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SpaceX’s Starlink Position Remains Protected from Most Starship Delay Scenarios, Analysts Say

By Rachel Jewett | April 27, 2023
      Starship lifts off in its first full integrated flight test on April 20, 2023. Photo: SpaceX

      Starship lifts off in its first full integrated flight test on April 20, 2023. Photo: SpaceX

      SpaceX’s recent Starship test may have sparked a mishap investigation by the Federal Aviation Administration (FAA) and raised concerns over potential damage to the environment, but leading space and satellite industry analysts still think the company’s powerful political and financial position will protect it through delays. 

      Despite SpaceX founder Elon Musk’s Thanksgiving “disaster” email to employees last year warning of potential bankruptcy and the need to reach a flight cadence with Starship to deploy Starlink satellites — several analysts told Via Satellite that they are doubtful that any Starship delays – pending environmental review — could lead to real trouble for the Starlink constellation. 

      Dallas Kasaboski, principal analyst for NSR, an Analysys Mason company, pointed out that even if Starlink is delayed in reaching full market takeup with its complete Gen 2 constellation due to the Starship timeline, it will still be ahead of competitors OneWeb and Amazon. He cited SpaceX rolling out “V2 Mini” satellites to launch on Falcon 9 as a hedge against delays. 

      “SpaceX has the first generation that [exists] and has contracts and customers. Downstream, the Starlink brand is very strong. There are many use cases we’ve seen where people who don’t know about satellite internet are excited about Starlink,” Kasaboski said. “There is some pressure, but there’s a lot of momentum and they have a full constellation that they could leverage.”

      “I don’t see a scenario where Starship is delayed by years,” he adds. “If there was a case where the FAA really came down on them and said the environmental report is a disaster and there’s some problem that SpaceX can’t overcome and it delayed them by a year or two — then we could see problems.”

      Tim Farrar, president of TMF Associates, said Starlink is at a point where it could be self-sustaining without Starship launches, albeit with lower market expectations. “It’s still not clear if Starlink will generate a return on the investment for SpaceX’s investors, let alone justify the $150 billion valuation that the company has attracted. But I don’t think it’s a good idea to assume that just because there might not be a great return on investment, this thing will go away,” he said. 

      When SpaceX tested the complete Starship rocket last week for the first time, the rocket cleared the launch pad and passed MaxQ, but fell out of the sky before exploding mid-air. Since the test, photos and videos show the destroyed launch pad, which was built without a flame trench or diverter to handle the impact of the launch on the pad. 

      In addition, reports from CNBC and Bloomberg show that particles fell out of the sky about 6 miles away from the launch site, well beyond the 1-mile radius SpaceX projected, and started a fire on state park land

      The FAA has activated an anomaly response plan, the agency confirmed in a statement emailed to Via Satellite. The mishap plan was referenced in SpaceX’s environmental assessment before the launch with the FAA. 

      Starship’s return to flight is “based on the FAA determining that any system, process, or procedure related to the mishap does not affect public safety,” the agency said, and it requires that SpaceX have ongoing monitoring of vegetation and wildlife by a qualified biologist. In addition, the National Transportation Safety Board (NTSB) and National Aeronautics and Space Administration (NASA) have “official observer status” to the investigation.

      Farrar believes the FAA was under a lot of political pressure to allow the launch to move forward, as NASA is depending on Starship for the Artemis program, and the Department of Defense has shown interest in the rocket as well. 

      “I think that the FAA, to some extent, takes things on trust if a company assures you everything is going to be okay.” Farrar said. “Sometimes that has disastrous consequences, as we’ve seen with Boeing and the 737. Companies are often under a lot of pressure to move quickly, and sometimes they cut corners and give assurances that are overly optimistic — if not underplaying the risks. That’s clearly what happened in this case.” 

      The day after the launch, Billy Nolen, the acting head of the Federal Aviation Administration withdrew his nomination to lead the agency, and said he will step down this summer. Farrar said it’s “distressing” that the agency faces a Starship review amid a leadership vacuum. 

      “It’s going to be harder to get answers about what considerations were made in the approval process — how they came to approve something that went so wrong, or miscalculated the impact,” he said. “I hope we’ll hear more from the FAA, but I am concerned that the lack of leadership may make that more difficult.” 

      The analysts Via Satellite spoke to for this story are largely confident that despite the FAA mishap investigation, SpaceX will move through the regulatory process and make the engineering progress needed to make Starship a reality — although the timeline for that is uncertain. However, all agree that the most pressing deadline — NASA’s Artemis III mission in 2025 — will not be met. 

      “I don’t believe this is a major setback. At this time, we don’t have enough information to really know what kind of delay this will bring,” said Laura Seward Forczyk, founder and executive director of consulting firm Astralytical. “But I don’t see anything within this launch that will be a major delay, like years. We already know that it takes longer than Elon Musk predicts to get the development of hardware, especially with new rockets on board.”

      SpaceX kept expectations low for the first launch, and no one really expected the first launch to be a complete success, commented Chris Daehnick, who leads McKinsey’s aerospace and defense market analytics platform. Data from the test will help the company move faster, and he expects SpaceX to get back on the launch pad in “reasonably short order.” 

      Musk has tossed out a number of ambitious timelines for Starship that came and went, like an orbital flight in 2020, an uncrewed Mars mission by 2022, and the crewed dearMoon mission set for this year.

      Maxime Puteaux, principal advisor for Euroconsult, doesn’t expect the Artemis III mission to take off before 2028 at the earliest. He expects SpaceX to build confidence in Starship by launching Starlink satellites, but cautions about the many technical hurdles Starship must clear before it will be able to launch the Artemis III mission. 

      “Artemis III is the most complex Starship mission profile. There are so many technical elements that need to be checked — the end goal of having astronauts with boots on the Moon isn’t happening anytime soon,” Puteaux said. 

      “They need to secure what I think is a very underestimated part — refueling cryogenic propellant in orbit, which is a massive complexity that hasn’t been tested yet,” he said. Puteaux also pointed to steep requirements to safely launch from Cape Canaveral and with its nearby national security infrastructure. “Considering the consequences of the launch failure last week, they will need to convince a lot of people that any launch of Starship from the Cape is safe. This is a major obstacle,” he added. 

      Despite the hurdles to make Starship operational and satisfy NASA as a key customer — many analysts are also skeptical that the commercial space industry needs or can support a launch vehicle as big as Starship. Japanese satellite operator Sky Perfect JSAT is the only commercial satellite operator so far to have publicly announced a Starship launch contract. 

      “The national security launch market is not designed today for a vehicle as massive as Starship,” comments Carissa Christensen, founder and CEO of BryceTech. “Payloads are designed to take advantage of available launchers. There’s not been, to my knowledge, a major development program to transform payloads specifically to take advantage of Starship’s capacity, either on the national security or on the commercial side.”

      While the launch market is capacity constrained, Christensen said an operational Starship brings more capacity to market than the current industry can support. 

      “Elon Musk has talked about very high launch rates. With a vehicle of that capacity, that’s more launch capacity than there’s demand for today,” she said. “Who’s going to take advantage of that? SpaceX is clearly banking on the fact that there will be users who can take advantage of that, whether that is commercial exploration, new kinds of satellite architectures, [or] human rated vehicles that go to Mars.” 

      Kasaboski believes that SpaceX’s dominant position in the space industry — between commercial launch, human spaceflight for NASA, and government launch contracts — means the company can afford to fail publicly as part of this development program, and not risk government contracts or investor confidence.

      “SpaceX can afford to fail. In terms of their support from the U.S. government, they are almost critical as part of the deployment of satellites and other infrastructure,” he said. “Given how bottlenecked launch is, and how competitive SpaceX is — most programs are tied to a very limited number of launch vehicles, and some of them are still in development. SpaceX can afford to take a very Silicon Valley bullish [approach]. They play by different rules.”