PARIS — The mid-2009 Chapter 11 bankruptcy filing by Sea Launch Co. has left Europe’s Ariane 5 and Russia’s Proton as the two dominant commercial launch providers, swelling both companies’ manifests with former Sea Launch customers and helping to put a floor on launch prices.
Whether temporary or permanent, the withdrawal of Long Beach, Calif.-based Sea Launch also has provoked a reaction among some of the biggest commercial satellite fleet operators, who claim that a market duopoly is inherently unstable.
These companies, joined by some satellite-hardware builders, have taken steps to engage the U.S. government in a dialogue that they hope will free up the U.S. Delta 4 and Atlas 5 vehicles for more than occasional use by commercial customers.
A less frequently acknowledged ambition of this coalition is to loosen restrictions on access to China’s Long March rocket, which for a decade has been off limits to satellites with U.S.-built components.
The effort, led by Intelsat of Bermuda and Washington and SES of Luxembourg, has placed the Arianespace consortium of Evry, France, and Proton marketer International Launch Services (ILS) of Reston, Va., in the uncomfortable position of being in direct opposition to their biggest customers.
ILS President Frank McKenna and Arianespace Chief Executive Jean-Yves Le Gall say their companies have not used the Sea Launch Chapter 11 reorganization to raise prices.
They further say that the commercial satellite market i s about to exit from an expansion of several years. Encouraging new entrants, they say, will weaken all launch-ser vice providers and destabilize an industry that is already known for its thin operating margins.
Le Gall said the apparently robust orders booked by Arianespace and ILS in 2009 already demonstrate the end of a growth cycle.
“We really don’t see much growth in 2009 if you subtract from the order books those satellites that were already booked elsewhere, and then moved to Arianespace or ILS in 2009,” Le Gall said. “The idea that the current launch capacity, even without Sea Launch, cannot meet current and especially future demand is simply not true.”
McKenna said both ILS and Arianespace have made substantial investment in plant and equipment to ensure sufficient launch capacity and frequency to handle commercial demand while tending to needs of the Russian and European governments that continue to back the Proton and Ariane 5 vehicles, respectively.
One example, McKenna said, is an investment made jointly by Orbital Sciences Corp. of Dulles, Va., a builder of small commercial telecommunications satellites, and ILS to modify the Proton rocket to carry two satellites weighing a combined 5,700 kilograms or so into geostationary transfer orbit, the destination of most telecommunications spacecraft.
“We’re already putting in bids to prospective customers to offer this service starting in early 2012,” McKenna said.
Arianespace has taken out a 10-year loan from the European Investment Bank to help finance the introduction of Russia’s Soyuz medium-lift rocket at Europe’s Guiana Space Center in French Guiana. A new Soyuz launch pad is nearing completion, and a first launch is scheduled for around June. The European version of Soyuz can l i f t a 3,000-kilogram satellite into geostationary transfer orbit from the equatorial French Guiana site.
Even if the Atlas 5 and Delta 4 rockets remain largely on the sidelines of the commercial market because commercial prices cannot match the perlaunch revenue these vehicles generate from U.S. government business, the commercial market will see an expansion of supply in the coming years.
Space Exploration Technologies (SpaceX) of Hawthorne, Calif., is developing a Falcon 9 vehicle designed in part with commercial telecommunications satellite customers in mind. Orbital Sciences’ Taurus 2 medium-lift vehicle, while intended mainly for government markets, ultimately could be available for some commercial missions, according to Orbital officials.
The Indian Space Research Organisation is nearing completion of the Mark 2 version of its GSLV rocket, which will enable India to launch its own domestic telecommunications satellites and perhaps compete commercially as well. China’s Long March vehicles in the past decade already have earned the trust of global satellite insurance underwriters, who assign insurance premiums for Long March launches that are not substantially higher than rates for Ariane 5 and Proton.
McKenna said the commercial markets in 2010 and 2011 both look stable compared with 2009 based on satellite orders that have been made and those considered likely to materialize.
It is in 2012, he said, that the industry’s cyclical nature will become apparent.
“We’ll start seeing a drop in 2012,” McKenna said, referring to the commercial market as a whole. “This business goes through acid tests from time to time. You saw it a few years ago with Atlas and Delta [both of which retreated from the commercial market] and you are seeing it now with Sea Launch and Land Launch [a Sea Launch variant for smaller satellites]. We need to keep a focus on what happened there and be sure the restructuring now underway does not lead to another set of unrealistic competitive dynamics.”
