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How Launch Providers are Standing Out in a New Commercial Market

Six global launch providers are drawing the same conclusion as they address a panel audience on a muggy spring afternoon in Washington, D.C.: Not all of their rockets will be servicing commercial customers over the next few years.

“I don’t think there’s actually room for all of us here,” says Gwynne Shotwell, president and COO of SpaceX, during a panel discussion at the 2019 SATELLITE show hosted by Via Satellite. “Although I think we’ll always remain on the panels, there will probably only be three folks getting to orbit regularly.”

Her fellow speakers on the panel — launch leaders from a mix of long-time service providers and more recent players — largely agree.

While the overall number of launches has grown worldwide, commercial opportunities are becoming more competitive as well as uneven, notes the analytical firm Jefferies Aerospace and Defense Group in a May 2019 report. In particular, 2018 saw only five orders for satellite launches to Geostationary Orbit (GEO) after peaking at 26 units in 2014.

Meanwhile, new entrants are filling the market at a rapid pace, ready to service upcoming orders to deploy new small satellite constellations into Low Earth Orbit (LEO). Companies including Rocket Lab, Relativity Space, Vector, Virgin Orbit, Firefly Aerospace, and more are developing cheap, flexible rocket systems and cultivating business plans that offer an edge in a crowded field of applicants.

As the demand for GEO satellite orders grows thin, there is not enough room for all of the prospective players to ultimately succeed in the emerging LEO market, says Carissa Christensen, founder and CEO of Bryce Space and Technology, an analytics and engineering company focusing on space, satellites, cyber, and Research and Development (R&D) based in Alexandria, Virginia.

That is normal for an industry full of new opportunities, she notes. “Multiple players pursue it, and typically you would expect that only some will succeed.”

The total number of launches worldwide and the number of commercial launches specifically is growing, according to a 2019 Bryce report. Meanwhile, government contracts continue to drive the launch service market, Christensen notes. “The most successful small launch providers will be those that are both competing effectively in the commercial market and have government customers that are providing them with additional significant demand,” she says.

New players are creating innovative business models to ensure they stand out in a crowd. Eric Salwan, director of business development for Firefly Aerospace, expects “a massive consolidation” of prospective small satellite providers, and a similar shrinking from the telecommunications constellations currently in development to those that are deployed.

Firefly, founded in 2017 and headquartered in Austin, is developing its Alpha vehicle to be capable of transporting 1,000 Kilograms (kg) into LEO, with initial launch scheduled for the end of 2019.

“We’re fortunate that we’re very close to launch,” Salwan says. “We feel that at our price point, … We are going to be able to go to market and successfully win the missions that we want to win.” Following Alpha’s first flight, Firefly plans to build a second, 4,000 kg LEO vehicle and an orbital transfer vehicle capable of in-space propulsion, he adds.

Relativity Space — an aerospace manufacturing company founded in 2015 and headquartered in Los Angeles — and its investors are betting that their patented 3-D printing system will allow them to eventually build a new launch vehicle in 60 days, vastly speeding up the time from contract signing to deployment. The goal is to 3-D print at least 95 percent of a launcher — to include the engine — by the end of 2020.

While additive manufacturing has become increasingly common to help speed up technology maturation, it is still being used largely in a “bottoms-up” manner, employed by companies in one specific department or as a research-and-development project, says Tim Ellis, company co-founder and CEO. “If you could build a whole product this way … it’s going to really unlock new capabilities that are unprecedented for speed and flexibility and the ability to launch and replenish constellations quickly,” he says. “I really see it much more holistically and disruptive across every single part of the process.”

The company’s first launch vehicle, dubbed Terran 1, will be capable of launching 1,250 kg into LEO, Ellis adds. First orbital launch is currently scheduled for 2020, with commercial launch services to begin in 2021.

While some providers acknowledge the projections for new constellations might be taken with a grain of salt, Mike French, Bryce’s senior vice president for commercial space, notes that the number of launch vehicles in development and that have already received funding “requires some belief that a fairly large segment of these proposed systems will come online and need a launch.” That being said, the new small launch environment remains “a bit of an unusual case,” he says.

“There are a lot of individual bets being made,” he adds. “When you step back and look at all of them, it can’t be true that all of them will service all of the slice.”

Ellis notes that the telesatellite companies planning new systems aim to service varied parts of the market, which should allow multiple constellations to survive. However, the explosion of new launch companies “is definitely a bit of a mirage,” he notes. “When you start to look at the different parameters, there’s actually a pretty wide gap between the half dozen or so companies that are really starting to solidify themselves as leaders” and other actors.

In an effort to distinguish itself thoroughly from other small sat launch providers, Rocket Lab U.S.A., a Huntington, California-based small launch company, is designing a new launch vehicle dubbed “Photon” to serve as a fully functional satellite bus, aiming to launch 170-kg payloads into LEO within four months from order to orbit.

The first operational Photon will be launched from the company’s Launch Complex-1 in New Zealand by the end of 2019, with future missions in active planning for 2020 with both commercial and government customers, says Peter Beck, Rocket Lab founder and CEO.

While considering the biggest barriers to providing more access to space, Beck notes that launch services come first, but the second is having a team of industry experts on hand to put a concept into orbit. With Photon, “all you need to do is come with your payload,” he says. “You don’t need to become spacecraft manufacturing experts; you just need to bring your sensor, or even your idea.”

While companies including SpaceX and Rocket Lab have already successfully launched multiple missions for both commercial and government customers, several providers — to include Firefly and Relativity Space — have two to three years to go before launching their first vehicles. Heavy launch providers including Blue Origin, Arianespace, and ULA also expect to launch their newest systems in the 2020-2021 timeframe.

French notes that current launch timelines may not be the most important indicator of long-term success.

“The more successful companies are those that are already signing letters of intent or making announcements of launch contracts, and hitting their technical milestones to ensure they continue to be funded,” he says.

At first glance, it may appear that small launchers can send new systems into LEO at a more cost-effective rate than large providers, but the latter can actually offer a cheaper ride, Christensen says. In total, small launches cost about $5 million to $10 per launch, as opposed to $50 million to $100, but “typically a small satellite is not buying the whole launch vehicle; they’re buying, metaphorically, a seat.”

“That’s a really important dynamic in the launch industry right now, is looking at the small satellites that are going to launch, [and] how many of them will choose to pay extra to have taxi service,” she adds.

The emergence of new start-up companies in the small launch market has not been missed by heavy-launch providers.

“This is one of the high peaks in venture capital coming into the space industry, and it continues to come in,” says Blue Origin CEO Bob Smith on the SATELLITE panel. “They’re not coming in with just silly ideas,” he adds. “New entrants will actually have an impact on this market.”

Christensen notes that for many years, it was conventional wisdom in the commercial launch community that new companies could not break through because the industry was “too conservative” and “risk-averse.” However, SpaceX has defied that adage in the last decade, in part by explicitly servicing multiple markets, she says. The Hawthorne, California-based company has also successfully worked to drive change in the way government customers make decisions about launch, and the way they engage with the launch service provider, while touting lower price points as a key strategy.

Shotwell says she doesn’t see SpaceX changing its business case dramatically, as the company has purpose-built each of its vehicles with diversity in mind from the start. However, she expects the company’s upcoming Starship heavy launcher to be a game-changer for the industry, particularly when it comes to reusability. “We have learned enough that we think we can bring the upper stage or the second stage back,” she says. “That would provide even further value to our existing customers, and will really change the way hopefully each of you think about space.”

Longtime GEO launch servicers are enhancing their technical capabilities in order to carry and deploy a diverse array of satellites more effectively, Christensen observes.

United Launch Alliance — a joint venture between Boeing and Lockheed Martin — is developing its next-generation Vulcan Centaur heavy launch vehicle, built primarily for the U.S. Air Force and national security missions and currently scheduled to launch in 2021, officials say. However, Jefferies analysts note that the Vulcan rocket may be more dependent on commercial business to remain viable than ULA’s previous systems were.

Meanwhile, Arianespace is betting its forthcoming Vega C rocket and Ariane 6 variants will allow the French company to take back commercial market share from SpaceX and other U.S. companies, who launched the majority of commercial missions in 2018 per Bryce Space and Technology.

The new vehicles are built for civil, commercial, and government missions and the company is pitching a 40 percent cost reduction, says Stéphane Israël, CEO of Arianespace and executive vice president of ArianeGroup. He has high hopes for Prometheus, the company’s new low-cost oxygen-methane engine, fit for reusability with flight tests expected in 2024, and set to be installed on Ariane-6 by 2025. “We think that [an] oxygen-methane engine is very promising,” he says at the SATELLITE show.

Blue Origin is looking to capitalize on new commercial and government opportunities with New Glenn, built with a reusable first stage to last for 25 missions and already on contract to launch Telesat’s new LEO satellite constellation while competing for future national security missions.

The rocket was purpose-built to service civil, commercial and defense markets with a 7-meter fairing that supports a variety of payload masses, says Bob Smith, Blue Origin CEO during the SATELLITE show.

“We are going to be having a very busy Florida in 2021, because it sounds like we’re all going to be launching there about the same time,” he notes.

While the near-term projections spell out a slow commercial business, Smith expresses optimism for how an increased demand for data will positively impact launch orders. “Every study shows us that the appetite for data is insatiable. … That trend is going to happen, it’s going to continue to multiply and there’s going to be a launch service impact to that. “You can question about how long that’s going to take to develop or how short it will take to develop but it will happen,” he says.

Small Launchers Focus on Securing Prime Real Estate

New small launch servicers are ensuring that they can meet future demand for proliferated LEO constellations by spreading out their launch pad access.

Rocket Lab U.S.A. has launched commercial and U.S. government small satellite payloads out of Launch Complex-1 on the Mahia Peninsula of New Zealand, whose remote location allows the company to operate in an orbital inclination range of sun-synchronous all the way to 39 degrees, says Peter Beck, founder and CEO.

Having a launch site built in New Zealand required a significant amount of bilateral diplomacy between the two countries, to include new space legislation, he notes. But it provides Rocket Lab with the same inclination sweep as Vandenberg Air Force Base in California and Cape Canaveral Air Force Station in Florida on one site. “I don’t know any other countries other than New Zealand … that meet the criteria,” Beck says.

The company is building a second launch site at Wallops Island in Virginia, which will support 12 launches a year once it is operational, which Beck expects by the end of 2019. That site will allow the company to serve U.S. government customers that may not want to launch offshore, he notes.

Firefly Aerospace plans to launch its Alpha vehicle from Vandenberg AFB’s Space Launch Complex (SLC)-2 West site, says Eric Salwan, director of commercial business development. That will allow the aerospace company to service smallsat customers looking to launch to Sunsynchronous Orbit (SSO) once Alpha comes online by the end of this year, he adds.

Less than two years later, Firefly will activate SLC-20 at Cape Canaveral Air Force Station, allowing the company to service most major small satellite inclinations, Salwan says.

Relativity Space is also looking at securing space on both coasts. Co-Founder and CEO Tim Ellis notes the company will launch its forthcoming Terran 1 rocket in 2020 from LC-16 at Cape Canaveral. The company is also in “active procurement” for a West Coast launch site, he adds.

Says Rocket Lab’s Beck: “The whole launch frequency and the launch site is not the sexy bit of the rocket; neither is the regulatory bit. But it actually is a bigger enabler than the rocket itself.” VS