Despite the recent upbeat comments from Lockheed Martin, the commercial helicopter sector is struggling. The ongoing depressed price of oil has reduced the need for helicopters to ferry cargo and personnel to and from oil rigs. Considering that the oil-and-gas sector accounts for a quarter of the global commercial helicopter market, this is creating a huge surplus, writes Doug Cameron of the Wall Street Journal.

The severity of the downturn has surprised major operators such as CHC and Bristow Group, significantly depressing their market value. Industry executives estimate that out of the 1,900 helicopters serving the oil and gas industry world-wide, 20 percent are currently idle or underemployed, and this overcapacity is expected to worsen before it improves.

That could mean more layoffs at Sikorsky’s Coatesville assembly plant.

One of the largest helicopter operators in the Gulf of Mexico, Era Group, has said it may cancel or defer almost 75 percent of its orders. That includes deals with Lockheed Martin’s Sikorsky unit and AgustaWestland.

Helicopter operators are trying to diversify by expanding into medical, VIP flights and search and rescue missions, but there is limited scope for redeploying helicopters to other uses because of the different customers’ preferences in aircraft type and configuration.

As a result, the industry is being forced to look at options for storing unsold helicopters. Limited hangar space had created a need for alternative solutions such as shrink-wrapping helicopters to prevent outside elements affecting them while waiting for buyers.