WASHINGTON — Analysts and executives see a changing face of military helicopter sales in the Gulf region, with political and economic factors pushing the GCC powers away from the US and toward European interests.
Alix Leboulanger, a defense industry analyst with Frost & Sullivan, believes a "substantial change" is underway in the rotorcraft market, one that will result in the Gulf states emphasizing non-American goods.
"American helicopter OEMs have recently lost some of their market dominance, and this is mainly due to the Arab Uprising, the repercussions of the Edward Snowden affair, the geopolitical shift toward Iran and the implementation of the Asian Pivot, in no specific order," Leboulanger said.
She points to recent agreements such as Lebanon's $3 billion spending spree last year, which included second-hand attack helicopters; Kuwait's pending order for a dozen Airbus Caracal helicopters; Qatar's pipeline of 22 NH90 vehicles; and Bahrain's interest in new combat helicopter, which seems to be focused on the Turkish T-129.
All of those are situations where a government decided to buy non-American, despite a history in the region of buying systems from American giants Sikorsky and Boeing.
On the whole, Leboulanger says not to expect "a massive surge or fleet build-up in helicopter programs in the Gulf region." Instead, she predicts a focus on renewal and modernization for attack platforms from Kuwait and Qatar, and naval platforms Saudi Arabia, UAE and Bahrain.
However, Douglas Barrie of the International Institute for Strategic Studies sees potential for growth due to the ongoing coalition operations in Yemen.
"One of the things that will be interesting to see what comes out of the Saudi/UAE coalition operations in Yemen is whether or not that focuses people's minds yet more on rotorcraft capability," Barrie said. "The whole mobility piece you get, it's important."
That could provide some room for US companies, particularly platforms like Sikorsky's Black Hawk utility helicopters or Boeing's CH-47 Chinook cargo vehicle, Barrie added, both platforms that are already in use by Gulf nations.
Randy Rotte, Boeing's head of business development for cargo helicopters, acknowledged that unrest in both Europe and the Middle East is increasing interest in Chinooks.
"It's fair to say that world events, when things happen, people are more prepared to buy, especially if it happens in your backyard," Rotte told Defense News Oct. 12. "You get a lot more interest than you might have seen five years ago."
He emphasized the benefit of having customers operate Chinooks during joint operations with other nations is a major selling point, essentially free advertising for the platform.
Turkey, the United Arab Emirates and Egypt operate the Chinook in the Gulf; all three have taken part in operations against the Islamic State militant group.
The ongoing Yemen operation could also increase interest in combat search and rescue options, Barrie said, noting that "if you conduct air operations, you want to be able to go pick up the aircrew if something happens to them."
Barrie also said that if Egypt actually procures the two Mistral class ships from France it has expressed interest in, it would have a natural requirement for helicopters.
There again, the US seems to be at a disadvantage, as Leboulanger noted, "Egypt is also buying 50 K-52 Russian naval attack helicopters, preferring again non-American technology."
"In the Middle East, we have a steady stream of business, but to be honest with you, we're all watching it carefully, as a fair amount of their budget is derived from their energy industry and the revenue that comes from energy," Mehta told Defense News in an Oct. 13 interview. "It's a tough time right now with oil prices being what they are."
That, combined with the general weakening of international currencies versus the dollar, is putting pressure on global defense budgets, Mehta said.
"We're starting to see the pressure, and we're starting to see the impact of those constrained budgets," he continued. "I can't point to one specific one and say this was going to happen and now it's been stopped. What I can tell, is maybe a little bit more caution."
Mehta also noted that general, US sales are being impacted by FMS.
"When you have a budget impasse and there are pundits talking about government shutdowns, continuing resolution, what does that mean – foreign customers start to get spooked by that," he told Defense News Oct. 13. "And they say 'I was going to buy FMS, I was going to buy something from a US contractor using the FMS system, but with all the uncertainty they have, how do I know I'm going to get anything on time?' "
Asked if he was hearing from foreign customers who were nervous and whether that could impact his business going forward, Mehta said simply, "Yeah. Absolutely. Absolutely."
Aaron Mehta was deputy editor and senior Pentagon correspondent for Defense News, covering policy, strategy and acquisition at the highest levels of the Defense Department and its international partners.