Infrastructure & Training Profile

The Light at the End of the Tunnel: Covid-19 Insights and Opportunities with Oceania Aviation

The Light at the End of the Tunnel: Covid-19 Insights and Opportunities with Oceania Aviation

The COVID-19 pandemic has undoubtedly changed the operating environment for aviation operators around the world – dramatically, and in more ways than one. From ongoing supply chain challenges, to extensive sustained border restrictions, to adapting to the infamous ‘new normal’ and planning for sustainable growth, the needs of operators and MROs alike continue to constantly evolve. Oceania Aviation, a full-service MRO provider which also has significant aircraft and parts sales divisions, is based in New Zealand and thus has had to navigate the impact of borders which have been largely shut off from the rest of the world for almost two years now – despite having a global customer base. Asian Sky Media’s Alud Davies sat down (virtually) with the CEO of Oceania Aviation and its parent company Salus Aviation, Greg Edmonds, to discuss the impacts that the pandemic has had on the business and the markets that they operate in. They also chat about the current operating environment and the plans for growth in 2022 and beyond.

First, tell us a little more about Oceania Aviation – how big are your facilities, and what capabilities do you offer the APAC region?

Oceania Aviation is one of Australasia’s largest and most recognized MRO support providers. The business delivers a comprehensive range of specialist services across both rotary and fixed wing aircraft from our five facilities throughout New Zealand, with our capabilities spanning almost all major helicopter and piston-powered fixed-wing OEMs. Alongside line and heavy maintenance, we have purpose-built facilities that offer blade and composite repairs, turbine and piston engine overhauls, dynamic component overhaul, propeller repair and overhaul and even engineering and plating. Oceania is unique in the fact that it provides turnkey aircraft support solutions, so that our customers can use us as their “one-stop-shop” for all their aircraft MRO needs. The business also designs and manufactures helicopter role equipment via our composites manufacturing division, providing solutions to operators who need to add functionality to their aircraft in order to maximise revenue. These include cargo pods, agricultural spray systems, cargo swing systems and much more. Our facilities range in size and purpose, with five facilities in the upper North Island and one in the South Island. Our largest current hangar is our 1,000 square metre Harvard Lane hangar, which is New Zealand’s leading specialist rotary maintenance facility – offering maintenance, upgrades and reconfigurations, customizations and component overhauls to a significant global customer base.

How many helicopters can you work on simultaneously?

That’s a really good question, and a hard one to answer given we have facilities across the country! Our Harvard Lane hangar houses up to around five or six helicopters at any one time, and then our North Shore hangar can work on an additional two to three helicopters at a time.

Alongside our full airframe work, we are also constantly working on a number of major helicopter components within our repair and overhaul workshops, such as sets of blades, turbine engines and specific dynamic components.

How has 2021 been so far for Oceania Aviation and the New Zealand aviation industry?

To be completely honest, 2021 has been a very challenging year for Oceania Aviation, the wider Salus group and certainly for the Australasian aviation industry as a whole. While Oceania Aviation has largely been able to continue operating during the ongoing lockdowns in New Zealand thanks to essential work with agricultural and aeromedical operators, the company has had to adjust to some major changes off the back of the changing activity and needs of the operators we work with. COVID-19 has had a notably differing impact between local fixed-wing and helicopter operators, and even within those two camps, some responses were quite varied. In terms of our global customer base (many of whom are based in the APAC region), we have been lucky to still see some strong demand continuing for our more specialised overhaul and repair services – such as helicopter blade repairs, role equipment manufacturing, and helicopter upgrades and reconfigurations. The biggest issues for us around our global customers have been the ongoing supply chain challenges, which have made lead times a lot longer and have required us to be super flexible, nimble and adaptable to an ever-changing logistics environment.

Can you talk to the differences between rotary and fixed-wing operations in the current market?

Regarding the fixed-wing industry in New Zealand, many mid and larger-sized operators are flight training academies – and some schools have been deeply affected by international border closures, not being able to bring in new students from overseas. We even saw one of our clients, L3 Harris Flight Academy, completely shut down and exit New Zealand in early 2021. So that side of the business has been more challenging from a COVID-induced demand perspective. Demand for our rotary services has been more stable, given that agricultural and EMS fleets which are considered essential, haven’t slowed down. MRO requirements are based on cycles and hours flown, so since these sectors don’t shut down during lockdowns, neither do we. Obviously the aerial tourism sector in New Zealand, which relies heavily on international visitors, has taken a significant hit both in terms of international demand and also from being forced to shut down during lockdowns. However, an interesting trend has emerged here where several tourist operators have been pivoting to adapt to the market, turning to alternate mission types such as agriculture, longline or other similar work. This has allowed them to keep some of their fleet operational despite the ongoing downturn, and in turn also contributes to keeping Oceania’s rotary MRO divisions steadier.

How about the supply chain that you have briefly talked about; has this had a large impact in 2021?

Absolutely, I don’t think there’s a country around the world that hasn’t seen the impact of the unprecedented challenges facing the aviation supply chain. The industry normally relies on an aircraft-supported freight network, and the global lockdowns which have continued since the onset of the pandemic and greatly reduced commercial flights (which used to be the primary carrier of aviation supplies) meant that everything basically came to a grinding halt. The industry has largely pivoted towards sea freight as a more reliable, albeit much slower alternative to the strained air freight system – however, this has caused major impacts around longer lead times and delays, which were exacerbated by the Suez Canal blockage, as well as local New Zealand port challenges. To add further fuel to the fire, there are other issues occurring at all the links within the supply chain – for example, India (which is a major supplier for raw materials and sub-components for OEMs), has seen a severe manufacturing shortage due to the Delta variant, which means that parts manufacturers are sourcing these materials from a much smaller supply pool. This makes it all the more essential for both MRO providers and their customers to plan well in advance and keep a really steady and open line of communication going around their future needs which weren’t previously so important. We are doing everything we can to keep our customers from being AOG, but it’s very much based on how open that communication and planning can be.

Alongside the obvious challenges, has Covid-19 presented any opportunities for Oceania Aviation?

Yes I think there’s always opportunities available to take the most of from challenging situations, if your business is open to adapting and learning. For the Salus group, our partnership with Air Methods Corporation to provide fleet management services was implemented during the pandemic. Although we already had a long-standing relationship with the global EMS operator, the COVID-19 situation made it even more important for them to reduce their direct maintenance and manage operating costs, which we now help facilitate by divesting their legacy aircraft and parts inventory (as well as sourcing new aircraft when required). The need to work closely with our OEMs to mitigate supply chain challenges has also presented the Oceania business with opportunities to form stronger partnerships, which is illustrated by our appointment as a regional distributer for MD Helicopters (covering New Zealand, Singapore and Indonesia), alongside our existing service centre authorisation with MD. We have also renewed and strengthened relationships with several other OEM partners such as Bell, Garmin, Schweizer and Lycoming – all of whom we’re either an authorised service centre, distributor (or both) for.

More recently, we took the opportunity to bring our composites manufacturing (to produce helicopter role equipment) in-house, via the acquisition of the manufacturing equipment from a local business that designs and manufactures composites for the aerospace industry. Via a new strategic partnership, Aero Composites and Aero Design will focus on composite developments to bring new innovative aviation products to the industry, which Oceania Aviation will then manufacture from our new production facilities currently being set up. This will allow our business to expand and improve on the composite products we offer to the market, as well as providing more efficient turnaround times to our customer base. Part of this acquisition is the opportunity to focus on and expand the range of role equipment that we currently manufacture – very exciting things to come in this space!

So are you optimistic about the market in 2022?

From a rotary perspective, I am cautiously excited about what 2022 will bring for the industry and for the Salus group companies. The global aviation market is very quickly gearing up in terms of aircraft purchases, operational activity and looking to the future of the industry (including sustainability and technology). I think that in the shorter term, it will take some time to see fixed-wing activity return to pre-COVID levels, especially in the local General Aviation sector where flight training schools and commercial operators are so reliant on international visitors. For Oceania Aviation, we will be focusing in 2022 on significant opportunities for growth in the rotary sector, via our new Composites manufacturing division, the expansion of our Oceania Aviation capabilities into the US market, and a core focus on our specialised repair and overhaul services which we offer to the APAC region. Fleet management is also proving a significant opportunity for growth within our Aircraft Sales division, and we will be looking to partner with further operators to help efficiently manage their aircraft fleets. We’ve seen a strong pick-up in demand for our helicopter listings in the past quarter, which we predict will only increase as we move into more open borders and a rebuilding market in 2022.