Satellite Launch Services in Flux
Commercial satellite launch services continue in a state of flux, with new and returning market entrants threatening the already-thin margins of the existing players, a new wave of launch failures roiling the market, and funding of next generation vehicles still in question, while demand appears static in the roughly 20 to 25 heavy commercial satellite per year bracket. At one point during the last few years, the commercial market was reduced to a near duopoly – particularly for heavy lift vehicles – between International Launch Services (ILS), a U.S. company owned by Khrunichev State Research and Production Space Center of Russia, and Arianespace, a French company with French majority, but pan-European ownership. The Delta and Atlas launch vehicles of the American United Launch Alliance (ULA), the Boeing-Lockheed Martin joint venture, were back-ordered for U.S. government use. Sea Launch, originally a Boeing-managed multinational project, was mothballed following the NSS-8 launch failure in January 2007 and subsequent bankruptcy proceeding. California-based Space X’s Falcon 9 vehicle was still in the developmental stage. China Great Wall Industry Corp. was confined mainly to its domestic market for its Long March vehicles by western regulatory restrictions.
Recently, however, a lot of these market-setting conditions have changed sharply. On the positive side, Sea Launch emerged from bankruptcy in October 2010, returned to flight a year later, and conducted five successful launches through 2012. The Falcon 9 entered into service and successfully sent its Dragon payload module to resupply the International Space Station – the Dragon is intended to carry crews to the ISS in the future. CGWIC is developing its own impressive track record of successful launches, and is making inroads outside of its domestic market, launching satellites for Eutelsat, Venezuela, Turkey and Pakistan in the last few years. Another U.S. entrant, the Orbital Sciences Antares vehicle continues to move through its tests. Faced with decreasing U.S. government demand, ULA may seek to make inroads into the commercial market.
On the negative side, launch service “anomalies” have returned to haunt ILS and Sea Launch. In the case of ILS, which commercially markets the Proton launch vehicle manufactured by Khrunichev, the failure of its Breeze-M upper stage in December, in the year’s eighth launch, followed Breeze-M failures in August 2011 and August 2012. Those launches involved Russian government and commercial satellites, rather than the non-Russian commercial customers served by ILS. While the Proton has a heritage of over 400 launches spanning nearly the entire space age, the Breeze-M is a recent upgrade to the vehicle family, and its recurring anomalies are likely to concern customers. Khrunichev reports that overheating in an upper stage oxidizer pump was at the root of the December failure. If the recurring Breeze-M problem can be identified and remedied without further losses, ILS should get past the controversy.
The February 1 loss of Intelsat 27 aboard a Zenit 3SL vehicle forty seconds after launch may spell greater difficulties for Sea Launch, now owned by an Energia affiliate. Sea Launch did complete five successful launches after returning to flight before the Intelsat 27 event, but is bound to faces concerns about the reliability of its floating platform launch model. One saving grace is that Sea Launch has a relatively light launch manifest for 2013, and is next scheduled to launch Spacecom’s Amos-4 satellite from Baikonur on its Zenit Land Launch vehicle, which continued in service after the 2007 Sea Launch failure.
In the case of Arianespace, launch anomalies are not an issue; the company owns an enviable record of 54 consecutive Ariane 5 launches and over 50 percent of the commercial market. However, it may be limited in the future by the differing risk appetites of its more than 20 shareholders from numerous European countries. The European Space Agency decided in November to focus on the Ariane 5 ME (Mid-life Evolution vehicle), shelving the possibility of an Ariane 6, with the proviso that the new Ariane 5 ME Vinci restartable-engine upper stage will also serve as the upper stage of an eventual Ariane 6. While Arianespace’s market position is secure for the next few years, it is facing the same tight demand market as everyone else, and there are younger, hungrier competitors with less conservative owners circling.
Owen D. Kurtin is the founding member of New York City-based law firm Kurtin PLLC and a founder and principal of private investment firm The Vinland Group LLC. He may be reached at [email protected].