On June 20, 1999, at 1312 mountain daylight time, a Bell 206B helicopter, N39122, landed hard on a road approximately 200 yards short of the point of intended landing at Telluride Regional Airport, Telluride, Colorado. One commercial pilot and one passenger received serious injuries and the other commercial pilot and passenger received minor injuries. The helicopter sustained substantial damage. Visual meteorological conditions prevailed for this local area business flight conducted under Title 14 CFR Part 91 and no flight plan was filed. The flight departed Telluride at 1221. According to the operator, the flight was for the purpose of introducing local persons to the operation of the helicopter as an air tour vehicle operated under Title 14 CFR Part 135 doing business as Helicopter Services Telluride (HST). A Part 135 operating certificate had not yet been issued. At the time of the accident two local persons were being given a ride to introduce them to the service and the company pilot was building experience with oversight provided by a safety pilot hired by the operator from Western Slope Helicopters, Montrose, Colorado. According to the owner of Western Slope Helicopters, the safety pilot was provided to satisfy insurance requirements. The company pilot did not provide a statement; however, according to the safety pilot, they were on approach to the deicing pad at Telluride Regional Airport with the company pilot, who had been at the controls for the entire flight, flying the helicopter from the left seat. According to the safety pilot, about 100 to 150 feet above the ground, on a heading of 270 degrees the pilot flying allowed the helicopter to "slow up too much" and the airspeed went to zero and the sink rate increased rapidly. As he reached for the controls he said the pilot flying "made a significant collective increase drooping RPM and starting a right yaw/spin." At this point, according to the safety pilot, the company pilot took his hands from the controls and said, "you've got it." The safety pilot said he took control, applied forward cyclic, down collective, and "throttle" to idle to stop the spin. He said he then tried to cushion the landing with up collective. The helicopter landed hard with no forward speed and no yaw on a heading of 060 degrees. A passenger, seated in the left rear seat, provided information that the company pilot did all the flying on the accident flight, and that she noticed him "clutching" the controls during the second spin before impact. Her recollections as to events were the same as the information provided by the safety pilot. An examination of the helicopter provided no evidence of preimpact structural or system failure or malfunction. The examination did provide evidence of impact related vertical loading beyond the structural capability of the helicopter. (See attached photographs.) Weather conditions reported by the Telluride airport at the time of the accident were 6,000 foot overcast skies, a temperature of 70 degrees Fahrenheit (F), wind from 330 at 3 knots, visibility of 25 miles and an altimeter setting of 30.38 inches of mercury (Hg). Calculated density altitude was approximately 12,000 feet. Calculated operating weight at the time of the accident was 2,659 pounds (lbs.). The calculations are based on an aircraft empty weight of 1,637 lbs., pilots and passengers combined weight of 700 lbs., 40 gallons of fuel at 6.8 lbs./gallon = 260 lbs., 12 lbs. of engine and transmission oil, and 50 pounds of baggage. Attached are excerpts from the helicopter flight manual, which provide performance information for the regime of flight that the helicopter was operating in, and a Federal Aviation Administration Advisory Circular which partially addresses the phenomenon the safety pilot discussed in his narrative of the accident. In addition, according the National Aeronautics and Space Administration (NASA) definition of Vortex Ring State (power settling), aircraft weight, weather conditions, operating environment, and the safety pilot's narrative of the event, the helicopter exhibited performance characteristics of power settling. This phenomenon addresses the remainder of the safety pilot's narrative and is described in NASA publications as follows: * When entering a hover at high gross weights, and/or high altitudes under nearly calm wind conditions, vortex ring state or power settling may result. This condition occurs because vortices are built up at both the tips and along the span of the main rotor blades. A recirculation of air takes place and the helicopter settles into it's own rotor wash down flow which decreases the aerodynamic efficiency of the rotor system. The more power (higher angle of attack) selected in attempting to produce adequate lift the less efficient the rotor system becomes due to increased turbulence. An ever-increasing rate of descent is the result. In extreme power settling, the velocity of the recirculating air mass becomes so high that full power can produce a rate of descent in excess of 3,000 feet-per-minute. * Recovery from this condition is attained by increasing forward speed and rate of descent so that the rotor system "flies" out of the self-induced turbulence. When entering a hover in close proximity to the ground, sufficient altitude may not be available to recover before ground contact is made.