9. Packaged support
Effectively representing a 'halfway-house' between traditional helicopter operation and fractional ownership, these 'complete service offerings' are becoming a popular method of realizing true 'ease of operation' rotorcraft ownership. Now offered by several of the major OEMs (e.g. Agusta's 'Global Support Plan,' Bell's '360' plan and Eurocopter's 'Satisfly' service), these head-to-tail support concepts are likely to become the norm for smaller operators who lack their own extensive support structure, and who seek to maximize their ease of ownership.

10. Airborne law enforcement and public agencies
Although the airborne law enforcement (ALE) and paramilitary markets have received considerable attention following the increased focus on homeland security in the aftermath of 9/11, there has yet to be any significant increase in the level of additional procurement funding, the initial focus of these efforts being the simplification of inter-agency responsibilities and coordination. Existing ALE fleets have, however, enjoyed greater importance (and hence funding), with a number of aircraft returned to service and a degree of fleet replenishment.

11. Emergency Medical Services (EMS)
Despite concerns over the sustainability of increases in global medical-related expenditure, the EMS niche is currently enjoying positive growth through re-equipment and new service introductions, in recognition of the importance of the 'golden hour.' While the most noticeable activity in the EMS market has been the replacement of older twin-engined EMS aircraft such as the BK117 and BO 105 with the newer EC 135 and A109E, there has also been a concurrent spread of EMS services to smaller and rural communities through lower-cost single-engine EMS aircraft.

12. New technology
New technology continues to be a central linchpin to the future growth of the civil market. Recent technology introductions have included the advent of true integrated avionics suites offering 'free-flight' capable navigation; Global Positioning System (GPS) technology and differential GPS, which promises to make precision instrument approach and landing systems commonplace; and active vibration-reduction systems. Future technology developments are likely to focus on three key areas:

• Noise reduction. The audible footprint of rotorcraft remains the principal obstacle to wider usage, especially in metropolitan areas. Although traditionally driven by the tourism industry, noise-reduction technologies are likely to become an increasingly important design focus as Chapter 8 & 11 restrictions tighten and urban sprawls widen. Extensive work in these areas continues to be undertaken, both in Europe and - despite NASA funding restrictions - the U.S., with novel blade, tail rotor and variable transmission concepts likely to lead low-noise technology development.
• Control systems. As advanced fixed-wing aircraft control systems become more widespread and mature, a spin-off of technology into the rotary-wing world can be expected. Fly-by-wire designs are already with us, and fly-by-light and neural network control systems are on the horizon. As well as offering weight reduction, control responsiveness and maintenance benefits, these systems also offer safety advantages, such as improved redundancy, greater immunity to electromagnetic interference and - in the case of neural net systems - fault avoidance control.
• Cost reduction. Although the increasing reliability and maintainability of today's rotorcraft have tended to arrest and even reduce the maintenance costs associated with helicopter operation, the fundamental issues of first cost and complexity remain. A substantive reduction in acquisition costs (through the use of innovative but off-the-shelf technologies and materials) could enable rotorcraft to regain their price competitiveness against other forms of transport, while simultaneously tapping into the burgeoning leisure market. The adoption of improved build processes and material developments will facilitate this trend, as may the incorporation of innovative low-maintenance drivetrain and rotor systems. Piezoelectric actuators represent one area of particular interest to helicopter applications, since any technology that will assist in the simplification of rotorcraft control systems will help reduce helicopter costs; weight and reliability benefits may also be realized as this technology matures.

The recent in-roads into the U.S. civil helicopter market made by European OEMs such as Eurocopter and AgustaWestland have stimulated repeated calls by U.S. industry figures, politicians and even military seniors for government-funded rotorcraft research and development (R&D). While substantial U.S. government-funded civil rotorcraft R&D has yet to flow, the cancellation of the RAH-66 Comanche program - regularly cited as the one bright spot in U.S. helicopter-related R&D - can be expected to prompt additional calls for such investment (e.g. the proposed Center for Rotorcraft Innovation).

European OEMs have in turn called for an integrated European approach to funded R&D, which thus raises the prospect of accelerated technology development during the decade. The creation of the European Aviation Safety Agency (EASA) in September 2003 represented an initial move towards greater European coordination, this body having already undertaken a number of helicopter-related certification programs.

2003 CIVIL FORECAST VERSUS ACTUAL RESULTS
Preliminary information suggests that approximately 480 civil helicopters were delivered in 2003, down from 490 in 2002. This is within three percent of the Rolls-Royce/Teal Group 2003 helicopter market forecast.

MILITARY HELICOPTER FORECAST
Military procurement forecasting is traditionally difficult to verify, due to the sensitivities involved in establishing actual deliveries and customers, not to mention program delays. However, by analyzing known requirements, declared programs, aircraft losses and fleet aging, it is possible to provide a realistically accurate estimate of anticipated demand

Projected military helicopter deliveries for the 2004 -2013 period include 4,103 new-build aircraft and 1,456 major engine-related upgrades. This total of 5,559 units represents six percent growth over last year's forecast, reflecting the transition of some major military programs into production during the period. The associated value of this forecast is $81.7 billion in airframes and $6.9 billion in engines.

The substantial growth seen during the period - averaging just under five percent per annum - raises obvious questions regarding the well-known 'bow wave' effect, i.e. projected orders failing to appear due to funding shortfalls, political reprioritization, etc.. While it is entirely possible that some factors may come to influence the acquisition programs projected to occur over the decade, many of these very programs have already been subject to extensive delays, and can thus no longer realistically be postponed.

The impact of this bow-wave effect has been aggravated by the on-going 'war on terror' and the related operations in Iraq and Afghanistan, which have had the twin effects of siphoning-off procurement funds in favor of more urgent operational costs, and challenging existing assumptions regarding future defense requirements. The highest-profile casualty of this re-thinking has been the RAH-66 Comanche program, which was cancelled in February 2004 due to the 'changing operational environment.' Some of the funds that were scheduled to be spent on Comanche procurement will be redirected to other platforms, including UAVs, scout helicopters and utility helicopters, but it is also likely that the 'Comanche dividend' will be used to pay for pre-planned programs, including CH-47 and UH-60 upgrades.

2003 also witnessed delays to a number of major programs, including the U.S. Army's Sikorsky UH-60M Black Hawk upgrade (fielding of which has slipped from 2007 to 2009) and the Franco-German Eurocopter Tiger (initial deliveries of which have slipped from December 2002 to mid-2004). Further delays to - and reductions in - other major programs are inevitable given the prioritization currently placed on funding for on-going operations in Iraq and elsewhere.

MILITARY HELICOPTER MARKET FORCES, ISSUES, AND CONCERNS:
1. The changing security environment
The global 'war on terror' and U.S.-led operations in Afghanistan and Iraq have reinforced the role of the helicopter in the modern battlefield. Since the very nature of the battlefield can no longer be easily defined, but is instead likely to be closer to a military operation in urban terrain (MOUT), the tactical advantages of rotorcraft - i.e. rapid deployment, flexible mission planning and 'swing' tasking - become clear. This growing emphasis on tactical mobility has been emerging for some time, but was brought into stark focus with the events of 2003.

In addition to tactical transports, the renewed emphasis on multi-national 'composite' operations has also reinforced the need for easily deployable reconnaissance platforms, deep-insertion self-deployment capabilities and armed multi-role ground support assets. These capabilities are already designed into many of the new-generation of rotorcraft (e.g. the RAH-66 Comanche, EH Industries EH101 and Eurocopter Tiger, respectively), and are thus likely to be largely met by on-going procurement programs.

The other aspect of this new world order is a heightened emphasis on the need for border patrol. While clearly reinforcing the market for existing land-based utility types, this focus may also see two other developments occur: firstly, the increasing application of traditional maritime patrol helicopters in a broader 'border protection' role, utilizing multi-purpose sensor suites; and, secondly, an increasing interest in vertical take-off and landing unmanned air vehicle (VTUAV) assets to patrol those more isolated borders.

2. Fleet re-equipment
The coming decade sees the introduction of an almost unprecedented number of major new designs. While the 1950s and 1960s witnessed a veritable explosion of new programs, the coming decade is notable firstly for the expense involved in the replacement programs being undertaken, and secondly for the concurrent nature of many of these projects.

A number of key North American delivery programs are already underway, led by upgrade programs such as the U.S. Army's Boeing CH-47F Improved Cargo Helicopter (ICH), UH-60M Black Hawk modernization and AH-64D Longbow Apache Block III upgrade. Apache is likely to be a major beneficiary of the demise of the RAH-66 Comanche, and the 'avionics only' Block III upgrade may well be followed by a more comprehensive 'Block IV' upgrade, for which a new rotor system and powerplant is being considered.

The U.S. Army has also declared its intention to procure 303 utility helicopters to replace its aging UH-1 fleet (offering a tactical alternative to UH-60 usage), plus 368 scout helicopters to supplant its existing OH-58D Kiowa Warrior platform. The service also plans to continue development of UAVs, including the RQ-8B Fire Scout Class IV unmanned air system (UAS) and the unmanned combat armed rotorcraft (UCAR).

The U.S. Navy also represents a major source of military helicopter demand during the period, through its MH-60S Knight Hawk (formerly the CH-60S) and MH-60R Strike Hawk (formerly SH-60R) programs. These two Black Hawk-derived platforms will provide the Navy with a brand new rotary-wing fleet of almost 500 aircraft, substantially enhancing the service's capabilities. The MH-60R was originally to have been a remanufacture program itself, but the economics of a new-buy program proved too attractive for the DoD to refuse.

The U.S. Marine Corps will also be a major customer for military rotorcraft during the period, through its UH-1Y Huey and AH-1Z Super Cobra upgrade programs (involving 100 and 180 airframes, respectively), and the Bell-Boeing V_22 Osprey tiltrotor, 360 of which are sought by the service (plus 50 for the USAF Special Operations Command).

Europe has already witnessed the recent introduction of two new aircraft types - the EHI EH101 and AgustaWestland WAH-64 Apache - but these programs pale in comparison to the volumes associated with the NHI Industries NH90 and Eurocopter Tiger. The NH90 - deliveries of which will commence during the middle of the decade - will soon become the backbone of Europe's tactical transport and maritime helicopter fleets, with no other European program of its size likely to occur for many decades to come. The selection of the NH90 by Portugal and Greece has further highlighted the NH90's position as the common tactical transport for European military operators. Last year's selection of the Tiger by Spain further raises the importance of this program to Europe, and partly offsets the reduction in the original home nation's requirements.

A number of European nations are also re-equipping with new utility types (e.g. Agusta A109F, Eurocopter EC120/EC135), though the value of these orders is substantially less than that of the larger machines already mentioned.

Other major worldwide programs occurring during the decade include:

• Canadian Maritime Helicopter Program (MHP)
• Indian light utility helicopter & Dhruv ALH tactical transport/maritime programs
• Japanese light attack, SAR and transport helicopter programs
• Korean Multipurpose Helicopter (KMH) & attack helicopter programs
• Malaysian maritime & SAR/transport helicopter programs
• Omani tactical transport
• Singaporean tactical transport & maritime helicopter programs
• Scandinavian attack helicopter program
• UK Support, Amphibious, Battlefield Rotorcraft (SABR).
• USAF personnel recovery vehicle (PRV) combat SAR program
• U.S. Coast Guard Deepwater

3. Upgrades
The market for major engine-related upgrades is expected to witness substantial growth over the coming decade, with deliveries doubling in volume over the period. Although already a well-established means of asset recapitalization (typified by the U.S. DoD's OH-58D Kiowa Warrior and AH/MH-6 MELB upgrades), the upgrade market will be brought to the fore during the period through four major projects:

• U.S. Marine Corps AH-1Z/UH-1Y upgrade, which will see the Corps' Hueys and Cobras gain common engine, rotor and drivetrain systems, plus new avionics
• U.S. Army UH-60M Black Hawk upgrade, which will see up to 1,200 aircraft recapitalized with new engines, avionics, rotor blades and a strengthened fuselage
• U.S. Army CH-47F+ Improved Cargo Helicopter (ICH), which will see 300 Chinooks gain uprated engines, new avionics and a modernized fuselage
• UK Battlefield Light Utility Helicopter (BLUH) and Surface Combatant Maritime Rotorcraft (SCMR), which will likely see the existing fleet of Army Air Corps and Navy Lynx updated with new engines, fuselages and avionics

4. Heavy-lift rotorcraft
One notable program missing from this list of upgrades is the U.S. Marine Corps' CH-53X Sea Stallion service life extension program (SLEP), which was intended to see the Corps' fleet of 154 Sikorsky CH-53E Super Stallions equipped with new engines, rotorheads, rotorblades and cabins. The service now intends to procure new CH-53s in lieu of upgrades, reflecting the same logic applied by the U.S. Navy to its MH-60R program (which was originally to have involved an upgrade of the SH-60F fleet).

While the U.S. Army is retaining the remanufacture approach to its CH-47F program, the service is already actively looking ahead to 2020-25, when it envisions a new breed of Air Maneuver Transport (AMT) super heavylifters entering service to support the Future Combat System (FCS) program. A multi-service Joint Vertical Aircraft Task Force (JVATF) is now studying this requirement. A similar requirement is beginning to emerge in Europe, and may well - in light of the cost of developing such a vehicle - lead to transatlantic co-operation in this arena.

5. Vertical take-off and landing UAVs (VTUAVs)
The market for VTUAVs is expected to come to fruition during the decade, driven by the successful operation of fixed-wing UAV types and by the increased emphasis on surveillance/strike in today's 'uncertain' asymmetric threat security environment.

Three programs are expected to drive the emergence of this market, led by the Northrop Grumman RQ-8 Fire Scout UAV. Just two years ago, Fire Scout appeared to be another victim of the high 'infant mortality' rates associated with UAVs, the U.S. Navy and Marine Corps dropping their commitment to the program. Today, however, Fire Scout is once again in favor with the Navy, which intends to initially deploy the system from its Littoral Combat Ship (LCS). The successful Fire Scout testing program has also attracted the interest of the U.S. Army, which plans to acquire an armed growth version of the system to meet the FCS Class IV UAS requirement. Fire Scout is also expected to lead the development of an export market for VTUAVs.

The Bell Eagle Eye tiltrotor UAV also looks well positioned to enter service during the decade, initially with the U.S. Coast Guard as part of the Deepwater program. A subscale prototype of the Eagle Eye has been flying since 1993, and Bell now intends to complete a full-size prototype. The U.S. Marine Corps also remain interested in acquiring a high-speed VTUAV to support the V-22 Osprey, and the Eagle Eye - together with Boeing's Canard Rotor Wing (CRW) - may be considered for this role.

The most important VTUAV program likely to emerge during the decade is the U.S. Army's unmanned combat armed rotorcraft (UCAR). While the idea of armed VTUAVs is not new, the U.S. Navy having experimented with various armament options on the Gyrodyne QH-50, it is the successful use of Hellfire-armed Predator UAVs over Afghanistan and Yemen that has reawakened interest in this field. A downselect of the winning UCAR team is expected later this year, with the system itself likely to enter service at the beginning of the decade, likely partnered with Apache as a manned/ unmanned system team. The U.S. Army may eventually buy up to 1,000 UCARs.

A plethora of additional VTUAV designs is now being offered, spanning from hand-launched micro-UAVs (MUAVs) to large unmanned battlefield transports. The U.S. Army's Future Combat System (FCS) battlefield project is likely to drive much of this technology, including the development of 'self-deploying sensor' VTUAVs. The Army has indicated that it will procure as many as 6,000 UAVs in support of the FCS program, though the vast majority of these are likely to be small non-turbine variants.

6. Rotorcraft survivability
Although rotorcraft have proven essential to operations in Iraq and Afghanistan, the highly publicized losses suffered during these operations - most notably the downing of the once unassailable AH-64 Apache - have led to a debate over the survivability of helicopters during military operations in urban terrain (MOUT). These losses have already led to a substantial effort to equip active-duty rotorcraft with the latest in self-protection (including infrared exhaust suppressors such as AADC's IES-47), but even these impressive defense aids are of little use against unguided rocket propelled grenades (RPGs)

Attention is therefore also turning to the use of additional lightweight armor, together with new tactical concepts of operation (CONOPS), possibly even including the use of 'noise making' companion UAVs as decoys. These losses have also provided additional impetus to the development of noise reduction technologies (such as low-signature rotor blades), studies into airborne sniper detection sensors, and a greater focus into the provision improved hot & high rotorcraft performance through enhanced installed power margins, thereby allowing helicopters to fly above most ground threats.

FORECAST METHODOLOGY
Rolls-Royce and the Teal Group both employ quantitative methodologies to model the civil and military helicopter markets. This enables the development of detailed, market-driven forecasts based on analysis of fleet activity, airframe retirements, known procurement programs and requirements, operational usage, and macroeconomic factors. This analytical research is reinforced by direct input polled from the world's major airframers, owners and operators. The result is a powerful yet flexible set of models, and a forecast that is fundamentally sound from a market standpoint.

For forecasting purposes, we have classified the helicopter market as follows:

CIVIL:
Single engine - Bell 407, EC 120, MD 500/600, etc.
Light twin (0-8,500 lbs.) - A109E, Bell 427, EC 135, MD Explorer, etc.
Intermediate twin (8,500-12,500 lbs.) - AB139, Bell 430, EC 155, S-76C+, etc.
Large multi-engine (12,500+ lbs.) - EC 225, EH101, S-92, etc.

MILITARY: Light single engine - AH/MH-6, EC 120, RQ-8A, etc.
Light twin (0-8,500 lbs.) - A109M, EC 635, etc.
Intermediate twin (8,500-15,000 lbs.) - A149, Super Lynx, Tiger, etc.
Large twin (15,000-30,000 lbs.) - AH-64, NH90, UH-60, etc.
Heavy multi-engine (30,000+ lbs.) - EH101, CH-53, CH-47, etc.