Small launch industry sees pandemic, government affecting market
WASHINGTON — Executives with several major small launch vehicle companies say both the economic repercussions of the pandemic and the growing interest by the U.S. government in such vehicles could reshape the industry.
During an Aug. 3 SpaceNews panel discussion associated with the online version of the annual Small Satellite Conference, Dan Hart, president and chief executive of Virgin Orbit, said he believed the pandemic may accelerate a long-awaited shakeout of the industry, where dozens of companies are pursuing vehicles.
“This is a developing market area, and it’s messy. I think COVID is amplifying the dynamics,” he said. “We’re seeing winners and we’re seeing people fall out and we’re seeing reinventions, in some cases, of concepts.”
Interest in small satellites is growing, he noted, particularly by government agencies. “That said, we’re not going to have a hundred healthy small launch providers launching on a frequent basis,” he said. “There will be a shakeout.”
Virgin Orbit carried out its first demonstration mission for its air-launched LauncherOne vehicle May 25. The vehicle successfully deployed from its Boeing 747 carrier aircraft and ignited its main engine, but a liquid oxygen propellant line for the engine failed seconds later, terminating the flight.
Hart said the company has identified the modifications to the engine needed to correct that problem, and expects to perform its next launch before the end of the year. The company announced Aug. 3 that the launch will carry 11 cubesats for NASA, flying the Venture Class Launch Services mission the company received a contract for in 2015.
Peter Beck, chief executive of Rocket Lab, also sees far more vehicles than demand for them. “The market is going to have to grow an awful lot to support more launch providers,” he said. “I’m a little bit worried. If everybody brings their launch vehicles online, there’s going to be a lot of vehicles sitting on the pad waiting for payloads.”
Besides competition from other small launch vehicles, there are growing options for rideshares on larger launch vehicles that are less expensive on a per-kilogram basis than small launchers. That includes a SpaceX rideshare program announced a year ago where the company is offering rideshares on its own Starlink launches as well as dedicated rideshare launches.
Beck and others believe that small launch vehicles can offer an effective solution to customers who value responsiveness over price. “It hasn’t really affected our business model at all because it’s a totally different customer,” he said of rideshare services.
Brad Schneider, chief revenue officer of Firefly Aerospace, said he had not seen any major impacts on the company’s business caused by the pandemic. “I don’t think COVID has impacted our demand at all. I think the market is a bit fickle right now and people are waiting to see who’s coming to the market,” he said.
Firefly is developing the Alpha launch vehicle, capable of placing up to a metric ton into orbit. The company is finalizing testing of the rocket and completing work on its launch pad at Vandenberg Air Force Base in California, and aims to perform a first launch in late October, carrying six payloads from undisclosed customers.
That schedule has slipped, which Schneider said was to maximize the chances of success on that inaugural launch. “We’d like to have a nice press release in that timeframe of putting six payloads exactly where they need to be,” he said.
Like the other companies on the panel, Schneider said that Firefly is looking for a mix of commercial and government customers. The growing role of the Pentagon in particular as a customer for small launch vehicles was highlights in June when the Defense Department announced the selection of six companies for launch contracts using the Defense Production Act. The Pentagon withdrew the awards a few weeks later, claiming the funds allocated for them were needed for other initiatives.
Hart said that the small launch industry offers benefits to the government, provided the contracting is done properly. “I think the government has some real opportunity here. They just need to think it through and be very focused on the needs and the uses,” he said.
The lack of transparency of how the Pentagon chose those companies — which included Rocket Lab and VOX Space, the government services arm of Virgin Orbit — has prompted concerns in the industry that the government could distort the market. While Firefly was not among those winning a contract, Schneider said he was not concerned about the Pentagon picking winners and losers.
“I don’t think it will be distorted,” he said. “I do believe that having a hundred of us on a list and trying to pick and choose who is critical to the industrial base is an interesting element, but I think it’s going to be proven out as we individually become more and more robust and reliable.”
Beck disagreed. “I think there is a risk of distorting the market,” he said. “If the government picks some leaders and creates some unnatural market forces, then when that goes away it doesn’t leave the industry in a strong place.”
“I certainly don’t want any pity contracts,” he said. “Let’s bid them out fairly and the best launch provider will win.”