SpaceX Failure Leaves Long List of Customers in the Lurch


PARIS — The June 28 failure of a SpaceX Falcon 9 rocket is almost certain to deal a blow to the revenue projections of numerous SpaceX commercial customers that had been basing their results on being in orbit this year or early in 2016.

Commercial operators whose scheduled launches are now under threat include:

• SES of Luxembourg, which had planned a September launch of a satellite providing the company with a late 2015/early 2016 revenue boost with substantial new-business capacity.

• Machine-to-machine satellite operator Orbcomm of Rochelle Park, New Jersey, whose 11 remaining second-generation satellites were scheduled for launch this year.

• Eutelsat of Paris and ABS of Bermuda, whose twin all-electric satellites take several months to reach final destination in orbit and were scheduled for launch late this year on a single Falcon 9.

 • Mobile satellite services provider Iridium Communications of McLean, Virginia, with seven launches planned in 2016-2017 to complete its second-generation constellation.

• ViaSat Inc. of Carlsbad, California, whose ViaSat-2 broadband satellite is needed to return to growth ViaSat’s U.S. consumer broadband business and was scheduled on a mid-2016 flight of SpaceX’s not-yet-flown Falcon Heavy. SpaceX had planned to launch the inaugural Falcon Heavy on a self-funded launch late this year, with three customer missions in 2016 for the U.S. Air Force, a joint Inmarat/Arabsat satellite and for ViaSat.

Spacecom of Israel’s Amos 6 and Sky Perfect JSat of Japan’s JCSat-14 also had been scheduled for launch this year.

And that’s just the commercial end. On the government side, ocean-altimetry users worldwide had been awaiting the August launch of the Jason-3 satellite to take over from the existing Jason-2, which is long past its planned retirement date.

Argentina’s Conae space agency had planned two Falcon 9 launches, each carrying a Saocom radar Earth observation satellite. SpaceX has said Conae had made deposits of $25.1 million in 2013 and $41.9 million in 2015 for the two flights.

The initial post-failure focus has logically been on its effect on the International Space Station. The Falcon 9 v1.1 rocket was carrying a Dragon space station cargo-supply freighter and was the third cargo-supply failure in less than a year. As a result, NASA and the other space station partners are more than ever counting on planned cargo flights of Russian and Japanese cargo vessels, planned for July and August, respectively.

NASA and the Russian space agency, Roscosmos, said June 28 that there is no immediate issue for the station’s astronauts given the current on-board supply levels.

But unlike space station managers, commercial satellite operators generally do not store capacity in orbit in the event of supply shutdown except in cases where the backup supply is guaranteed to television broadcasters and is embedded in contract pricing.

Commercial operators not only do not have spare capacity to replace planned launches, the current state of the commercial launch market leaves them with no choice but to stick with the vehicles they have reserved.

With Russia’s Proton rocket still struggling to recover from its May failure – its fourth since mid-2012 – the commercial market for the past two years has rushed to book slots aboard Europe’s Ariane 5 heavy-lift rocket and the SpaceX Falcon 9 v1.1.

This has made commercial operators nervous. The larger of them – SES, Intelsat and Eutelsat, with a total of nearly 140 satellites in orbit – have stressed the need for a third viable rocket and said they stand ready to return to Proton if the vehicle’s builders can demonstrate better manufacturing quality control.

Industry officials have said Russia’s Proton is likely to return to flight by September. But how many commercial flights it can accomplish in the next 12 months while meeting the demands of the Russian government market is unclear.

In any event, no commercial fleet operator at the moment wants to put a satellite at the end of the Proton queue, especially since the September return-to-flight scenario has not been confirmed by Roscosmos.

Arianespace has said its Ariane 5 manifest is full through 2016, meaning any SpaceX customer seeking to switch vehicles for an earlier launch is likely to be told: Openings start sometime in 2017.

Investment bank Jeffries on June 29 referred to SpaceX as “the golden child” of the commercial launch industry, both for its arrival as an alternative to the troubled Proton and for its low-price pressure on Arianespace.

One industry official said Hawthorne, California-based SpaceX in recent months has not used its de facto duopoly with Arianespace to raise prices . On the contrary, this official said, SpaceX has been offering prices well below $60 million for a launch to geostationary transfer orbit, the destination of most telecommunications satellites. Even $55 million proposals have been seen, the official said.

In June 26 testimony to the U.S. House Armed Services strategic forces subcommittee, Jeffrey Thornburg, SpaceX senior director for propulsion engineering, said the company’s backlog was valued at more than $7 billion, with nearly 50 missions manifested.

When commercial fleet operators say they want three regular flight options to preserve schedule credibility, launch-service suppliers routinely counter that these operators are using schedule concerns as a code for driving down launch costs.

Given the current Proton and Falcon 9 status, it is schedule more than anything that matters to these fleet operators.

One company whose business model seems able to shrug off what would be catastrophic events for others is Planet Labs of San Francisco, California, which is building an Earth observation business with dozens of small satellites, many deployed into low Earth orbit from the space station.

Planet Labs lost eight satellites in the Falcon 9 failure – assuming none can be recovered from the Dragon capsule debris – and lost 26 others in the October 2014 failure of the Orbital ATK Antares rocket, also on a space station supply mission.

In a June 28 statement, Planet Labs Chief Executive Will Marshall took the latest setback in stride:

“We’ve experienced a launch failure before and, statistically, we will again,” Marshall said. “With a quarterly launch schedule across a network of international partners, we will reach our goal of imaging the entire Earth, every day.”