How to Break the Global Launch Bottleneck
The launch industry is facing a slew of technical and geopolitical challenges, fanning fears of undersupply just as major mega constellations are looking for rides into space. But is this bottleneck just a blip on the horizon?
May 23, 2023
The past few years has seen an upsurge in activity in Low-Earth Orbit (LEO), led by megaconstellations of broadband satellites from SpaceX’s Starlink and OneWeb, followed by flocks of Earth observation, IoT, and military satellites.
Within the next decade, Amazon’s Project Kuiper and Telesat’s Lightspeed constellations will send even more smallsats into that orbit. Meanwhile, telecommunications companies are joining forces with satcom providers to eventually enable satellite-based communication to smartphones. At the same time, the price of heavy launches to LEO has experienced a 95 percent price decrease over the last four decades, from $65,000 per kilogram, to just $1,500 per kilogram.
Taken together, these events would suggest a boom period for launch providers, were there not only a handful of rockets ready for service. The sparsity of available systems has customers scrambling for a spot on the manifest as Kuiper and Starlink book up years’ worth of capacity. But space stakeholders caution that this fear of current launch undersupply, and an assumption about future megaconstellations, may be hiding the polar opposite situation in the future.
Several events over the past year have prompted observers to wonder over the immediate future of launch supply. Russia’s ongoing war in Ukraine has kept most from using Moscow’s Soyuz rockets, and Japan’s initial H3 rocket launch in March suffered a second-stage engine failure, causing it to self-destruct.
In Europe, Arianespace’s Vega C also suffered a launch failure in March, likely taking it out of rotation for the rest of the year, and the European launcher will soon launch the final Ariane 5 rocket before the debut of Ariane 6. Virgin Orbit is going through bankruptcy following its own failed mission from the U.K. in January. And United Launch Alliance (ULA) is reportedly, as of this article’s writing, up for sale, and has sold out the final launches of its Atlas V heavy-lift vehicle, while the next-generation Vulcan waits in the wings.
All the while, multiple companies that based their business models on small-launch vehicles half a decade ago have pivoted to building medium- to heavy-lift rockets instead, delaying their entry into the market.
The result is an environment that leaves launch customers in a tricky bind, wary of taking risk on a new rocket that is unproven or has already failed. That leaves only a handful of options, with SpaceX firmly in the most dominant position, and other options from Rocket Lab, Northrop Grumman, and the Indian Space Research Organisation (ISRO).
No More Russian Rockets
The international space sector was among many affected by Russia’s February 2022 invasion of Ukraine. Moscow’s space agency Roscosmos announced it would cease the sale of its RD-180 rocket engines to the United States as a retaliation against economic sanctions imposed by Western governments. Meanwhile, companies including OneWeb canceled all future launches aboard Soyuz rockets. All in all, about 15 percent of the global launch capacity went offline overnight after February 2022, observers note.
While no one predicted Europe’s largest ground war since World War II would emerge last year, stakeholders were already preparing for reduced partnerships with Russia. For ULA CEO Tory Bruno, it was clear that the relationship between Moscow and Washington D.C., alongside its allies, has been “on a downward trend for some time.”
The Atlas V rocket, which uses RD-180 engines, sold its final launches back in 2021; the last 19 are scheduled between July 2023 and 2029, and missions include Amazon’s Project Kuiper and the U.S. Space Force’s National Security Space Launch (NSSL) effort. The NSSL initiative is directly tied to a desire to end the U.S. government’s reliance on Russian-made propulsion systems for military space launches, Bruno notes. In 2014, Congress directed the Air Force to seek alternatives to Atlas V after Russia’s invasion of Crimea that same year.
When U.K. spacecraft builder In-Space Missions was founded in 2015, the idea was to take advantage of low-cost Russian launch capabilities, says CEO Doug Liddle. But by 2018, that was already “off the cards,” as many of In-Space’s customers came from the defense world and weren’t comfortable with the idea of using rockets from Moscow.
The company has suffered some setbacks with two launch failures in recent years. In-Space Missions co-designed and built the Prometheus-2 cubesats alongside the U.K.’s Dstl Office and Airbus, which were lost in the Virgin Orbit LauncherOne failure in January. Before that, a failed 2020 Rocket Lab Electron launch saw its demonstration Faraday-1 satellite fall into the ocean.
While In-Space is currently on SpaceX’s Falcon 9 manifest, Liddle says he is “keenly aware” of how challenging it is to get on an affordable launch before summer 2025.
“We’re investigating some of the newer, smaller launch options,” he says. “They’re not as affordable, but they are sooner. You can make an argument on your business case, in some instances that actually, the higher price, but getting something up a year earlier, is the smarter decision to make.”
The Bottleneck Bind
Access to space has always been limited by launch supply, points out Paul Lionnet, research and managing director at the Paris-based trade association Eurospace.
“Launchers have always been rather rare, because they are expensive to develop, they’re expensive to build, they’re expensive to operate, and they’re dangerous,” he tells Via Satellite.
The industry has seen launch capacity slumps before, he notes. After the Space Shuttle Columbia tragedy in 2003 that killed all seven astronauts on board, flight operations for the shuttle were suspended for two years. At the same time, Ariane 5 was struggling to launch successfully after years of engine test failures.
“At one given moment in time, the two biggest launchers were out of the market for almost two years,” says Lionnet. “This is where we had, for the first time since the Cold War, a slump in the launch activity worldwide.”
The current bottleneck in the market is putting launch customers in a bind. After the slew of launch failures in recent months, satellite builders and providers may be more wary of signing onto a manifest for a brand-new rocket.
It can be difficult for potential customers to perform due diligence on a newer, or smaller, launch provider, Liddle notes. “If I was buying a component for my spacecraft, I would spend time with the manufacturer, I'd look under the hood,” he says. “We would have design reviews where they would share detailed schematics. When you're buying a small launch, you don't get that same level of visibility.”
With a company like SpaceX, whose Falcon 9 rocket achieved the highest number of launches for a single rocket type in a calendar year with 60 launches in 2022, “you know what you’re getting,” Liddle continues.
Where Did the Microlaunchers Go?
Less than five years ago, investors were pouring cash into small-launch upstarts, and companies espoused the business value of the coming megaconstellations, believing the small rocket size and lower cost would mean thousands and thousands of launches for dozens of prospective microlaunch providers.
Companies like Relativity Space and Firefly Aerospace began developing smaller rockets that could carry less than 1,200 kg into LEO, arguing that this would be the most cost-effective way to launch these millions of small satellites into space, and replenish them when needed.
Now, it has become clear that heavy-class launch vehicles remain the system of choice in the market. In-Space Missions’ Liddle notes: “If you’re trying to ship freight across the Atlantic, you don’t use small boats. It’s exactly the same here.”
While Firefly Aerospace is ramping up production on its small launcher Alpha, the Texas-based company is also co-developing a new medium launch vehicle alongside Northrop Grumman, due to enter the market in 2025 in support of commercial and government missions.
Meanwhile, Relativity Space earlier this year announced plans to shift away from its Terran-1 micro-launcher program, which was due to enter the launch market this year, toward Terran-R, a rocket capable of carrying between 12,500 and 40,000 kg to space and slated to debut in 2026.
The company first focused on Terran-1 because that was the size of vehicle its potential customers expressed interest in, says Josh Brost, Relativity Space’s senior vice president of revenue operations. Now, the market demand is clearly pointing toward a need for a heavier rocket, he adds.
Relativity’s work on the Terran-1 launcher ultimately served as a risk reduction study for Terran-R, he notes. "It allowed us to collect huge amounts of data, and demonstrate lots of different tools, and really increase customers' confidence that we have the team that can pull off that bigger system,” he says. To date, Relativity has signed $1.65 billion in binding contracts for Terran-R once it enters the market in 2026, and is backed by more than $1.3 billion raised from U.S. investors, per Brost.
He claims the delayed entry to market actually works out in Relativity’s favor, as he says the vast majority of launch capacity through 2025 is already accounted for.
For some stakeholders, the business case for small launchers to support megaconstellations never quite added up. A proliferated LEO constellation provider would spend years establishing its initial constellation if they were only launched one by one on micro launchers, notes ULA’s Bruno. The needs of SpaceX and OneWeb require a rapid deployment process, meaning dozens launched at a time, for an inexpensive launch cost.
There is a market for small launchers to send up small research-and-development missions or to replace individual satellites, but it remains a relatively inefficient business plan compared to a heavy-class rocket, says Lionnet.
“There are a lot of things that don’t scale down: the operations room, the communication systems, the separation system,” he tells Via Satellite. “A small launch has always been less reliable, more complex, and more expensive than a medium or heavy launch.”
How Can Launch Companies be Profitable?
The launch business by itself has never been a profitable one, notes Lionnet, who has studied the economics of the space industry for three decades. The upfront costs to develop a reliable spacecraft are significant, and even the most robust launcher from a reputable company can suffer failures and setbacks, as was the case with Arianespace’s Vega C.
Many of the newer launch providers are being supported by venture capitalists and other external investments as they develop their systems. But as interest rates have skyrocketed globally, cash is becoming more scarce, potentially leading to more bankruptcies in the future.
To avoid that outcome, some companies are diversifying their portfolios to better cushion the launch business. Rocket Lab, for example, now has a robust Space Systems business building components and spacecraft that in recent quarters has brought in more revenue than the launch business.
Firefly Aerospace is pitching itself as not only a launch provider, but more as an “end-to-end space transportation business,” as it continues to produce Alpha small launchers, and hones the new medium-lift launcher alongside its Blue Ghost lunar lander and Space Utility Vehicle products.
“Looking ahead, Firefly’s evolving line of launch vehicles and spacecraft will provide more access to space and support more advanced missions over the next five to 10 years,” says Bill Weber, Firefly CEO. “This includes responsive launch, de-orbit, and reentry services in LEO; in-space mobility, logistics, and payload hosting in GEO [Geostationary Orbit]; lunar deliveries and orbital services in cislunar space along with Moon sample returns to Earth; and transport services to nearby planets such as Mars and Venus.”
From Bottleneck to Oversupply?
Observers note that the current crunch in the launch market could dissipate in just a few years. By 2026, numerous new rockets are supposed to be ready for lift-off, including Relativity Space’s Terran-R, SpaceX’s Starship, Blue Origin’s New Glenn, ULA’s Vulcan, and Arianespace’s Ariane 6, as well as small launchers from Isar Aerospace and ABL Space Systems, and others. Meanwhile, the European Space Agency (ESA) is also developing new reusable rocket concepts via its Prometheus rocket engine program.
An April 2023 report from consulting group McKinsey on the launch market report lays out three prospective scenarios for launch demand through 2030, with the highest demand case forecasting more than 65,000 new satellites in orbit by the end of the decade. This includes not only small satellites filling up proliferated LEO constellations currently in place, but also heavier systems in other orbits.
The low-case scenario for launch demand assumes 18,000 satellites with a mass of 54 kilograms would be in orbit by 2030; its base case scenario forecasts 27,000 active systems, with 4,000 to 5,000 satellites being launched per year. The base case also assumes that SpaceX’s forthcoming Starship super heavy-class launcher achieves its desired daily launch rates by 2030, and that other rockets currently in development all successfully enter the launch market.
Lionnet warns that this future plethora of launch systems could lead to oversupply, if the prospective notion of thousands and thousands of new small satellites doesn’t end up transpiring. Space tech observers have long been wary of the current megaconstellation wave ending up like the 1990s-era space-telecom bust. In that era, companies planned over two dozen proliferated LEO systems; only two – from Iridium and Globalstar – actually made it off the ground and into orbit.
Starlink’s success thus far is due to one major factor, Lionnet notes: “SpaceX had the cash and capability to roll out the constellation, and they did it fantastically well.” But should other companies’ megaconstellation dreams not materialize, the rocket suppliers who are too slow to market, or can’t bring their launch costs down enough, may miss out on the next decade’s capacity.
Launch customers say that all they’re looking for are a handful of dependable, flight-proven systems, where due diligence can be performed prior to purchasing services.
In the meantime, “there is an element of the Wild West in how the offerings are being developed and sold,” says Liddle. VS
Vivienne Machi is an award-winning reporter based in Stuttgart, Germany