Commercial, not government, demand will drive size of small launch vehicle market

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WASHINGTON — Startups in the burgeoning small launch vehicle market acknowledge that only a handful of vehicles will survive a likely shakeout, driven more by commercial rather than government demand.

A panel session at the Satellite 2019 conference here May 8 featured three startups that expect to perform first launches of their small launch vehicles within the next year, all of whom are optimistic about their own ventures while expecting a contraction in the number of competing vehicles in the next few years.

Stephen Eisele, vice president of business development at Virgin Orbit, said the company was in the “final, final, final” phase in the development of its LauncherOne rocket. “We’ve got one thing left to button down” with the rocket, along with a few captive carry flights of the modified Boeing 747 carrier aircraft, he said, but didn’t give an estimated date of their first orbital launch.

Robert Cleave, chief revenue officer at Vector, said the company was planning a test launch of its Vector-R rocket this summer, with a “critical milestone” in the vehicle’s testing planned in the coming days. That vehicle will be capable of placing up to 35 kilograms into a sun-synchronous orbit, with the larger Vector-H, also under development, able to carry about 200 kilograms to the same orbit.

Les Kovacs, vice president of business development at Firefly Aerospace, said his company expects to take possession of its launch site at Vandenberg Air Force Base in California, formerly used by the Delta 2, in June or July. The company has stated it plans a first launch of its Alpha launch vehicle in December, but Kovacs acknowledged that is a “all-green-light, success-oriented” schedule. “So we will probably push into some time in 2020.”

Those vehicles will join Rocket Lab’s Electron, which started regular commercial operations last year, and dozens of vehicles — more than one hundred, by some estimates — under development. Despite the growing interest in small satellites, vehicle developers acknowledged that there is only demand for a few different small launch vehicles.

“Of the 100-plus companies, my assessment is that you’ll probably have five, six, maybe seven survive,” Kovacs said. Interest from the U.S. military in small launch vehicles will likely only support two vehicles, in order to provide the same kind of assured access to space it desires for larger satellites.

Commercial interest, he said, will be a far larger driver of demand. “It used to be that, in the launch industry, the anchor tenant was always the U.S. government, and that’s not going to be the case here,” he said. “That’s going to flip, and it’s going to be commercial demand that’s going to drive the small launchers in the out years.”

“We’re tracking a large number of wannabe launch vehicle providers,” Cleave said. He didn’t give a specific estimate on how many he thought would survive, but agreed it would be driven by commercial, not government, demand. “The commercial business case is driven by economics, and availability and reliability, and so whoever can provide those will survive.”

“I think today the market can probably sustain three systems,” said Marino Fragnito, vice president of the Vega business unit at Arianespace, marketing the Vega and upcoming Vega-C small launch vehicles. The introduction of satellite megaconstellations, he added, could support three additional systems.

Fred Wilson, business development lead for space systems at Aerojet Rocketdyne, was more skeptical about the role constellations will play in stimulating demand for small launch vehicles. He noted the company has seen an increase in demand for electric propulsion systems it offers for small satellites, but expects many of those satellites to launch either as secondary payloads on larger rockets or, in the case of constellations, be deployed dozens at a time on large vehicles. “We’re not that bullish about the megaconstellations translating into business for small launch,” he said.

One challenge about estimating the size of the small launch vehicle market is the diversity of vehicles that are included, from the Vector-R up to the Vega, which can place 1,500 kilograms into a sun-synchronous orbit. Cleave suggested several niches, at different payload sizes, may emerge. “I could see some complementariness between our service offerings which could potentially support more,” he said.

Payload capacity, though, will not be the only factor in shaping the market. “If you’re just looking at size, that’s not enough,” said Curt Blake, president of Spaceflight, a company that provides rideshare launch services for payloads on a number of launch vehicles. “You have to look at price per kilogram, and you have to look at schedule reliability. Those are two concepts that to my mind are more important.”

The panel, whose representatives were from the U.S. and Europe, said little about small launch vehicles under development elsewhere, notably China, that could play a key factor in the market. Blake, though, did mention India’s Small Satellite Launch Vehicle (SSLV), designed to place 300 kilograms into sun-synchronous orbit with a first launch later this year.

“It’s going to have super-attractive pricing,” he said of the SSLV. “It’s very capable.”