combat Search And Rescue (CSAR) capability. The Visegard Four Hind upgrade is also expected to be watched closely by the Hrvatsko Ratno Zrakoplovstvo i Protu Zracna Obrana (Croatian Air Force) and Voeno Vozduhoplovstvo i Protiv Vozdusna Odbrana na Armijata na Republika Makedonija (Macedonian Air Force) which operate nine Mi-24D/V and 12 Mi-24K/V attack/reconnaissance aircraft respectively.

Several companies offer Hind upgrades. AVIAKON of Ukraine is a prime contractor although as yet, the company has not secured any orders for its product. AVIAKON offers improvements to the Hind’s engines, avionics and countermeasures and also offers the installation of a helmet-mounted targeting system. Russian helicopter builders Rostvertol and Mil also offer upgrades for the Hind. Rostvertol’s modification package includes the installation of thermal imaging equipment, television cameras, LFR, target designation system and a weapons suite that can include 9K113M Shturm-VM/Ataka ATGMs along with more powerful VK-2500 engines.

Rostvertol has already performed such an upgrade on four Mi-35Ps for the Air Force of Zimbabwe. The company also offers an upgrade for the Mi-26 ‘Halo’ heavy-lift helicopter. However, there are far fewer of these aircraft in services around the world and those militaries operating such aircraft may not have sufficient funds to pursue any improvement programmes.

It must be noted that there are restraints which could restrict the growth of the Hind upgrade market. Some Russian contractors have been unhappy about foreign companies upgrading the Mi-25/35 citing intellectual property rights to the original design of the aircraft and its systems. Furthermore, despite a number of companies around the world offering improvements to the Hind, the market has been slow to develop with only India, Bulgaria and the Visegrad Four actively pursuing improvements to their fleets.

There are thought to be 1,500 Hinds in service throughout the world but given that many Hinds were exported to erstwhile Soviet Union client states in the developing world, there are no guarantees that these countries will have the funds available to improve their Hind fleets.

Other major military helicopter upgrade and retrofit markets in Europe include the United Kingdom’s modification of the Royal Navy’s 13 AEW.2 Sea King Airborne Surveillance and Aerial Control helicopters. The improvements will see the aircraft re-designated to the AEW.7 standard with the installation of a Thales Defence Searchwater 2000 radar, Cerberus mission management system, Have Quick-II secure radio, AN/APX-113(V) interrogator friend or foe system and a video recorder. The programme is expected to be completed in 2005. Notably, the Comando de la Aviación Naval Argentina (Argentine Naval Aviation) is considering an upgrade to extend the service life of its S-61D and ASH-3H Sea King ASW and support helicopters.

Companies in the United States dominate the military helicopter upgrade and retrofit markets. Curiously, many major US companies known as prime contractors for upgrades are increasingly acting as second-tier suppliers producing specialist components. For example, Boeing has developed a programme called ‘Drive Train 2000’ which will offer a new transmission and power delivery system for the Apache attack helicopter. Given that nine countries operate the Apache, the market for such a product is significant.

Boeing’s example is being followed by BAE Systems, an ostensibly British company with a major presence in the US military aviation market. The company was selected by Boeing to develop a Fully Automated Digital Engine Control (FADEC) system for the US Army’s CH-47F upgrade programme. Given that seventeen counties currently operate Chinook variants this is could represent a lucrative market for BAE Systems as a second-tier supplier. The market alone for BAE Systems vis-à-vis the CH-47F FADEC installation could cover 300 aircraft. A further 350 aircraft worldwide could also be installed with the product.

The second-tier supplier base remains strong in the United States. Companies such as DRS Technologies have developed niche products such as components for the Arrowhead FLIR system to be installed on the Apache AH-64D Block III attack helicopter. While the contract to supply the US Army with this equipment is valued at US$37.5 million there may be some residual product export potential for the company to other Apache operators.

Other specialist firms such as Global Helicopter Technology Inc. stand to gain from the quantity of US-designed and constructed military helicopters across the world. In 2004 the company was certified to integrate new engines for UH-1H helicopters in service globally. The US market alone is expected to include up to 280 units. The company has also worked on engine upgrades for the Hindustan Aeronautics Limited (HAL) Advanced Light Helicopter (ALH) and Agusta’s A-129 Mangusta attack helicopter.

The US market will continue to provide prospects for several other specialist companies. MTC Technologies Inc. was selected by the US Air Force (USAF) for a US$47.7 million contract to integrate, install and test new systems on the USAF MH-53 Pave Low III SOF helicopters and to augment the aircraft to MH-53M standard.

At the prime contractor level, Bell Helicopter Textron will benefit from a contract to upgrade the USMC’s UH-1 and AH-1 aircraft, under which the company will provide new turbine engines, composite hinge-less and bearing-less main and tail-rotors, common drive trains, hydraulics, electrical distribution systems in addition to new mission systems and armaments. The USMC hopes that the project will reduce the life cycle cost of these aircraft while improving performance, survivability and service rates.

Other prime contractors such as Lockheed Martin are developing a market as a major systems integrator for military helicopter upgrades. To this end, the company is currently integrating a common cockpit and mission systems for the USMC’s MH-60 helicopters. This will see the Lockheed Martin Common Cockpit, which includes MFDs, being fitted across the MH-60S/R fleet. Away from the US home market, Lockheed Martin are offering their services as a prime contractor. To this end, the company integrated the major systems of 44 of the Royal Navy’s EH-101 Merlin ASW helicopters.

Beyond the United States, other countries are actively involved in the military helicopter upgrade and retrofit business. Two companies in Israel: Israeli Aircraft Industries (IAI) and Elbit Ltd are both market leaders. The former offers "comprehensive maintenance and support services for combat aircraft and helicopters, including upgrading and life extension". The company is currently working with HAL to supply a mission avionics upgrade for India’s ALH.

Elbit Ltd also provides helicopter upgrade services offering comprehensive modifications to Western and Soviet aircraft. The company notes that its avionics are currently in service on over 4,000 military and civilian helicopters around the world.

In Europe, while upgrades of Soviet-designed helicopters are available from Russian and Ukrainian suppliers, Romania is providing cost-effective upgrades of Western platforms. To this end, Eurocopter Romania completely refurbished and overhauled the RAF’s Puma HC. Mk.1 aircraft. This service will be extended to the AS 532UC/UL Puma helicopters of the Abu Dhabi Air Force. The upgrade will include the installations of new engines together with a new automatic pilot and avionics system. With Puma variants being operated by 31 other countries, the Eurocopter Romania Puma upgrade could be a lucrative area for future similar projects.

There is a strong military helicopter upgrade and retrofit supplier base in the rest of Europe. The British company Rolls Royce is a market leader and continues to supply engines for upgrades and retrofits across the world. Other British companies such as Racal Avionics retain a strong presence in the military helicopter upgrade and retrofit market. The company won a £5 million (US$ 9.2 million) contract to supply its LightWeight Common Control Unit (LWCCU), based on the company’s Control Display and Navigation Unit (CDNU), for integration onto the Royal Navy’s EH-101 Cormorant CSAR aircraft and Marina Militaire Italiana (Italian Naval Aviation) EH-101 ASW aircraft. LWCCU equipment will also be retrofitted RAF EH-101 Merlin aircraft.

Racal is also engaged in providing the Royal Navy with SATURN Very/Ultra High Frequency radios for their Lynx HMA Mk. 8 helicopters. Other Racal equipment installations accompanying the SATURN system include an AMS 2000 CDNU, RA800L Communications Control System and Racal Central Tactical System. AMS Navigation units will also be retrofitted onto the RAF’s HC Mk.2/2A Chinook helicopters.

South Africa is home to the Advanced Technologies Engineering (ATE) company which is emerging as a major military helicopter retrofit and upgrade contractor. The company is currently supplying a sensor and upgrade package for the Mi-24/35. ATE’s improvement programme for the Hind includes the addition of a turreted 20-mm (0.7-in) cannon and infrared optical sight and target designator. Improvements to the cockpit include the addition of night vision capabilities and the capacity to fire Makopa ATGMs.

The company is also offering an avionics upgrade to the AH-2A Rooivalk attack helicopters operated by the Suid Afrikaanse Lugmag (South African Air Force). However, the market potential for any Rooivalk upgrade is limited given that the South African Air Force is the only operator of the aircraft to date.

Broadly speaking, the military helicopter upgrade and retrofit market is expected to remain buoyant over the next two decades. Retrofit and recapitalisation efforts being pursued by the US armed forces to extend the life and survivability of their military helicopters while outfitting them for SOF missions will provide several market opportunities, especially for second-tier suppliers.

However this must be weighed against the large number of suppliers already present in the United States. Furthermore, foreign companies have traditionally found it difficult to penetrate the US market for military equipment.

The potential for upgrading Russian-derived military helicopters may also grow; however there are several companies in the erstwhile Warsaw Pact which offer upgrades on aircraft such as the Hind. Foreign companies, which do not traditionally have expertise in upgrading such aircraft, could find it difficult to break into this market. Moreover, despite the profusion of Russian helicopters in service around the world, it is unlikely that all of their operators would have sufficient funds to embark upon a major upgrade for their aircraft.

Both the supplier base and upgrade market in Western Europe and Asia remains healthy. However, the number of helicopters in service throughout these countries is small compared to the US market. For this reason, the size of the supplier base may remain constant although several European companies could be expected to move into new market areas such as NATO compatibility.