[Satellite News 10-09-08] The spiralling cost of launch services remains a major concern for fixed satellite services (FSS) operators around the globe.
    “I believe satellites and launchers are too expensive,” Eutelsat CEO Giuliano Berretta said at September’s World Satellite Business Week in Paris. “What is happening in the last year is too much. It is another world. There has been a change in policy in launching the rockets. The reliability has not improved, but the price has. You will feint when you hear the prices for launch services.”
    David McGlade, CEO of Intelsat, said, “The costs of building and launching a satellite is going up far faster than inflation. As it is dollar denominated, it is very expensive for us. The non-European manufacturers are expensive. We have to be careful as an industry in terms of how we push it.”
    The launch providers are not surprised by the comments, but insist that the demands from the FSS operators for on-time launches and assured access to space factor into the costs.
    “I’m not surprised, because that’s everybody’s right,” said Jean-Yves Le Gall, CEO of Arianespace. “What are important to me are the facts. One fact is the exorbitant price that operators had to pay in the past, with launch failures and delays, due to the low level of quality. Another fact is that Ariane 5 now has a string of 27 successful launches in a row and Arianespace has a record backlog of orders.”
    Arianespace also had signed eight contracts by early September, Le Gall said.
    Kjell Karlsen, new president and general manager of Sea Launch Co., said, “I strongly believe that launch prices are fairly valued and reflective of the vital role that launch vehicle providers play in the supply chain. We are currently seeing prices today that make the business case for launch suppliers sustainable. This status follows six-to-seven years of losses. The dissatisfaction expressed by FSS operators during World Satellite Business Week was not unexpected and, in fact, spirited dialog in our industry is healthy,” he said.
    The problem with the era of low launch prices was that the providers were losing money, and that was not sustainable, said Frank McKenna, president of International Launch Services (ILS). “The commercial launch business, like any other, needs to be profitable to remain in business,” “All of the segments of the value chain for commercial space telecommunications services need to be financially healthy, and that includes the launch segment. The nature of the launch segment is seen in the massive investment that is required to develop and reliably maintain a launch system with a healthy production rate over a 15-to-20-year life cycle. This longer-term view is often overlooked in the debate about the current prices.  How do we achieve a financially viable launch industry to support the commercial space industry? That is the question for constructive debate that ILS has posed to industry panels over the last two years.”
    In terms of the major strategic challenges the companies are facing and the overall assessment of the landscape, all believed it was a healthy landscape right now.    
    “Launch services supply continues to exceed overall industry demand, but periodic supply perturbations, a strong replacement cycle and new industry entrants have placed us in a state of equilibrium, more or less,” said Karlsen.