ILS Threatens Protest of Arianespace Subsidy

by

WASHINGTON Commercial launch provider International Launch Services (ILS) on March 17 said it is weighing a protest of European governments’ decision to award fresh price supports to Europe’s Arianespace launch consortium, characterizing them as an “inordinate and direct subsidization of … commercial operations.”

Reston, Va.-based ILS, which markets Russia’s Proton heavy-lift vehicle and is Arianespace’s principal competitor in the commercial market, issued a statement following the decision by the 18-nation European Space Agency (ESA) to grant Arianespace a two-year aid package totaling 250 million euros ($318 million), with the implicit promise of continued support starting in 2013.

The package is designed to help Evry, France-based Arianespace, whose principal offering is the European-built Ariane 5 heavy-lift rocket, return to profitability, a goal Arianespace has been unable to reach in the past two years despite the vehicle’s technical and commercial success.

“ILS is extremely disappointed with the outcome of the Council meeting though it was not unexpected,” ILS President Frank McKenna said in the statement. “Arianespace cost reductions of 250 million euros would have been a far better solution. But these additional cost subsidies, totaling approximately 250 million euros over two years to fund Ariane’s operations, will continue to create a distortion of the market.

“The ongoing subsidization of Arianedis-incentivizes cost reduction and efficiencies, prevents other launch providers from competing on a level playing field, deters new providers from entering the market and [is] detrimental to the long-term health of the commercial launch industry. ILS is evaluating all avenues of recourse to stop such inordinate and direct subsidization of Ariane’s commercial operations.”

Briefing reporters March 14, McKenna conceded that filing a protest to one or more international governmental organizations such as the European Union or the World Trade Organization might appear quixotic. But he said ILS is determined to create a public record of protest.

Arianespace Chief Executive Jean-Yves Le Gall, in a March 15 debate with McKenna and other launch service providers during the Satellite 2011 conference, accused McKenna of turning a blind eye to ILS’s own subsidies from the Russian government.

“There are hidden subsidies, and subsidies that are transparent,” Le Gall said. “There is a huge effort made by the Russian government to support the launch sector. But it is not support that is made directly to the launch company. In Baikonur, there are thousands of people working full-time, and all these people are free to the launch operation.”

The BaikonurCosmodrome in Kazakhstan is Russia’s principal launch base and the site of Proton launches.

“We have been very transparent in our operations. We have 1,500 people at the Guiana Space Center and we must pay these people. All of the companies up here receive subsidies,” Le Gall said, referring to the companies serving the commercial space-launch market.