In January 2004, Congress directed the U.S. Secretary of Defense to contract with a federally funded research and development center to study U.S. national security space launch requirements. The Defense Department selected the Rand Corp. ‘s National Defense Research Institute to establish a panel of experts to assess America’s national security launch requirements. After a year of deliberations, Rand issued a final report in mid August 2006. The report’s main conclusion was that the lack of a robust commercial launch market has made the U.S. government the sole user of the Evolved Expendable Launch Vehicle (EELV) families. As such, the U.S. Air Force will need to bear the full cost of ownership associated with the EELV program.
While the report’s main finding as it relates to national security space was not surprising, the panel’s comments regarding non-U.S. launch companies and the current dynamics of the commercial market were indeed remarkable. The report singles out Europe’s Arianespace, as a “representative” non-U.S. launch provider, claiming that the commercial launch operator’s approach to the market is flawed and ultimately is unsustainable.
What was astonishing is that Rand’s panel of experts was bold enough to opine on the fate of Arianespace and the state of the commercial marketplace without talking to the companies that actually purchase commercial launch services. Indeed, a quick glance at the list of industry speakers contacted by Rand shows that not a single commercial satellite operator or insurance broker was interviewed by the panel. The major commercial satellite manufacturers, both domestic and foreign, who occasionally purchase launch services for operators who want spacecraft delivered in orbit also are absent from the list of speakers who appeared before the panel.
In the cursory treatment that the report gives to non-U.S. launch service providers, the reader comes away with the idea that Arianespace is on the brink of collapse and would not exist but for government support. The truth of the matter is that Arianespace, now in its 26th year of existence, enjoys continued success and profitability in the commercial launch services marketplace.
Here are the facts: Despite a challenging marketplace, for the last three years Arianespace has been profitable. Moreover, during that time the Ariane 5 has become the industry’s workhorse launch vehicle, building on the legacy of the Ariane 4, which established the benchmark for service during the 1990s. Even though the access to space provided by the Ariane system is a strategic asset for Europe, Arianespace is overwhelmingly sustained by commercial launches. During the past quarter century more than 80 percent of the payloads launched by Arianespace have been for private commercial satellite operators, not captive government customers who often pay more for unique mission requirements.
This is in stark contrast to U.S. launch systems for whom the reverse is true. With roughly 90 percent or more of their manifests dedicated to U.S. government payloads, the EELV systems clearly would not be able to survive solely on commercial business.
You would never know these facts by reading the Rand report. Unfortunately, the experts empanelled by Rand gave readers the impression that Arianespace already has one foot in the grave, saying: “The problems of cost, dual-launch strategy, and declining market demand further exacerbate the increased foreign competition that severely challenges Arianespace’s business case and ultimately its survival.”
Their assessment neglects to take into account the following accomplishments that have bolstered Arianespace’s market position in recent years:
- Arianespace has the industry’s largest order book with a backlog of 38 spacecraft.
- Arianespace plans five to seven dual launches per year through 2008 carrying 10 to 14 satellites per year.
- Arianespace’s satellite launch rate is twice that of any competitor launch system operating today.
- Since 1980, Arianespace has 78 dual launches to its credit — a testament to our successful strategy of orbiting two satellites at a time.
- Ariane 5 is the only launch vehicle operating today that can carry satellites weighing less than 2 metric tons and also satellites weighing more than 8 metric tons.
- State-of-the-art launch and payload processing facilities at the Guiana Space Center provide unmatched surge capability, which allowed Arianespace in 2005 to successfully place 7 large commercial satellites in orbit — three dual manifest and one dedicated mission –in a period of just four months and 10 days between August and early December.
In addition to questioning Arianespace’s ability to thrive on the strength of the commercial marketplace, the Rand report also avers that Arianespace’s dual launch approach — its signature feature as a launch services provider — adversely impacts schedule assurance, jacking-up insurance rates and causing capacity problems.
In reality, Ariane 5 enjoys one of the lowest rates in the launch industry. During the last 18 months alone, the Ariane 5 has flown eight times without incident, launching 14 satellites and helping to keep insurance rates down. Furthermore, capacity shortages in the wake of Sept. 11 do not exist in today’s market. Insurance rates today are declining across the board as new capacity enters the market.
Rand also fails to note that Arianespace is the only launch services company to provide an innovative Launch Risk Guarantee package to its customers, which adds even more capacity to the insurance market and helps reduce rates for all satellite operators. Had Rand’s empanelled experts checked with a single space insurance broker or underwriter, they would have learned these
simple facts. Despite the panel’s criticism of Arianespace’s dual-launch approach, the U.S. Air Force is now actively studying the viability of dual launch missions for GPS satellites as well as looking at options for other piggyback satellite missions on the EELVs.
What’s more, the Rand report betrays a lack of understanding of the basics of back-up launch services Arianespace provides to customers. Through the innovative Launch Services Alliance founded three years ago by Arianespace, Sea Launch and Mitsubishi Heavy Industries, Arianespace can offer back-up capabilities on multiple launch systems and provide real mission assurance to its customers.
This mission assurance includes the demonstrated ability to integrate satellites to multiple launch vehicles, which, curiously, is a point the panel found lacking in the U.S. government’s approach to assured access where national security payloads are not currently integrated on both EELV launch vehicles.
The report goes on to say that the presence of only one launch site (in French Guiana) and limited mass-to-orbit capacity have somehow “…decreased the Ariane 5’s ability to compete globally.”
Again, had the Rand panel actually talked to any of the commercial satellite manufacturers or operators who routinely utilize the Guiana Space Center, they would find no basis for such claims. Furthermore, the rise of foreign launch systems for emerging non-western countries, which the report claims will doom Arianespace, still have a long way to go before their vehicles are proven to be reliable and capable commercial launchers.
The argument against Arianespace suffers, when the report’s summary concludes that non-U.S. launch providers somehow enjoy greater support and lower labor rates than the American-made EELVs. In reality, Air Force spending on Assured Access to Space and RDT&E for range and infrastructure support is more than twice the amount spent on European Guaranteed Access to Space.
Further review of economic data shows that labor in Europe, where Ariane 5 is produced, is more expensive than labor in the United States.
How exactly the panel concluded that the commercially owned and operated western European-based Arianespace is somehow “representative of a foreign launch company” in comparison to 100 percent government owned launch providers from India, China and Russia is not explained by the report. Taking a one-size-fits-all approach to non-U.S. firms was clearly more convenient for the panel in helping to explain why the EELV systems, despite strong support from the Air Force, could not compete in today’s commercial marketplace.
The bottom line is that if Arianespace weren’t competitive with its dual launch system, didn’t offer reasonable insurance rates, and didn’t maintain the world’s most up-to-date launch facilities, its manifest wouldn’t be full.
Arianespace is indeed alive and well. As the company that invented commercial launch services, we look forward to our next 25 years of launching satellites that bring our world closer together. To paraphrase the great American author Mark Twain, the Rand report of our imminent death has been greatly exaggerated.
Clay Mowry is president of Arianespace Inc., the U.S. subsidiary of Europe’s Arianespace consortium.