Smallsat launch services feel pricing pressure

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PARIS — Companies that provide both dedicated and rideshare launch services for small satellites say that price remains a major factor for their customers, with pressure from growing competition to lower them.

Companies working on many of the dozens of small launch vehicles currently under development have argued that the flexibility they provide, including giving smallsat operators control over when to launch and to what orbit, is worth the higher price such vehicles have over rideshare services, where smallsats are secondary payloads on larger rockets.

“We are a key part of a business plan for our customers, and that’s really the way launch needs to be looked at,” said Dan Hart, president and chief executive of Virgin Orbit, during a panel at Euroconsult’s World Satellite Business Week here Sept. 11. Virgin Orbit is developing an air-launched small rocket, LauncherOne, that Hart said should make its first orbital launch attempt in the middle of this fall.

Hart argued that the smallsat community has matured in recent years into businesses where price alone is not the only factor in selecting a launch provider. “The question is always, what is the capability and what is the total value of a launch in that business plan,” he said. “What we’re seeing is that the flexibility, the ability to get to the right orbit on time, which schedule assurance, and being focused upon as a customer, are really important equities to this now-growing community.”

That does not mean, however, price is no longer a factor. “There’s a lot of talk about dedicated launches being better than rideshare,” said Tim Ellis, chief executive of Relativity Space, which is working on its Terran 1 rocket for commercial launches beginning in 2021. “But price is still a pretty big factor, so that’s why we’re pricing quite aggressively for the payload size we’re at.” Relativity offers the Terran 1, capable of placing up to 1,250 kilograms into low Earth orbit, for $10 million.

“Price is not the only point, but you cannot be too far from the market price if you want win customers,” said Marino Fragnito, vice president of the Vega program at Arianespace. “If some players start to cut prices, we are obliged to follow. We cannot stay at our current level of pricing when someone else is dropping prices on the market.”

He added that he was confident that Vega would continue to win business because of its technical and schedule performance, although he acknowledged the July launch failure of the latest Vega launch, which he called a “glitch.” Vega will resume flights in early 2020, he said, starting with a dedicated rideshare launch of more than 40 satellites.

“The price has gone down in the past few years. It’s a trend that will continue,” said Alexander Serkin, chief executive of GK Launch Services, which markets the Soyuz rocket commercially, including for smallsat rideshare missions. “The recent changes in price policy of some of our competitors were really dramatic.”

Those dramatic changes include the unveiling in August of a new smallsat rideshare program by SpaceX. The company first proposed an annual series of dedicated Falcon 9 launches from Vandenberg Air Force Base for smallsats, but weeks later said it would instead offer three such missions a year, as well as secondary payload opportunities on Starlink missions. SpaceX said its service could launch a 200-kilogram smallsat for $1 million, a price far below what dedicated small launchers could offer for satellites that size.

“I think it’s a great validator of the small satellite market,” said Ellis of the SpaceX initiative. “I think it is also an indicator that pricing does matter.” He added that he was “quite confident” that Relativity will still win customers, but would have to be mindful of not offering prices much higher than such competition.

“The fact that SpaceX announces such incredible prices for smallsats affects our business, affects our pricing policy up to a certain point,” said Fragnito. “We will follow, up to a certain point. We don’t want to kill ourselves. We want to make a profitable business and we still do it or the moment.”

“But it’s clear the competition will be fiercer and fiercer,” he added. “Only a few will survive.”

Serkin said GK Launch was working with Roscosmos on ways to lower the cost of Soyuz launches. That includes the development of a new variant of the Soyuz rocket, the Soyuz 2M, based on the Soyuz-2.1b but without the Fregat upper stage. That version will cost about $30 million and place two to three tons into sun-synchronous orbit.

There are limits, though, of how low launch prices can go, he said. “I hope that, in a few years, we won’t start paying our customers to remain in this market.”