Survival of the Fittest

At the recent World Satellite Business Week, the issue of launches was bound to arise – and of course, it did. With Sea Launch currently going through a re-organisation process after filing Chapter 11 in June, the issue of competition arose and it appears that there is concern that there is simply not enough choice available to operators. In a market that is dominated by Arianespace and ILS, satellite operators have taken steps to lobby the United States government to encourage them to move into the commercial launch market in order to make the launch landscape much more competitive. The removal, albeit temporary at present, of Sea Launch from the sector means additional business for the likes of the dominant players but is this giving the industry the choice and the value for money?

Proof that satellite systems and services are in high demand can be found in the launch service providers backlogs. The major international providers have an impressive line-up of launches for the coming twelve months. Arianespace, remains on track for the busiest calendar year of heavy-lift launches with Ariane 5, and continues to prepare for the introduction of its medium-lift Soyuz and lightweight Vega from French Guiana. In addition, the company’s order book backlog currently stands at 33 geostationary orbit payloads in addition to seven dedicated Ariane 5 missions and nine dedicated Soyuz flights – a new Arianespace industry record.

Satellite launches come at a price and the satellite operators have often criticised launch providers for their high prices. Although it cannot be denied that prices have gone up over recent times, the launch providers point out that there is a price to pay to launch on time. If the launch service providers cannot make a profit, they cannot operate and, at the end of the day, this is a science in itself. If the launch fails to place a satellite in orbit correctly and it is lost, or even if it does not get into the air, the provider is held responsible. So, the provider does not want to take any chances on anything going wrong. The cost of launch service provision is extensive and involves a team of highly qualified technical staff. Operators have, in the past, suggested that the providers should take on performance initiatives that hinge on whether they perform the launch on time, for example, or financial penalties for late launches or launch failures. Perhaps what the operators sometimes forget is the fact that a launch failure or a late launch impacts upon the launch service provider as well as the operator. They are also badly affected.

So what would competition do for the launch industry? The entrance of the United States’ United Launch Alliance (ULA) and China’s Long March (that has recently failed to deliver on their last launch) could signal a decrease in launch prices. However, the overriding point is that operators must minimise risk when choosing a launch provider. They need reliability above all else. New entrants to the commercial launch sector may not be able to deliver this and it therefore becomes a survival of the fittest.

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