A Level Playing Field?
In the launcher industry, it is a never-ending debate: is everybody playing by the same rules, or not? Ask Boeing or Lockheed Martin/ILS, and they will tell you that the playing field is far from level. The reason? Thanks to European government funding, Arianespace does not have to make a profit in order to survive. This means they can afford to sell at a loss--a charge often levelled at the European-backed Airbus consortium as well--while Boeing and Lockheed Martin/ILS cannot.
"We are concerned, but we recognize there isn't much we can do about it," says Boeing's Trafton. "The governments of Europe have paid to develop the Ariane 5, and they continue to cover Arianespace's losses. This tells me that Arianespace can pretty much set their prices where they need to in order to win market share."
"We know that our costs are much lower than Arianespace's," says Sea Launch's Maser. "Unlike them, we don't sell at a loss, and we never will."
However, Le Gall scoffs at this criticism. "The U.S. launch vehicle industry is supported through military contracts and other forms of aid," he explains. (Among the sources of aid cited by Arianespace: federal support for EELV launcher development, the European launch agency's exclusion from U.S. government projects, Zenit construction at government- owned and operated plants in Ukraine and Russia, and low-cost leases--relative to what Arianespace pays in French Guiana--for U.S. launchers' access to the Florida Spaceport.) "For instance, the Delta 4 has just started flying, yet Boeing already has about 20 government contracts to use this vehicle. If Arianespace enjoyed this level of support from European governments, we would be very happy."
Who Will Remain?
A shrinking market and too many launchers: would not consolidation make sense? Normally it would. However, as mentioned, it is not likely to happen in the launcher industry. After all, Europe is not likely to let Arianespace fail, both for strategic reasons (maintaining European-controlled access to orbit), and those of national pride.
"The word I use to describe the current state of the launcher industry is 'irrational'," Trafton says. "I don't see how the market can continue to support this number of launchers. The only reason it's happening at all is that European governments are unwilling to let market forces come to bear. Whatever happens, Europe will not allow Arianespace to go under, because it's their only launch provider." Meanwhile, with the U.S. government wanting the option of buying launchers from both Boeing and Lockheed Martin, it's unlikely that they'll be allowed to fail either. As a result, none of the big three appear in any imminent danger.
This said, you can't run a launcher company without money. Hence, what remains to be seen is whether the European and U.S. governments will provide enough cash to keep the big three not just alive, but healthy. After all, launcher technology is dynamic: any company that just treads water risks being surpassed by its competitors, and ultimately being driven out of the market.
"Can we keep going like this?" asks McAlister. "As far as the current launcher companies are concerned, the answer is yes: we can keep going like this, and we will keep going like this. Whether it makes economic sense or not, the launcher industry will keep going like this."
James Careless is the senior contributing editor to Via Satellite.