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444          HELICOPTER AIR SERVICE PROGRAM


Future Unit Costs

If helicopter operations are to become economically self-sufficient in their present role of providing an expedited means of airport transportation, the scale of those operations must increase and the unit costs of providing them must decrease. In the preceding section it was found that the potential for helicopter operations in our largest metropolitan areas will expand with higher levels of intercity air traffic and under conditions of surface traffic congestion. The purpose of this section is to explore possibilities of change in the other economic determinant, unit operating costs.

The economics of an airline are determined in large part by the kind of equipment it operates. This is particularly true of the helicopter carriers in their present stage of development; and in the preceding section we found that the introduction of new and larger turbine equipment has resulted in sharp decreases in unit costs. It is recognized, however, that the period of operations with the new equipment is still limited and that present costs may not be representative of the future. The direct costs of introducing new equipment in an airline are high as it requires some time for operating personnel to become completely familiar with the aircraft. Increases in indirect cost are involved also as it is often necessary to increase ground complements before the full effects of more productive equipment are felt. On the other hand, costs of operating new equipment may be understated due to low overhaul requirements. In looking to the future, therefore, it is necessary to estimate what a normal level of operating cost might be.

As the level of unit costs will be determined primarily by the type of equipment, it is first necessary to make an assumption as to the kind of aircraft which will be operated in airport transportation in the period under study. With the many innovations now occuring [[occurring]] in the manufacture of helicopters to meet a wide variety of military needs it is difficult to visualize precisely the type of aircraft which may become available to commercial carriers over a 10 or 15 year period. Military helicopters already in production or advanced stages of design hold forth the prospect of commercial configurations with greater seat mile productivity and lower unit costs than those presently operated.

Rather than speculate as to cost, speed and capacity characteristics of aircraft that might be available sometime in the future we will base our economic projections primarily upon the characteristics of the new turbine aircraft now in operation. Although this may understate somewhat the economic potential of the helicopter carriers, we believe that it is a more realistic approach. The next few years will be the most critical ones for the helicopter industry in making progress toward self-sufficiency and in this period it is unlikely that carrier fleets used in airport transportation will consist of aircraft other than the S-61 or the V-107, or slightly modified versions. Although demand for helicopter service in cities where it is presently offered and expansion to a few more metropolitan areas will result in the sale of more helicopters, the commercial market is still too small to offer much of an attraction to a manufacturer considering to produce a completely new commercial aircraft.

Although aircraft larger and faster than the S-61 or the V-107 would provide the possibility of lower seat mile costs, the size and speed of the present turbine aircraft are reasonably well adapted to their present commercial missions. Regular and frequent patterns of service throughout the day are essential if the carriers are to instill the airport-shuttle concept in the passenger's mind. Ideally, departures should be so frequent that the passenger will know that he will have only a few minutes wait no matter when he goes to the heliport. As there is considerable fluctuation  in demand by hour of the day, this means that there is a limit to the number of seats which can be operated at off-peak hours. At the same time this means that sufficient seats must be available at peak hours. While not suggesting that present configurations represent an optimum solution to these traffic problems we believe that the new turbine aircraft represent a reasonable capacity figure to use in determining breakeven needs even though the availability of new and more economical aircraft would reduce those requirements.



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