Editorial | Independence Declaration
Communications, which has struggled to sell hosted payload capacity aboard its second-generation satellite system to the U.S. government, made the best of its circumstances in launching the Aireon LLC joint venture, which aims to provide air traffic management data using specially designed terminals to be installed aboard the craft.
Iridium and partner Nav Canada are investing their own money in Aireon, the formation of which was publicly announced June 19. Although the companies declined to divulge how much, Iridium Chief Executive Matt Desch said it is in the hundreds of millions of dollars. That’s not exactly small potatoes, especially considering that the financing Iridium has available to deploy the new constellation — the estimated cost is $3 billion — leaves almost zero margin for error.
Aireon’s business entails selling precise GPS-based position location information for commercial aircraft flying transoceanic or other routes beyond the reach of ground-based relay towers. The data will give airlines more flexibility in route planning and in-flight navigation, enabling aircraft to, for example, take advantage of emerging wind conditions to save fuel. According to one estimate, Aireon could save the airline industry $6 billion to $8 billion in fuel costs over the first dozen years on certain trans-Atlantic and trans-Pacific routes alone.
With 66 operational satellites providing ubiquitous coverage from low Earth orbit, the Iridium Next constellation is uniquely able to provide this service. This of course is true for lots of potential hosted payload applications, a point Mr. Desch tried hard to get across to the Pentagon and other U.S. federal agencies. Unfortunately, the government and private sector have different operating tempos. The government is plodding, methodical and often indecisive, especially when plying relatively unfamiliar territory. Satellite operators in particular lose business if their fleet replenishment and expansion programs fall behind schedule; they cannot risk slowing things down on the chance that the government will come aboard as a passenger.
This lack of synchronicity is not a fatal problem for hosting government payloads on geostationary-orbiting commercial satellites, which are launched at a rate of 20 to 25 per year. Iridium Next, however, was a one-shot deal.
Mr. Desch says hosted payload capacity will still be available on the Iridium Next satellites even with the inclusion of the Aireon terminals. But given that the constellation is slated to begin launching in 2015, it seems unlikely that some agency will step forward with a viable plan to utilize more than a few of the spacecraft, especially now that the amount of space and power available on the satellites has changed.
The good news is that Iridium did not allow itself to be stymied by the government’s bureaucratic inertia. Instead, it took matters into its own hands, coming up with an idea that appears to stand a decent chance of blossoming. Iridium may well have preferred an approach that didn’t put more of its own capital at risk, but there’s also the possibility of Aireon being more lucrative in the long run than a classic government hosted payload arrangement.
The Aireon venture also provides a near-term benefit to the overall space economy: Harris Corp. is getting a contract to build the ADS-B air traffic data terminals for the Iridium Next spacecraft, while ITT Exelis is providing systems engineering support. Neither Harris nor Exelis is investing in Aireon. However, Exelis is investing in a land-based ADS-B network as part of an air traffic data services contract with the U.S. Federal Aviation Administration, and airlines have begun to outfit their aircraft with the terminals needed to make the service work. This means airlines will not have to modify their equipment to utilize the Aireon service.
It’s unfortunate that the government was too slow to take full advantage of the Iridium Next hosted payload opportunity. But Iridium Communications deserves all the credit in the world for coming up with a solid backup plan and for demonstrating that there is more than one way to approach this nascent market.