The helicopter market is expected to continue to struggle in 2015, following a year when both new and used deliveries declined, industry analyst Brian Foley of Brian Foley Associates predicted.

New shipments plummeted 24.7 percent to 971 helicopters in 2014, according to the latest General Aviation Manufacturers Association (GAMA) industry report. The decline was evident with both pistons and turbines. Piston helicopter shipments dropped 31.3 percent in 2014 to 230, while turbine helicopter deliveries slid 22.4 percent to 741. Billings for the year also fell overall, but not quite at the rate as deliveries. Billings were down 7.5 percent to $4.9 billion, according to GAMA. (The GAMA report does not include AgustaWestland, which is reporting 2014 delivery results in mid-March.)

At the same time, market analyst Amstat reported used-helicopter transactions fell 5.7 percent in 2014, according to Foley.

GAMA president and CEO Pete Bunce said the decline follows a strong period of growth and comes as a number of manufacturers are updating and/or adding new models. This activity can cause deliveries of existing models to quiet in advance of the newer models reaching the market. But Bunce also agreed that the volatility of the oil-and-gas industry is taking a toll on the helicopter market.

It is this volatility, coupled with a strengthening U.S. dollar, that leads Foley to believe that the downturn experienced in 2014 will extend into 2015. The improved dollar is making helicopters appear on average 20 percent pricier outside the U.S. than a year ago, he noted. In addition lower oil prices will spur oil companies to conserve cash, scale back their deliveries and cut back on their flight operations, Foley forecast.

“It will be a domino effect,” he said. “Once demand drops to fly oil crews to offshore platforms operators will reassess their fleet requirements, which in turn causes lessors and manufacturers to manage their order books for deferrals and cancellations.” Foley does not expect order books to decline instantly, but believes they will gradually drop as deliveries approach and progress payments come due.

An offshoot of the market uncertainty, he believes, is the emergence of a number of well-capitalized lessors. Operators are able to turn to lessors for the more costly offshore-capable helicopters rather than purchase a number of smaller helicopters, he said. The leases enable operators to delay payments until the helicopter is delivered and producing revenue, Foley added. Because offshore helicopters are highly specialized, selling them on the used market can be difficult, he said. Given the tight budgets, Foley expects the number of would-be sellers to outnumber buyers, pushing down pricing and residual values.

While heavy helicopters are facing a more difficult market, Foley does see pockets of improvement. With U.S. corporate profits on an upswing, sales to corporations are poised to strengthen. Also, while soft oil prices are putting pressure on the largest equipment, they also encourage operation of smaller helicopters, priming sales for piston and light turbine helicopters, he said.

But the oil-and-gas segment accounts for a significant portion of the industry’s overall value, Foley added, saying this is the much larger concern. “[The year] 2015 will be a volatile, challenging market for the civil helicopter industry with consolidation a possibility across all aspects of the business.”