Era Helicopters is one of the largest and oldest helicopter companies in the world. Era currently operates more than 120 helicopters in several countries around the world. During the time that I have been employed by Era Helicopters there have been components of the organization’s strategy that have remained the same, and others that have dramatically changed.
One of the key elements of Era Helicopters’ strategy that has remained constant is fleet diversification. Era currently operates a of fleet helicopters that includes ten different makes and models in four different categories; heavy twin, medium twin, light twin, and single engine. “We believe a key factor in optimizing results of operations is to maintain a versatile, modern fleet” (Era Group Inc., 2011). Heavy twin engine aircraft are primarily utilized to transport up to nineteen workers to deep water oil production projects. Medium twins generally are able to carry eleven to sixteen passengers and are utilized for deep and shallow water projects, search and rescue, and air medical operations. Light twin engine helicopters can carry six to nine passengers and are used in shallow water offshore oil platform transportation. Single engine aircraft provide transportation to shallow water operations at a lower operating cost. “By maintaining a diverse helicopter fleet, Era is able to provide virtually every helicopter service imaginable for any third-party” (Burkenroad, 2016). A primary component of Era Helicopters’ strategy has been fleet diversification.
A few other key factors of Era Helicopters’ strategy have changed over the last decade. When I first joined Era in 2007 it was owned by a company called SEACOR Holdings, a marine transportation company that specializes in serving the energy and agricultural industries. SEACOR Holdings was able to serve customers by providing helicopter transportation to offshore oil facilities. In 2012 SEACOR Holdings separated its businesses and Era Group Inc. was created as a sole helicopter transportation company. On January 31, 2013 Era Group began trading on the New York stock exchange.
As a result of the changing energy market, and reduced revenues from the oil and gas industry, Era Helicopters adapted its strategy and broadened its market diversification. “Historically our operations have primarily served the U.S. offshore oil and gas industry” (IPO). In recent years Era Helicopters has been involved in Alaska flightseeing, emergency air medical, search and rescue, firefighting support, utility services, mining, pipeline survey, and has even entered the unmanned aerial vehicles market. For the last couple years Era has had a partnership with an on demand air charter called Blade, which operates similar to Uber. “In recent years we have made efforts to reduce our dependence on [the oil and gas] market and take advantage of the mobility and versatility of our helicopters in order to expand into other geographic regions and to serve other industries” (IPO). In the last few years Era has had operations in the U.S., the U.K., Norway, Spain, India, the Dominican Republic, Suriname, Brazil, and Columbia.
Based on the business economy and market demands Era Helicopters underwent a significant management restructuring in 2014. Unfortunately the traditional hierarchical structure remained in place. Some positions were combined, and responsibilities of management were realigned. The intent of the restructuring was “to streamline its business, provide better service to its customers and grow its market share on a global basis” (Era Helicopter, 2014).
In recent years Era Helicopters has adapted its strategy again, and has gone through a period of adaptation. The crude oil prices dropped from $90-$100 a barrel in early 2014 to less than $40 a barrel in early 2016. “As a result upstream oil and gas companies faced a 50% drop in revenues in less than a year, putting the global energy market into significant distress” (Burkenroad, 2016). Era has “transitioned to operating as a profitable helicopter dealer, gaining revenue by downsizing the fleet due to recent economic circumstances within the oil and gas industry” (Burkenroad, 2016). During the current period of reduced oil prices Era has downsized its fleet to gain revenue from the sales of aircraft that have been underutilized as a result of the downturn in the oil market. “If Era is going to survive long-term, the oil market will need to rebound. Era’s strategy mainly focuses on surviving as long as possible on effective asset management until this rebound occurs” (Burkenroad, 2016). In just the last couple months the flightseeing operations in Alaska were sold.
Due to the fact that Era Helicopter’s success is so heavily dependent on the oil prices, it is impossible to predict what will happen to the company over the next ten years. I see a couple possibilities. If oil prices rebound Era Helicopters’ customer base will grow, revenues will increase, and the company will begin to expand to meet the needs of the customers. Era Helicopters would increase its fleet, replacing aircraft that have been sold during the downturn in order to better serve the needs of the oil industry. However, if oil prices remain low for years to come the impact on the company would be tremendous. The fleet would continue to be reduced as the customer base shrinks. The organizational structure would need to be significantly realigned. Functional silos would need to be demolished as resources become more scarce and departments would need to reduce in size. A cross-functional matrix structure would ensure that necessary tasks are accomplished without a hierarchy in each department. Clearly a continued downturn in oil price would demand greater adaptation and creativity to ensure profitability for years to come.
References
Burkenroad Reports. (2016). Era Group Incorporated. Retrieved from https://tulane.app.box.com/s/pcdsmd5sojkqqgj0yaqdlk7ysqlwgn71
Era Group Inc. (2014, October 29). Era Group Inc. announces organizational realignment [Press release]. Retrieved from https://ir.erahelicopters.com/press-releases/detail/484/era-group-inc-announces-organizational-realignment
Era Group Inc. (2011) Era Group Inc IPO. Retrieved from https://www.sec.gov/Archives/edgar/data/1525221/000119312511320096/d213533ds1a.htm
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