Prospects For Commercial Launch Industry Looking More Stable
After enduring some lean years, the commercial launch industry is beginning to gain momentum again according to officials from Arianespace, International Launch Services (ILS) and Sea Launch, the three major commercial launch providers.
"We’re working hard to launch six Ariane 5s this year," said Clay Mowry, president of Arianespace Inc., Arianespace’s Washington, D.C.-based marketing arm. "Going forward, I think that the manifests are close to full not just for us, but also for the other commercial launch companies as well.
"The market has turned a corner from where we were a few years ago, when the satellite market reached its nadir with only seven to eight satellites being ordered," he added. "Now we’re back to 20 spacecraft a year, which returns us to the point where the business is sustainable."
ILS, which markets commercial launches on Lockheed Martin’s Atlas 5 vehicle and Russia’s Proton rocket, has been averaging six to eight launches per year for both commercial and government customers throughout the past several years, said Frank McKenna, the company’s vice president and deputy. "If you look at where we are right now, our Proton schedule was pushed back 10 weeks while we investigated and corrected the problem due to the mishap with the Proton M second stage during the Feb. 28 Arabsat 4A launch," he said. "But we’re now on track to launch Hot Bird 8 in August and two more Protons this year; plus one more Atlas launch. Meanwhile, our order backlog is healthy, so ILS’ business remains strong."
Sea Launch, the commercial launch arm of Boeing comprised of an international consortium that performs its missions from a floating platform in the Pacific Ocean, finally is living up to its predicted launch rate.
"It’s almost become a joke that, for the past four years running, we predicted an annual launch rate of five satellites but never made that goal due to delays in satellites being delivered to us," said Rob Peckham, president and general manager of Sea Launch. "Well, this year we predicted six launches, and so far have done three. Assuming that the remaining three satellites show up on time, we’ll be doing three more launches before year’s end." In addition to its over-water launches, Sea Launch also has begun the processs of establishing a land launch business, due to debut in 2008.
The current resurgence of the launch market is due to a better balance of providers and demand, Peckham added, a situation that had been in favor of the satellite operators for the past several years. "What we’ve seen occur is an overnight jump back to equilibrium between launch supply and satellite demand," he said. "Looking ahead to 2007 and 2008, it appears that the pendulum is about to swing even further in our favor as more satellites line up for launch."
The recovery has helped drive launch prices higher as well. "Today, we’re seeing launch prices that are more in line with the value we provide to our customers," Peckham said.
Jeff Foust, a launch industry analyst at Futron Corp., agreed with the assessments of the industry executives. "In the near term, the launch industry is in good shape," he said. "In part, this is because there is a glut of satellites that have been delayed due to manufacturing problems, which are now coming due to be launched at the same time."
McKenna agrees that delays in satellite manufacturing and deliveries account for the launch industry’s currently-packed manifests. Another factor is the "recovery of all commercial launch systems from various issues," he said. "… Together, these factors have resulted in a significant backlog of business that is driving all near term activities; a backlog that we see extending well into 2008."
Of course, backlogs eventually clear up, which is why Foust wonders how long the launch industry’s renewed health will continue. "This current burst of business won’t last indefinitely."
Steve Blum, president of Tellus Venture Associates, expects new streams of business will pick up the slack and keep launch companies busy.
"We are coming into a new cycle of replacement satellite builds, all of which will need to be launched," Blum said. "As well, the surplus bandwidth that was keeping transponder prices down is starting to ease, which could convince people to build more satellites. Meanwhile, if the demand for Ka-band services such as Wildblue grows that way [direct broadcast satellites] did, you’re going to see a continual stream of launches in this category. Finally, companies that acquired extra bandwidth by purchasing other carriers and rationalizing their two fleets are now running out of options. To get more capacity, these companies will need to launch more satellites."
A major impact on launch demand could be take up high-definition TV, which require more transponder capacity than standard-definition channels, Mowry said. "We all think that demand is going to have a positive impact on the industry with more satellites being required, and thus more launches as well. What remains to be seen is when HD catches on and how fast."
McKenna expects the launch industry will enjoy a 5 percent annual growth rate in the years to come. "It won’t be flashy and earth-shattering, but it will be steady and stable," he said.
Of course, just because launch demand may stabilize does not mean that Arianespace, ILS, and Sea Launch will continue to dominate this market.
"If you’re a developed country and you want to be a world player, you’ll have a space program," he said. But given the time it takes to develop reliable heavy-lift launchers, he does not see near-term threats. "If you’re asking me whether we’re going to see serious competition in the near term, my answer is no. But if you’re talking 15 to 20 years from now, then my answer is yes."