December 31, 2012
Credit: Credit: SpaceX
For decades, space-launch providers have survived, and prospered, on government support in the form of development funding, launch contracts and infrastructure subsidies to maintain access to space.
That is changing as international competition increases, privately funded players enter the market and government budgets come under pressure. The result is an unprecedented set of challenges to traditional launch providers even as the industry continues to worry about future demand.
The replacement cycles of large commercial communications-satellite operators that have driven demand for launch services are nearing an end and, beginning around 2014, fewer launches are expected. In addition, budget constraints on governments are expected to limit their satellite procurements.
Europe's government-supported Ariane 5 currently launches roughly half of the world's commercial satellites, but faces increasing competition from the Russian Proton, which remains competitive despite a spate of launch mishaps. China, India and Japan are all developing potentially competing launchers, and SpaceX in the U.S. has more than $1 billion in commercial launch contracts for its privately developed, low-cost Falcon 9.
In November 2012, the European Space Agency agreed to proceed with the upgraded Ariane 5 Midlife Evolution (ME) and to continue studying a modular, lower-cost successor dubbed Ariane 6. Germany is backing the Ariane 5ME, to fly in 2017-18, and a decision has been set for 2014 on development of the French-backed Ariane 6, to enter service after 2020. French space agency CNES is studying three modular configurations for the Ariane 6, two solid-propellant and one all-liquid. All would use the Vinci cryogenic upper-stage engine under development for the 5ME.
Although it lofts a handful of institutional missions a year, Arianespace's business model is built on executing five dual launches of commercial spacecraft annually. The French say Ariane 5 is viable if it launches six missions a year—government and commercial—but would be unprofitable if it lost just two commercial satellites to competing vehicles. They estimate a solid-rocket Ariane 6, which would launch just one satellite at a time, could survive on eight launches a year—five commercial and three institutional.
Similar challenges face United Launch Alliance (ULA), which provides Atlas V and Delta IV launches for the U.S. government under the Evolved Expendable Launch Vehicle (EELV) program. The merger of Boeing and Lockheed Martin's launcher businesses to form ULA, satellite delays and NASA's withdrawal from the market have driven up launch costs under EELV.
The U.S. Air Force is under pressure from Congress to end a contract that provides infrastructure support to ULA to maintain assured access to space, and to open the launch services contracts to competition. As a result, the Air Force plans to begin by competing low-risk launches between new entrants while keeping the mission-critical launches with ULA.