Editorial: The Challenge Ahead for SpaceX

by

Space Exploration Technologies Corp. (SpaceX) has every reason to feel proud and, to a degree, vindicated following the successful debut of its Falcon 9 medium-lift rocket. In what undoubtedly was the most closely watched event in the space industry this year, the vehicle turned in a near-flawless performance the only visible hiccup was an unexpected roll motion that SpaceX officials said did not affect the outcome and is easy to correct as it placed a model of the company’s Dragon cargo capsule into low Earth orbit.

It is an impressive achievement for a number of reasons, not the least of which is the fact that maiden rocket launches frequently fail, a reality SpaceX encountered with its much smaller and less-challenging Falcon 1, which failed in its first three flights. With Falcon 9, SpaceX has answered via action, not words doubters who questioned the upstart’s technical chops, citing the rocket’s relatively modest development cost and the company’s neophyte status; it was founded only in 2002 by Elon Musk, a physics major who left grad school to strike it rich in the info-tech boom of the 1990s. According to Mr. Musk, SpaceX’s chief executive officer and chief technology officer, the total investment in the Falcon 1 and Falcon 9 to date is between $350 million and $400 million, which is pretty low as far as rocket development goes.

The flight lends a strong dose of credibility to NASA’s plan to rely in part on SpaceX and Orbital Sciences Corp. to deliver cargo to the international space station on a commercial basis starting as early as 2011. SpaceX and Orbital are receiving considerable NASA funding help to develop their respective rockets and cargo capsules, and both hold larger, multiyear service contracts to resupply the space station once their systems have been fully demonstrated.

There also are implications for the commercial satellite launch market, where the arrival of a credible low-cost option for medium-sized payloads could prove beneficial for companies like Iridium, which plans to launch 72 low-orbiting satellites weighing 800 kilograms apiece starting in 2015 and has budgeted less than $800 million for that purpose. SpaceX is advertising Falcon 9 launches to various orbits for around $50 million, which is well below the going market rate for comparably sized vehicles.

Notwithstanding all this, some perspective on Falcon 9’s debut is in order. While SpaceX and NASA couldn’t have hoped for a better outcome, it is only over a series of successful launches that any vehicle can establish a track record for reliability. Orbital’s air-launched Pegasus rocket, for example, was successful in its debut but suffered several glitches, including two outright failures, over its next eight missions. The next several Falcon 9 launches are bound to be white-knuckle affairs; SpaceX and NASA, along with other current and prospective customers, have to be prepared for setbacks.

SpaceX is well behind schedule on the three Falcon 9-Dragon demonstration flights it signed up for under its Commercial Orbital Transportation Services (COTS) agreement with NASA, and these must be completed before the company can begin fulfilling its $1.6 billion contract to deliver cargo to the space station. Originally scheduled to commence in 2008, the COTS demos are now officially slated for this year, but NASA and SpaceX recently acknowledged that the second and third have pushed well into 2011. Delays invariably cost money, which in this case presumably would come out of SpaceX’s pocket given the way the COTS program is structured.

SpaceX, which says it has three years of profitability under its belt, is hoping to persuade NASA to waive the second COTS demo, arguing that its objectives can be combined with those of the third. Obviously it’s for NASA and its space station partners to decide whether they’re comfortable with the Dragon visiting the orbiting lab on its second flight, but the cost benefit to SpaceX is clear: The company would save considerable money on the hardware and other resources associated with COTS demo No. 2 regardless of whether it forfeits a $10 million COTS milestone payment in the process and would be able to proceed sooner to the more-lucrative space station cargo-delivery missions.

Whichever way that negotiation goes, it’s clear that the Falcon 9-Dragon development program has taken longer and thus cost more than SpaceX anticipated when it signed its $278 million COTS agreement with NASA in 2006. That’s far from unusual in the space business, of course, but it does make SpaceX look a bit more like the more-entrenched companies who represent the mold Mr. Musk seeks to break.

SpaceX does seem to be doing things differently; a notable example is that it manufactures the vast majority of its rocket components in house rather than pay the rates charged by outside suppliers. And even if the price of a Falcon 9 launch creeps above what is now being advertised by SpaceX, it has a long way to go to reach the prevailing market rates for comparable vehicles.

SpaceX has shown itself equal to what has proved time and time again to be one of the most difficult of all technical tasks: launching something into space. The challenge ahead for the company making a sustainable commercial business that truly brings down the cost of space access is likely to prove every bit as daunting.