The launch last week of two satellites aboard an Ariane 5 rocket was a much-needed boost for French launch company Arianespace and the owners of the precious cargo.

Arianespace, and the launch industry in general, breathed a sigh of relief when the Ariane 5 blasted into atmosphere and deployed the two birds. Arianespace has put all its eggs into the Ariane 5 basket and early failures have been troubling to the dominant commercial launch services provider.

But this time, everything went smoothly. The rocket lifted the PanAmSat [Nasdaq: SPOT] Galaxy XII and the Indian Space Research Organisation’s INSAT 3A satellite into their proper orbits. The Ariane 5 left the space center in Kourou, French Guiana, at about 6:52 p.m. (EDT) April 9 and deployed the satellites as planned.

The problem-free launch and positive in-orbit tests of Galaxy XII satellite are especially encouraging to Wilton, Conn.-based PanAmSat, which surprised the industry by choosing Dulles, Va.-based Orbital Sciences [NYSE: ORB] to build the spacecraft. Orbital Sciences specializes in building small and medium-sized satellites that are generally undesirable for geostationary (GEO) satellite use, where bigger and more powerful spacecraft typically are preferred. With excess capacity in orbit, that view appears to be changing as operators increasingly opt to launch smaller satellites to better fit demand.

The Galaxy XII is the first of three satellites Orbital is building for PanAmSat. Orbital’s GEO satellites are based on the STAR family of smaller satellite platforms, which are able to accommodate most types of commercial communications use. The goods news for operators is that the STAR satellites also are significantly less expensive to manufacture and launch.

“In these uncertain times, there is merit in progressively building your in-orbit resources as the demand materializes,” said D.K. Sachdev, president of SpaceTel Consultancy, of Vienna, Va.

“Besides reducing market risks, such approaches can often be financially superior in present-value terms.”

The three Galaxy satellites that Orbital contracted to build will transmit entertainment and information for cable television systems, TV broadcast affiliates, direct-to-home TV operators, Internet service providers, telecommunications companies and corporations. Galaxy XII, a C-band satellite, will be the sixth Star mission. Galaxy XIV and Galaxy XV are under construction at Orbital’s Dulles, Va., satellite-manufacturing facilities. Each Orbital spacecraft has a 15-year life expectancy and will provide capacity for PanAmSat’s satellite network over the continental United States, Alaska and Hawaii.

“When we talk of satellite manufacturers, we generally talk only about the big five: Alcatel Space, Astrium, Boeing [NYSE: BA], Lockheed Martin [NYSE: LMT], and Space Systems/ Loral [NYSE: LOR],” Sachdev said. “However, it is time to also recognize that there are several others steadily developing their roles and market niches in the industry.” These satellite manufacturers include Orbital Sciences, as well as up-and-coming firms in China, India and Israel, Sachdev said.

The Indian-built INSAT 3A, which accompanied the Galaxy XII into orbit, is the latest in a long series of GEO and earth resources satellites India has been developing for over two decades, Sachdev said.

–Paul Dykewicz and Elizabeth Paris