Steven Nixon, ITC-AeroLeasing’s Executive Vice President, reflects on the history of leasing in the helicopter industry.
Leasing a helicopter may not yet be a common practice among helicopter operators, who have historically often financed their fleet by traditional bank loans, mortgages, etc. This fact is somewhat contrary to the commercial airline fixed-wing industry, whereby approximately 50 per cent of the global fleet is currently on operating lease by airlines. The rotary-wing market attracted the attention of leasing specialists only later, with a slow and gradual start initiated by some entrepreneurial and market-aware individuals. The concept of leasing a helicopter has been known for around 50 years, but only gained strong momentum from the 2010s, when several specialist helicopter lessors entered the market at a similar time.
At ITC-AeroLeasing, we know a thing or two about helicopter leasing, having been in the industry for 40 years, since 1985. Our founder, Tomoo Nakayama, played a key role in structuring leases within the vertical lift industry, and ITC has steadily continued to do so during the formation of a new helicopter financing landscape over the last 10 to 15 years. Helicopter leasing options simply were not available at the beginning of the helicopter industry mass production.
The first mass-produced helicopters were designed by Sikorsky in 1942, exclusively for military purposes, and used during the Second World War. Bell designed the first helicopter certified for civilian use in the United States in 1946, with the Bell 47. In the late 1940s and 1950s, manufacturers like Sikorsky, Bell and Augusta were leading the helicopter market and innovations globally, though the use was primarily military. At that time, the only option was outright ownership, and up until the 1960s, helicopters were mostly owned by governments and armies.
1970’s: Shy beginnings
The civilian-use market gained momentum in the 1970s, with the rapid development of industries such as oil and gas, where operations relied heavily on helicopters for personnel transportation, to and from offshore rigs. But the high cost of acquisition, as well as the high replacement rate induced by wear and tear of aircraft, made the situation difficult for many operators. Popular aircraft like the Sikorsky S-76 were very expensive, capital-intensive assets. Banks created leasing options to provide an alternative to direct purchase, thereby allowing operators to preserve cash flow and reduce financial risks while keeping access to the technologically advanced helicopters needed for their operations.
Leasing was just beginning at this time, yet operators could recognise the financial benefits of spreading costs over time, rather than making large upfront capital investments. Banks and financial institutions were the obvious options for operators, but some industry players took matters into their own hands and transformed their operating activity and fleet management, to add leasing as one of their service offerings.
Eagle Copters, from Calgary Canada, established in 1975, started out by offering lease services with one single aircraft, an Alouette II. Fifty years later, Eagle Copters is still in business, still leasing aircraft, with a variety of other services, including engineering and maintenance, upgrades, sales, etc.
1980s and 1990s: Becoming leasing specialists
During most of the 1980s and 1990s, helicopter deliveries and prices were closely tied to oil prices, and the market fluctuated in concordance with the oil sector. It was around this time that the first specialised helicopter leasing companies emerged, taking independence from banks, who had developed aircraft leasing and financing divisions. Goldman Sachs had such a division, led in the late 1970s by Richard Santulli. Santulli left Goldman Sachs in 1980 to launch RTS, a helicopter-specialised leasing company. Goldman Sachs, judging the market was too small, transferred their assets to RTS, the first helicopter-dedicated leasing company. By 1984, RTS had a portfolio of 200 aircraft. In its wake, other helicopter leasing companies appeared, such as ITC-AeroLeasing in 1989, founded by Tomoo Nakayama and marking a global start to the leasing industry.
Over the course of the 1980s and 1990s, helicopter leasing slowly matured, with more and more companies specialising in tailored leasing solutions. Gradually, as financiers started to gain confidence that helicopters could be treated as a relatively low risk asset and a strong market to invest in, more leasing models were developed. Operating leases, wherein the lessor remains the owner, and the lessee uses the helicopter for a fixed period, then started to grow in popularity.
Late 1990s: HAI sets a course
The Helicopter Association International (HAI) noticed the growing activity and transactions offered by specialised leasing companies, and in 1996 the organisation created a finance and leasing committee presided over by Tomoo Nakayama of ITC-AeroLeasing. Since 1985 and through his work at ITC-AeroLeasing, Nakayama has helped to define an industry standard for the helicopter leasing business model by establishing a comprehensive approach to helicopter leasing, including various structures, and then extending this model into other general and business aviation aircraft.
ITC-AeroLeasing sought to create multiple leasing and financing options that would be more accessible to a wider range of market segments – including smaller operators with modest balance sheets, access to a very diverse range of aircraft models, and for operators performing a variety of mission-types. The company noticed the growing demand for helicopters and small airplanes to transport people, materials, cargo and so on, often to remote areas, especially for humanitarian, essential and socially responsible missions. As chairman of the then HAI’s finance and leasing committee, Nakayama set out to educate the helicopter industry about the benefits and flexibility of leasing. He believed that in order to grow the helicopter industry, the industry needed to become more familiar with various financing and leasing methods, not only traditional bank financing.
Nakayama believed that leasing instead of buying would allow the individual businesses and the industry as a whole to grow at an accelerated pace. By the late 1990s and early 2000s, more operators started to develop a leasing arm within their operating business. This was most prevalent in the oil and gas industry, as most of the global helicopter fleet was utilised for offshore transportation. For instance, in 2005, Era Group Inc, the parent company of Era Helicopters LLC, one of the largest offshore helicopter operators, launched Era Leasing LLC, effectively joining those specialised helicopter leasing companies, but predominantly with a focus on the offshore oil and gas market segment. Helicopter leasing was slowly proving its worth in the 2000s. As the demand for helicopters was growing, leasing companies started to scale their operations and timidly diversify.
Offshore energy was undeniably the driving force of leasing, but new markets were emerging along with newer uses for helicopters. Rotorcraft were now starting to be used for firefighting and disaster response, emergency medical services, as well as tourism and corporate transportation. At the same time, the popularity of leasing firms – offering not only brand-new helicopters, but also older, preowned or used aircraft – increased, supporting smaller operators with more modest budgets to increase their fleet size.
2010s: Ready to roar
By the early 2010s, the leasing industry was ready to take off. The 2008 financial crisis did not stop the industry’s growth, as operators sought cost-efficient solutions to maintain their activity. The decade became what some would perceive as the golden age of the helicopter leasing industry, as giants were born, and astonishingly sized transactions were made at a rapid rate.
In 2010, Richard Santulli founded Milestone Aviation Group; in 2012, Lease Corporation International (LCI) launched its leasing subsidiary, LCI Helicopters Ltd; and in 2013, Ed Washecka, former CEO of Era Helicopters LLC, created Waypoint Leasing. These companies grew to become giants in the industry, at an incredibly fast rate. In 2013, at the HAI Heli-Expo, less than three years after going into business, Milestone Aviation had a leased fleet valued at over USD 1.3 billion and had orders and options placed with manufacturers for additional aircraft worth a further USD 2.2 billion. During that same Heli-Expo in 2013, Milestone Aviation announced a staggering number of orders: 14 Eurocopter EC225s, five Eurocopter EC175s, 23 Sikorsky S-92s, and seven Sikorsky S-76Ds.
The bulk of the business for these giants remained in the offshore energy sector, yet with their emergence the leasing industry also grew more diverse and had become more affordable for smaller operators. The helicopter industry was still somewhat of a niche market – a market that could easily be saturated, which could prevent the ability of numerous players and companies to compete and thrive. While the oil and gas operators represented great revenue generators for the big leasing companies, a large portion of the global helicopter market was composed of smaller operators, for example those operators with a fleet of four or five helicopters. This segment was yet untapped by the giant leasing companies, and perhaps not viable for their business models, leaving it open for smaller leasing companies and banks.
The higher you fly, the harder you fall
This extreme growth of the helicopter leasing titans came to a brutal end a few years later. In 2014, the downturn of the oil and gas industry impacted on the leasing companies relying heavily on this sector. As oil production slowed, so did the demand for helicopters.
The downturn exposed the vulnerability of lessors with a fleet model heavily focused on one sector. Combined with large speculative orders, it led to an oversupply of aircraft and sent the then-booming helicopter leasing industry into freefall. With high market acquisition costs and growing debt repayment schedules, the situation persisted to the point that operators and lessors struggled to remain financially viable. Waypoint Leasing, the second largest lessor at the time, filed for Chapter 11 bankruptcy protection in 2018. In 2019, the business became Macquarie Aviation after being bought by Macquarie Group. It took almost five years for the industry to recover. In order to bounce back from the crisis, leasing companies increased their fleet diversity, re-prioritised discipline and long-term sustainability in their decision-making, and some may have reduced the number of speculative orders placed with manufacturers.
According to Cirium, in 2014, the proportion of offshore-configured twin turbine helicopters in lessors’ fleets was around 60 per cent. This had dropped to 40 per cent by 2023. By comparison, the EMS sector grew to 30 per cent in 2023, and the utility sector to 20 per cent. Diversification of the fleet was accompanied by a rise of helicopters in multi-role configuration, increasing operators’ appeal, as they could use them for various missions. According to Macquarie Aviation, at the end of 2024, the offshore segment remains the dominant leasing market, where about a third of the fleet is under lease, far from the EMS fleet where only 15 per cent is under lease, and eight per cent for Search and Rescue.
Still growing
Meanwhile, the helicopter leasing industry keeps growing. Between 2022 and 2023, over 300 leasing transactions were recorded. IBA states that in Q1 2024, the percentage of leased helicopters was 10.56 per cent, but this is expected to grow to 15 per cent by 2030.
We are yet to see IBA’s projection for Q1 2025, and its potential impact on the global leased fleet projection. The lessor market remains dynamic, particularly so considering at least one new entrant is emerging as a potential mainstream lessor, mainly in the offshore energy sector. The leasing industry should grow stronger and more resilient as it learns from past challenges and gets ready to face future obstacles.
The diversification of leasing fleets will allow leasing companies to face rising demands from mission-critical sectors such as emergency medical services, SAR and firefighting, as the world faces growing geopolitical instability and the effects of climate change. Leasing companies are also taking a keen interest in advanced air mobility and eVTOLs, supporting the growth and evolution of major technological developments which will shape the future of our industry, with the aim of facilitating operators to fly these machines of the future.
Originally published by RotorHub in the February/March 2025 issue: RotorHub International – HMG Aerospace
