Aeronautical Communications Featured Article
Satellite 2011: Launch Providers Talk Tough in Tight Market
Launch providers from around world believe they have what it takes to survive in a market described as tight, even as they believe they can build market share for themselves.
"The replacement cycle for [fixed satellite services] has reached its peak," said Frank McKenna, president of International Launch Services (News - Alert) (ILS). "New technology in the commercial GEO market needs to offset what is a cyclical downturn in the marketplace. If you take the top three satellite service providers and look at their capital expenditure plans, in 2010, they had capex of $2.7 billion spent on space segment. In 2014, they've projected capex spending of $1.2 billion... with that we can a contracting demand equation over the next three to four years."
Executives from Arianespace (News - Alert), China Great Wall Industry, ILS, Lockheed Martin, Sea Launch, and SpaceX each presented a case at a Satellite 2011 panel in Washington, D.C., for their future success in selling launch services, choosing to emphasize their unique selling points while occasionally taking a whack at one another's financial support systems and business approaches.
What constitutes a government launch subsidy stirred up considerable debate among the panel, with ILS President McKenna saying that customers want a "good robust launch system produced on schedule at a good value" and services offered by "financially strong, independent companies, not losing money companies" that receive "billions of Euros of subsidies."
Arianespace Chairman and CEO Jean-Yves Le Gall said his company offered "full transparency" for his business to his customers, "not exactly the case with our competitors." He pointed out with transparency, customers could see everything Arianespace had to pay for and it paid for everything, while ILS had hidden subsidies with the "thousands of people" employed at the Baikonur launch site that it didn't have to pay. Regardless, Le Gall said all launch companies were subsidized in some form or another.
When the topic turned to projections of future launch orders in the next three years, half of the companies didn't have great expectations while the other half had very great expectations on either sustaining or growing their shares of the market.
China Great Wall Industries Executive Vice President Gao Ruofei frankly noted his company's hadn't flown a single commercial Long March launch in 2010 and was working "very hard" to get back into the mainstream launch services business as it had been in the 1990s: "It is cake we would like to have." Last year, the company hosted its first users conference, inviting former and prospective customers to one of its launch centers and it also revised its user manual as it tried to be more "open and transparent."
Lockheed Martin (News - Alert) wasn't planning to sell a lot of Atlas V launches. "We are not going to be a major player commercially in this market," said General Manager Jack Zivic. "Our goal is to have one to two launches per year."
Sea Launch, recently out of bankruptcy proceedings, was just starting to ramp up its operations. The company has a limited number of launches scheduled for the next two years. "We're due to deliver two this year, three the next, five going forward from 2013 on," said President Kjell Karlsen. "We're looking to fill the manifest in 2013."
Among the expansion-minded, SpaceX (News - Alert) had the most aggressive viewpoint on its prospects for the future. "Hopefully, we'll do two or three launches this year... five to six next year," stated President Gwynne Shotwell. "At 2013, we're at a pace to hit 12 launches per year, but we probably won't hit that until 2014... the market is ripe for a new entry offering quality services at a great price."
Arianespace is already at the 12 launches per year mark and believes it is the primary choice for commercial launch services, especially as communications satellites continue to get bigger. "We are starting to see customers move to heavy, very heavy satellites beyond 7 [metric] tons," said Le Gall. "In the communications satellite industry, big is beautiful. The bigger it is, the better it is. We think we will very big birds, on to 9 tons." In addition, Le Gall sees a niche market for smaller satellites, with many 3-ton satellites on the books.
Doug Mohney is a contributing editor for TMCnet and a 20-year veteran of the ICT space. To read more of his articles, please visit columnist page.
Edited by Tammy Wolf