Arianespace Assures French Parliament it Can Outcompete SpaceX

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PARIS — The head of Europe’s Arianespace launch consortium on May 12 said the company can beat competitor SpaceX in the open market with a euro/dollar exchange rate at today’s levels and the planned 5-6 percent reduction in Ariane 5 rocket production and launch costs.

Arianespace CEO Stephane Israel
Arianespace CEO Stephane Israel

Arianespace Chief Executive Stephane Israel also said a fresh canvassing of large commercial satellite fleet operators has found that SpaceX’s planned reuse of its Falcon 9 rocket’s first stage — designed to cut Falcon launch costs — at this point presents no real threat to Arianespace.

The Ariane 6 rocket agreed to by European governments last December, he said, has sufficient commercial attributes of its own to maintain its commercial market position against a partially reusable Falcon 9, Israel told the Economic Affairs Committee of the French National Assembly, or parliament.

Israel also said that in the two years or so since Arianespace and SpaceX have been regularly competing for business — since early 2014 the companies have formed a de facto duopoly on the commercial market — Arianespace has won the majority of the contracts. Only an in-depth review of each bid sponsor’s conditions would be able to verify this.

Arianespace and SpaceX evenly split the commercial contract awards openly competed in 2014. Each won nine contracts for geostationary satellites.

But it is often the case that one of them cannot bid for a given order. Some customers insist on conditions relating to launch dates or recent launch history that eliminate one of them from the bidding.

The correlation of forces between the two companies started with a SpaceX advantage on price — around $60 million compared to $90 million for a slot on the Ariane 5 rocket’s lower berth, reserved for small satellites — and an Arianespace advantage of a more than a decade’s operations without a failure.

A SpaceX Falcon 9 launched  ABS 3A and Eutelsat 115 West satellites on March 1. Credit: SpaceX
A SpaceX Falcon 9 launched
ABS 3A and Eutelsat 115 West satellites on March 1. Credit: SpaceX

The Falcon 9 has now launched 18 times since 2010 without a failure of its primary mission, including a flawless record to geostationary orbit, reducing the power of the Arianespace argument. In response, Arianespace has cut prices for its lower-berth position to reduce SpaceX’s advantage there.

The company has also increased prices for heavier upper-berth satellites because those competitors — Russia’s Proton and the Russian-Ukrainian Sea Launch vehicle — have run into trouble. Arianespace may lose this pricing flexibility once SpaceX introduces its Falcon Heavy in 2016.

Israel said Arianespace and Airbus Safran Launchers, a joint venture that owns a 39-percent stake in Arianespace and is prime contractor for the current Ariane 5 and future Ariane 6 rockets, have agreed to find production and operating savings of 5-6 percent.

He said those savings should be enough to keep SpaceX at bay if the euro remains about where it is now versus the U.S. dollar.

The regular Arianespace-SpaceX competition started at a time when the euro was trading for $1.35 and higher on foreign exchange markets. It’s now around $1.10, a level that Israel said offers a huge relief to the European rocket.

The drop in the euro’s value against the U.S. dollar provides Arianespace with a secondary advantage as well. Having purchased exchange-rate coverage contracts at the time of signing launch contracts when the euro was high, the company will be incurring the cost of these launches in lower-value euros.

But just as Arianespace could not expect to ask customers to pay extra when the euro climbed after contracts were signed, those customers cannot now expect a refund from Arianespace with the currency’s move in the other direction.

Israel said Arianespace fully expects SpaceX to succeed in its attempt to recover its Falcon 9 first stage.

But that’s just the start of the challenge, he said. It remains unknown what the refurbishment costs will be compared to the cost of churning out a fresh stage from an existing production line. He said it is also unclear whether commercial fleet operators will immediately accept placing $200 million telecommunications satellites on a rocket with a refurbished stage.

Finally, he said, flying a reusable stage means sacrificing first-stage performance so that enough energy is available to power it back to its recovery point. That power is thus unavailable for the mission, which is one reason why Hawthorne, California-based SpaceX thus far has attempted to recover its stages only on low-orbit missions, not for missions to geostationary transfer orbit, where most commercial satellites operate.

The hearing was notable for the number of times SpaceX was invoked by the parliament members in their questioning. Israel said that it was unrealistic to dismiss SpaceX five years ago, as was done by many in France, and is equally unrealistic to deify SpaceX now.