Small launch companies don’t foresee price war

by

WASHINGTON — Small launch vehicle developers say they don’t see a “race to the bottom” for launch prices despite the large number of companies developing vehicles and the emergence of new rideshare options.

During a panel at the Satellite 2020 conference here March 9, executives with two leading small launch vehicle companies, Rocket Lab and Virgin Orbit, argued their dedicated launch services fill a need increasingly sought by the market.

“What we’re offering is flexibility in launch,” said Lars Hoffman, senior vice president of global launch services at Rocket Lab. “What we’re hearing from the market and what we’re hearing from our customers is they like to have options. They’ve had the rideshare option before. This may be a new variation of that. What they really appreciate to have the dedicated option that we’re presenting.”

Hoffman was referring to growing rideshare launch opportunities, particularly from SpaceX, which rolled out its smallsat rideshare program last year and updated it Feb. 5. That service offers launch opportunities for smallsats at a fraction of the price of dedicated launches.

Small launch vehicle companies counter that they can provide better and more responsive launch services than rideshare options. “We’re already seeing the types of satellites, the orbits they’re going to and the need for responsiveness only increasing,” said Monica Jan, senior director of strategy and customer experience at Virgin Orbit. “There’s a whole variety of business models and responsive launch services that’s needed that’s not even happening today.”

Virgin Orbit is nearing its first launch of its LauncherOne rocket. The company performed a taxi test of its Boeing 747 aircraft with a fully-fueled LauncherOne rocket attached to its wing last week, one of the final milestones before that first flight. Richard Branson, founder of Virgin, said at an awards ceremony at the British Embassy here March 9 that he expected the first launch to take place next month.

Many other companies are also pursuing small launch vehicles, leading some to project a glut of launch capacity, pushing prices down. Jan was doubtful that would happen. “I don’t see this as a race to the bottom,” she said of launch pricing. Projections of very low launch prices from vehicle developers, she argued, were “noise” from newcomers yet to fully understand the costs of doing business in this field.

“Everyone’s predicting a very super-low price, but they fail to recognize that, at the end of the day, launch is still a capital-intensive heavy manufacturing business,” she said.

Hoffman agreed. “Some people can offer prices who haven’t launched yet, and they are going to realize that launch is expensive and capital intensive,” he said, estimating it costs $100 million to get to a first launch, then $100 million to scale up production. “That will, I think, as the market matures, moderate this pricing.”

He noted Rocket Lab can also offer rideshare services on its small Electron rocket. The company announced March 9 the manifest for the next Electron mission, scheduled for no earlier than March 27 from New Zealand. That launch will carry three unspecified payloads for the National Reconnaissance Office as well as cubesats built by Boston University and the University of New South Wales in Australia. The Boston University cubesat flight was arranged through NASA’s CubeSat Launch Initiative program.

“When we manifest a launch, it’s usually a combination of microsats and cubesats, and we’ve got a vehicle that’s right-sized for that market,” he said. “We’re able to fill our manifest, launch after launch, and we’ve got a full manifest now, launching monthly. The market is responding to that new option, that new choice they didn’t have before.”