Pricing Remains Hurdle for Commercial Delta, Atlas Sales

by












  Space News Business

Pricing Remains Hurdle for Commercial Delta, Atlas Sales

By PETER B. de SELDING
Space News Staff Writer
posted: 07 April 2009
11:42 am ET






WASHINGTON
— The two companies selling U.S. Delta and Atlas rockets to commercial customers said they could not justify a full re-entry into the market given the continued tough pricing environment for commercial launches.

Speaking March 25 here during the Satellite 2009 conference – the same day that major satellite fleet operators all but pleaded that Delta and Atlas managers reconnect with the commercial market – they said there was no real incentive for them to do so.

“We have just completed our 87th consecutive successful Delta 2 launch,” said Ken Heinly, director of launch product services at Boeing, which markets the Delta rocket. “People want it, but we’re having a hard time getting to where it’s priced right.”

David Markham, president of Lockheed Martin Commercial Launch Services, whose Atlas 5 rocket also has an enviable success history, said Atlas’ main customer, the U.S. Air Force, appears ambivalent about whether to facilitate the rocket’s commercial availability.

While the Air Force has publicly urged that Atlas remain commercially active, “there is an undercurrent there that prevents its use,”
Markham
said. He said in 2008, eight Atlas launches were scheduled for the
U.S.
government, and that only two occurred, meaning there was a wide opening for commercial launches, at least in terms of launch pad availability.

Heinly
and Markham said the occasionally dramatic swings in commercial launch pricing in recent years makes them wary. Heinly said that given some prices he has seen for commercial launches, it appears clear that rockets are occasionally being sold at a loss or, at best, break-even prices.

“Boeing will not enter into a bad deal,” Heinly said in explaining why Delta vehicles do not win much commercial work. “And I would ask the big three: Either there are extreme variations in your cost basis, or some of your launches were not that profitable.”

By “big three” Heinly meant Europe’s Arianespace consortium; the Sea Launch venture including Boeing and Russian, Ukrainian and Norwegian partners launching from an ocean platform; and International Launch Services (ILS) of Reston, Va., which markets Russia’s Proton vehicle.

ILS Chief Executive Frank McKenna, who said he fears the commercial launch market is facing an oversupply situation in the next couple of years as new vehicles enter a stagnant market, nonetheless said he could not understand why Delta and Atlas could not make a commercial business work.

“I find it incredible that, for some reason, we have qualified vehicles out there and we can’t use them,” McKenna said.

Kjell
Karlsen, chief executive of Long Beach, Calif.-based Sea Launch Co., which has faced customer defections in recent months because of a shortage of rocket components, said the company is working hard to remedy the problem.

“In 2006 we were overly aggressive in signing customers up too quickly before we had the hardware committed,” Karlsen said. “We won’t make that mistake again. Our focus now is to assure the hardware will be there. I think you’ll see a slowdown on Land Launch, with maybe one or two Land Launch missions” this year.

Land Launch uses the same Sea Launch vehicle, but operates from
Russia
‘s BaikonurCosmodrome in
Kazakhstan
.

The launch service providers disagreed over which of them most benefited from government subsidies, and even on what a subsidy is. Arianespace Chief Executive Jean-Yves Le Gall said Space Exploration Technologies Corp. (SpaceX) has benefited from U.S. government contracts despite SpaceX’s difficulties in trying to develop its Falcon line of rockets. The Hawthorne, Calif.-based company has yet to put a payload in orbit despite conducting four launches, only one of which did not end in failure.

Gwynne Shotwell, SpaceX’s president, said the NASA and other
U.S.
government contracts the company has received were for launch services and should not be confused with government handouts.

Le Gall did not buy this. “When I hear that SpaceX doesn’t have any subsidies, well, I would like to get those NASA contracts,” he said.