Until recently, the international launch industry has been almost completely centered on government launch providers. Many of these agencies have sought to work with other groups to share costs and spur advancement. However, as Ian Pryke, Senior Program Officer of the Space Studies Board, argues, such “international cooperation is not intrinsically good” but can be used “as a tool of foreign policy.” The nation with which one seeks to cooperate “will have less money to pursue other objectives that [a nation] may not like.” However, now that new, private groups are entering the scene and aggressively pushing for low costs and high reusability, many established groups are being forced to put aside ulterior foreign-policy goals to focus on cutting costs and increasing competitivity in the international launch industry. This shift could have two-fold consequences: vastly increasing efficiency and innovation in space technology while reducing roadblocks to international conflict.
The international launch industry is valued at around $345 billion dollars, with half of the $98 billion in annual revenues coming from government and commercial television contracts. The industry uses ninety launch sites in seven countries and includes national agencies, private groups, and public-private joint ventures. Currently, there are numerous competing and cooperating groups, each with their own launch systems. These groups are most easily divided into public and private groups.
The public space agencies are the older and better known. They include NASA, Roscosmos (formerly the Russian Space Agency), Japan Aerospace Exploration Agency (JAXA), ArianeGroup (the launch provider for the European Space Agency), the Indian Space Research Organisation (ISRO), and the China National Space Administration (CNSA). Despite public domination of space for decades, however, private groups are increasingly powerful, including SpaceX, Blue Origin (owned by Jeff Bezos), the United Launch Alliance (ULA, a Lockheed Martin and Boeing joint-venture), Orbital ATK (the oldest private launch provider), and International Launch Services (a Russian launch provider).
Of the 109 commercial satellite launches in 2018, China, Europe, Russia, and American private launch providers stand as the most prominent servicers. China, India, Russia, and SpaceX maintain the lowest commercial launch prices. Further, SpaceX and China have become increasingly dominant in the launch industry, growing to control over half the market in the last few years alone. SpaceX’s share over annual launches has nearly doubled in the past two years alone (from 10 percent in 2016) while the Chinese agency has retained their share relative to other providers. In total, the four launch providers that maintain commercial launch prices below $100 million (Russia, China, India, and SpaceX) control a combined 72.8 percent of the market.
As with business and international relations, not all of the agencies and companies have the same goals and aspirations. Amongst the government launch providers, most are seeking to cooperate with each other to reduce the chances of sparking a new space race while most private groups seek to outcompete and out perform each other through increased efficiency (bringing the ratio of launch cost to payload mass as close to zero as possible) and reduced launch prices (how much the customer must pay total).
NASA, the ESA, JAXA, and Roscosmos have a strong history of cooperative projects post-Cold War, most notably the International Space Station (ISS). Among government launch providers, India, Europe, and China maintain competitive commercial satellite launch programs. These competitive ventures—which run concurrently with cooperative ventures, force all three agencies to maintain the lowest overall launch costs amongst public agencies.
Private entities on the other hand have an almost completely competitive field. Private groups such as Virgin Galactic, Blue Origin, and Orbital ATK have long searched for cheaper methods to reach orbit than conventional models—most of which have failed to produce results. The successful companies though, have been able to compete directly with foreign nations in price and quality of their rockets. The only company which had not faced competition until recently is the United Launch Alliance.
Private and public space groups have limitations to their capabilities by the nature of their organization and models. Public space agencies have the strict limitations as they face public opinion, definite budgets, and high costs while private companies are faced with vaguer limitations such as demand, liability, and economic downturn. Public agencies receive all funding from their sponsor government, the majority of which must contend with public opinion to maintain their position. According to a PEW Research study, from 1970 to 2014, public support for increased funding for NASA has never exceeded 22 percent despite the agency maintaining the second highest approval rating of all US government agencies (behind the CDC). Even with only 0.5 percent of the US budget, the American public primarily supports spending on education, public health, and alternative energy development.
Private companies on the other hand face shifting barriers and limits due to their reliance on private funds and profit. The most important factor in any private venture is demand. Considering that the number of annual launches has remained low, with 109 scheduled for 2018 (up from 64 in 2016), there is not much room for new competitors in the satellite launch industry. This means newcomers must force out established companies or attempt to steal existing customers through cheaper prices or through other factors.
The Case of SpaceX
SpaceX has so far managed to succeed in both pushing out competitors and attracting existing customers. In 2016, SpaceX succeeded in forcing the ULA of their monopoly on government launches and has further pressured numerous companies to make drastic design changes. SpaceX reached a settlement with the Defense Department after threatening a lawsuit and has possibly exposed up to $70 billion in wasteful spending by the military. For years, the Department of Defense awarded dozens of launch contracts exclusively to ULA, citing their perfect success rate as justification for the expense. SpaceX’s vastly cheaper—and increasingly accurate—launch systems are what allowed them to bust the ULA hold and gain access to an extremely valuable customer: SpaceX was recently awarded three of the five launch contracts for Air Force GPS satellites for a fixed total value of $291 million.
Not only does SpaceX maintain some of the lowest overall launch costs, but the ratio of cost to the total mass the system can carry far outstrips all of SpaceX’s competitors. The overall cost of ULA launches ($164 million for the Atlas V and $350 million for the Delta IV Heavy) rank far higher than SpaceX’s ($62 million for the Falcon 9 and $90 million for the Falcon Heavy). This contrast becomes even more drastic when one considers how much each dollar buys. The following figure shows that each dollar spent on a SpaceX launch purchases considerably more weight than on either of ULA’s. rockets, which allows for clients to launch larger satellites for a lower price. This disparity is largely what has contributed to SpaceX’s meteoric rise, as a large mass can be bought for very cheaply. Until now, the ULA has survived on its 100 percent success rate, but for every successful SpaceX landing, the ULA loses its last remaining advantage.
This increased efficiency from SpaceX has caused considerable disruption to the international satellite launch industry and has brought to light many of the strengths and weaknesses of public and private groups. In the United States and abroad the primary advantage of government is the ability to restrict the private sector and competitors. In the United States, private spaceflight was prohibited until the 1980s when limited flight was permitted by the Reagan administration. Further deregulation came in 1990 with the Launch Services Purchase Act of the Bush administration when the government withdrew the mandated launch of government satellites on the Space Shuttle. Private groups like SpaceX, on the other hand, have some very important advantages when compared to governments. As private entities, they maintain far more control over financing, internal time tables, and company assets. SpaceX—founded in 2002—was valued at $2.4 billion in 2012 and has since risen to a total value of $27.5 billion.
This rise has come completely through private investment and government contracts attained by outcompeting other companies. Furthermore, without the complex oversight structures of governments, private groups are able to move resources internally with far greater speed. The strongest example of this is SpaceX’s announcement of the Big Falcon Rocket. Within months of the first launch of the Falcon Heavy, SpaceX announced plans to consolidate all rocket models into one, all-encompassing model, reducing costs and saving resources in the process. Such a move by a government entity could take a year or more. The Space Launch System—which began development in 2010—has yet to begin test flights despite already having spent $19 billion on the SLS. and other canceled projects and with another $43 billion in spending still yet to come before the first launch.
The Effects of Private Independence
The consequence of this independence is that private groups are able to maintain younger launch systems. Of the launch systems currently in use or recently discontinued, privately produced rockets are on average much younger than their government produced counterparts. Among the privately produced rockets included, the average service life was 8.86 years compared to 16.66 amongst public launch providers. This difference in age allows for greater incorporation of new technology into private launch systems when compared to government launch vehicles. The Space Shuttle stands as a stark example of this. Without an easy replacement, the Shuttle was used for two decades beyond its intended life of ten years per orbiter. Further, the Space Shuttle was far more expensive than predicted, less reliable than other models, forced to reduce the types of missions it could perform, and the deadliest launch system ever made. Faced with the same situation, a business would be forced to either implement massive reform or go out of business.
Consider the major examples of cooperation and competition: the Space Shuttle and vertical landing. The Space Shuttle was very unreliable. It took nearly a decade to develop and did not achieve the majority of its stated goals. Vertical landing on the other hand—a recent development of the private sector—has allowed for vast reductions in launch costs, far greater reusability, and drastically reduced launch schedules. While the Space Shuttle saw a vast reduction in how often they could launch following the Columbia and Challenger disasters, SpaceX has been able to continually increase their number of flights per year. In 2018 alone, SpaceX is scheduled to hit one launch every 13.5 days, a launch rate they could only achieve through a 50 percent increase in the number of flights per annum from 2017.
The Impact of the Rise of Private Groups
The most clear impact of the rise of private groups has been their impact on the established launch servisors. The impact of the reduced launch cost of SpaceX has caused ripples in the satellite launch industry. Europe, China, India, and the ULA have all been forced to reduce their overall price to compete—directly or indirectly—with SpaceX. All four are in the process of developing newer and more efficient rockets that can meet SpaceX ratio of mass to cost.
In response to SpaceX, the ArianeGroup——acting on behalf of the ESA——is targeting a reduction in launch prices of up to 50 percent from the current cost of $178 million. They hope to achieve this by developing a new launch system: the Ariane 6. ArianeGroup intends to bring about reductions to prices through streamlining production, increasing the efficiency of their production network, and improving on existing technology and systems. This new push is considered “the first time ever a conscious effort to design to cost and design to efficiency” within ArianeGroup and further projects are beginning to achieve greater affordability. Partners of ArianeGroup are beginning to test reusability as “SpaceX showed that it is feasible” and ArianeGroup hopes to incorporate this reusable technology into their rockets in the future. Despite all these changes, it might not be enough: SpaceX is “already eroding the anticipated 50 percent price drop with Ariane 6.”
The United Launch Alliance has maintained a fairly obstinate position on the effects of increased privatization, denying SpaceX’s impact. ULA CEO Tony Bruno has asserted that reusability will only reduce costs by about 10 percent, in contrast to SpaceX claims of 30 percent reduction. Despite denying the benefits of reusability, ULA has continued to move forward with their new design for a reusable rocket: the Vulcan Centaur. The Vulcan Centaur will utilize reusable solid rocket boosters to cut costs by an estimated 70 percent compared to the current Delta IV Heavy, bringing their launch cost down to around $105 million from $305 million. The Vulcan would be able to lift around forty tons, nearly one third more mass than its predecessor, but would still fall short of the Falcon Heavy’s seventy-ton capability—for price that is equivalent or cheaper. ULA plans to combat this disparity by using more effective fuels and deploying the “Advanced Cryogenic Evolved Stage.” This stage would be able to remain in orbit and be refueled to operate and transport satellites around the solar system for years.
China has taken a slightly more ingenuitive approach to cutting costs and increasing competitivity. In their quest to achieve a launch cost of $5,000 per kilogram the Chinese government hopes to develop multiple landing methods simultaneously and then choose the most reliable. China’s favored method utilizes a set of parachutes and an airbag just before landing. While cheaper and easier to develop than SpaceX’s vertical landing, the parachute-airbag method can be risky as “even a small shock can cause damage to the components in rocket engines” according to Sun Yi of Harbin Institute of Technology. China will make an official decision on landing methods in 2020.
The changes from China in response to SpaceX has led the ISRO (Indian Space Research Organisation) to push for further cuts to their already highly competitive launch systems. The ISRO has stated that they are not only competitive, but are pressing to cut costs by up to 90 percent of their current numbers. ISRO spokesperson Deviprasad Karnik signaled that this reduction in cost is part of a “global move to cut the cost of access to space.” India’s model of launching large groups of nano-satellites allows them to maintain extremely low costs for individual customers at around $3 million per satellite with scores of satellites per launch—India holds the record for most satellites launched at once at 104. The ISRO has also stated that they are working towards reusable rocket technology as well.
Russia, through ILS and Roscosmos, had been attempting to adapt to SpaceX’s pressure, but the arrival of new leadership has caused internal issues. The two groups, who work closely, were pushing the new concepts for the Proton Medium and Proton Light as competitors to SpaceX’s Falcon rockets. ILS’s idea was to use the pre-existing Proton Breeze M launch system to efficiently build a newer, smaller rocket family to meet the demand of smaller satellites—an area with less competition than larger payloads. The projects have since been placed on hold as Russia is now considering investing in the Angara rocket family as its answer to SpaceX.
Russia has seen almost a complete reversal of their previous situation. Russia currently maintains a monopoly on manned spaceflight. This monopoly is set to come to an end in the very near future as NASA’s “Space Taxi” contracts with SpaceX and Boeing are set to come to fruition with private, manned test flights scheduled to begin in the coming months. Russia’s current response, the Angara rocket family, has seen almost no flight time.
Roscosmos has suffered massive scandals in the past few years as $1.8 billion in funding disappeared in 2014 alone. This rampant corruption and inefficiency has led the Russian government to hint that Roscosmos may be facing budget cuts of up to $2 billion, rendering it nearly impossible for them to develop a system capable of competing with SpaceX. These budget cuts, according to Ivan Moiseev of the Russian Space Policy Institute, would bring the development of Roscosmos’ Soyuz-5 medium-lift booster—the integral part in reducing launch costs—to a complete halt. For the first time in decades, Russia may be pushed out of the launch industry almost completely due to poor management and the inability to compete on the increasingly vicious world stage.
All in all, the stage is set. With growing competition in the launch industry and nearly a dozen commercial and government rockets set to come on line in the coming years, the market is set to face an explosion of low cost launch vehicles. Further, manned flight is likely to benefit as reduced satellite launch costs frees funding for exploration in other fields by public agencies while multiple private groups are perfecting their launch vehicles and moving towards more complex missions and objectives. This new field will force groups to compete or die, as is occurring with Russia, and will strongly favor the group that can achieve the greatest efficiency, as with SpaceX. Further, as this new order comes into play, many remnants of the old cooperative system are falling away—the ISS is set to be fully and finally decommissioned in 2024 and the Soyuz ride-buying agreement will end in April 2019 with no renewal. This new paradigm of space flight will push increasingly for reliable and efficient rockets—to the benefit of mankind, while also reducing joint ventures that distract and hinder more aggressive desires—to the possible detriment of mankind.
EDIT: SpaceX has changed the name of the Big Falcon Rocket (BFR) to “Super Heavy Starship,” however, for clarity, the name was left as BFR throughout the story. “Super Heavy” refers to the first stage of the rocket (the booster) while “Starship” refers to the second stage (the cargo/passenger module).
Matthew Heck is a contributing writer for the Gate. The image featured in this article belongs to NASA and is an artist's rendition of the first Orion spacecraft in orbit; the original can be found here.