Prices Soar In Robust ELV Market

Geostationary satellite launch demand underpins ELV market, with some growth likely in low-Earth-orbit missions

Printed headline: ELVs Rebound

Production of expendable launch vehicles is set to rise during the next decade, although the landscape of the ELV market itself will remain unchanged. Europe will continue to grab the bulk of the market, and few new providers beyond Space Exploration Technologies are expected to emerge as global players. EADS has begun developing an uprated Ariane 5 with new upper stage and enhanced avionics.Credit: ARIANESPACE There were some lofty goals set for 2008 by launch providers, but none achieved its planned launch rate expectations that year. Ironically, by not meeting the desired launch tempo and therefore decreasing supply, they all enjoyed increased launch prices. According to FAA statistics, commercial launch revenues grew almost 100% between 2004 and 2008, to nearly $2 billion. Payments for launch services are typically spread over one to two years prior to launch, but for the purposes of the FAA’s calculations, revenue is counted in the year a payload launches. In 2008, 69 launches were conducted—one more than in 2007 and two more than in 2006, representing an all-time high for the new millennium. The 69 launches in 2008 carried 106 payloads into orbit, 42 for commercial purposes. The remaining payloads were used for government, military or nonprofit purposes. Twenty-eight of the commercial launches carried 46 payloads into orbit. Two launches resulted in failures to reach orbit: a Russian Proton-M carrying the AMC-14 for SES Americom; and a SpaceX Falcon carrying four small payloads. The 2008 tally compares to the 52 launches conducted through the first nine months of last year that carried 62 payloads into orbit. Of these payloads, 17 were for commercial applications, 33 for government or military uses, and seven involved cargo or passengers to the International Space Station. Five launches resulted in failures. Since 2004, about 70% of commercial launches have been to geostationary Earth orbit, a segment that generates more revenue than the non-GEO market and generally deploys larger payloads. Steady, albeit limited, growth for GEO communications satellite services is expected in the near term, which should translate to about 15 commercial launches annually for launch service providers. Indeed, of the 17 commercial payloads launched in the first three quarters of last year, 15 were GEO-bound communications satellites. A near-term trend of heavier GEO satellites bodes well for launch providers. Some growth in launch demand for low-Earth-orbit communications satellites is expected as existing LEO constellations such as Globalstar, Iridium and Orbcomm are either replenished or replaced with next-generation systems. In the near term, science satellites will continue to account for about half of the demand for non-GEO launch services. Governments continue to be the prevailing customers of the launch industry, accounting for 59% of the total global launches in 2008 and about the same percentage for the first three quarters of last year. This trend will continue in the decades to come. Stabilization and increases in prices mean launch providers no longer have to offer their ELVs at near-losses. Also, many of the major players in the commercial satellite arena are expected to be in the market for fleet replenishment. The above will lead to a nice spike in commercial launch activity. The anticipated resurgence in demand for both geosynchronous and nongeosynchronous satellite communications capacity and continued substantial government demand indicate that despite razor-thin profit margins, the world market for ELVs is robust. The following is a closer look at the major international launch providers: •Arianespace. Arianespace ordered 35 Ariane 5 ECA launch vehicles from European manufacturer EADS in early 2009. The deal is worth more than $5 billion and brings the total number of Ariane 5 ECA rockets in production to 49. The new launchers are to be used beginning in the second half of this year and should cover the needs of Arianespace through about 2016, based on typical annual launch tempo as calculated by Forecast International. Now that the Vinci engine is well into the bench-firing phase and its re-ignition capability has been demonstrated, a slightly modified version of the Ariane 5 ECB—renamed Ariane 5 ME (Mid-term Evolution)—is set to be proposed. The ME would be operational by 2015 and could lift 12 metric tons into geostationary transfer orbit (GTO), compared with 10 tons for the ECA. The European Space Agency (ESA) is also looking at an intermediate solution between the ECA and ME that could increase the ECA’s lift capability by 1-2 metric tons to GTO. This upgrade would primarily involve increasing the propellant load of HM7B, and would be compatible with a later switch to the Vinci engine. The Ariane 5 enjoys a comfortable position in the commercial market relative to its competitors, thanks in part to the limited launch rate of the Sea Launch Zenit-3SL and past failures of the Russian Proton-M rocket. Although available for commercial launches, the U.S. Delta IV and Atlas V are mainly courting government customers, which also should bode well for the Ariane 5. •International Launch Services. ILS has exclusive rights to market Proton launch services to global commercial satellite operators. The Khrunichev State Research and Production Space Center manufactures the Proton and is the majority owner of ILS. ILS secured six firm launch orders and three mission assignments in the first half of 2009. It also witnessed a significant trend in which customers moved from other providers to ILS Proton to meet their launch requirements. The Russian supply chain concerns that are impacting some launch operations are not affecting ILS. In fact, the consolidation of the Russian space industry has been a boon to the company, as the suppliers for Proton are now vertically integrated and the manufacturing process is much more streamlined. ILS marked a milestone with the first mission of last year—the 50th ILS Proton launch with the W2A satellite for longtime customer Eutelsat of France. The outlook for this year is robust, with at least nine missions anticipated for the year. Last September, ILS reported a backlog of 25 firm missions valued at more than $2 billion. •Orbital Sciences Corp. OSC provides the Minotaur, Pegasus and Taurus vehicles for orbital launch. In early December 2007, OSC provided an initial glimpse of its plans for a new medium-class launch vehicle named Taurus 2. According to the company, Taurus 2 will carry Delta II-class payloads by combining elements of Orbital’s existing Pegasus, Taurus and Minotaur launchers with other hardware. The Taurus 2 is a medium-lift vehicle under development to support communications satellite efforts to provide cargo resupply to the International Space Station, among other applications. OSC expects the Taurus 2 to begin launching late this year or early in 2011 from the Mid-Atlantic Regional Spaceport at Wallops Island, Va. Orbital will spend $45 million to develop launch facilities there for the Taurus 2. •Sea Launch. Sea Launch offers the Zenit-3SL for commercial launches to GEO, from the mobile Odyssey Launch Platform along the equator in the Pacific Ocean. Last June, Sea Launch filed for Chapter 11 bankruptcy protection but said it would continue operations while it restructured. The multinational venture stated in its filing that it has assets of $100 million to $500 million but liabilities in excess of $2 billion. Boeing, Sea Launch’s largest creditor, is also its largest stakeholder. Sea Launch owes Boeing nearly $1 billion in loans, trade debt and partner liabilities, according to the bankruptcy filing. Boeing holds a 40% stake in the partnership, providing support services and hardware for the Zenit-3SL rocket’s payload unit. Russia-based Energia, which holds a 25% interest, builds the rocket’s Block DM-SL upper stage and supports vehicle integration and mission operations. Aker, a Norwegian shipbuilder, constructed the company’s command ship and launch platform and owns 20% of the company. Ukrainian rocket manufacturers SDO Yuzhnoye and PO Yuzhmash control a 15% share of Sea Launch. Sea Launch has experienced supply chain problems that have limited the number of launches it can complete, and the late deliveries also made it more difficult for Sea Launch to meet its customers’ schedules, causing more payloads to be bumped to other rocket providers. •SpaceX. The Falcon 1 uses some innovative technologies, such as a tank design with pressure-assisted stabilization, a unique common tank bulkhead, a lithium-aluminum upper stage to reduce weight and engines that are built by SpaceX. These factors separate the company from the higher-cost contractor community. SpaceX is targeting NASA and the U.S. Defense Dept. to slowly convert the masses to the low-cost launcher. If the Falcon series can prove successful from a flight standpoint, and the pricing stays at suggested levels, SpaceX could revolutionize the industry and put serious pressure on the established players. The Falcon 1, offered at about $10 million, will mainly compete against Orbital Sciences’ Pegasus and Taurus for the half-ton-to-LEO market. Meanwhile, the Falcon 9 will target the evolved expendable launch vehicle class in the U.S.; again, if the $41-58-million price projections are accurate, the Falcon 9 could win a big share of the market. In the long term, SpaceX hopes to conduct about six Falcon missions annually. •United Launch Alliance. ULA was formed in December 2006. The company conducts launches for the noncommercial U.S. government market. Boeing heritage Delta vehicles and Lockheed Martin heritage Atlases are manufactured and operated by ULA. The company is a 50/50 partnership between Boeing and Lockheed Martin. In 2008, ULA conducted four U.S. government noncommercial launches. Three Delta II vehicles launched the Navstar GPS 2RM-6 for the Defense Dept. and the Gamma-ray Large Area Space Telescope and Jason 2 ocean topography spacecraft for NASA. A ULA Atlas V vehicle was launched in April 2008, placing the NRO L-28 reconnaissance satellite into an elliptical orbit. ULA will continue to lean on strong government demand and launch 4-6 spacecraft annually in the near term.