Easy Pickings in GEO Launch Services

On May 15, a Proton Breeze-M failed while launching Ekspress-AM 4R, adding to the string of failures and malfunctions affecting the rocket for several years (six since 2010). Combined with delays in Arianespace’s launch rhythm and the situation of the other launch players, the latest failure creates a unique situation in launch services: while there are too many players for the market, there is currently a scarcity of reliable and affordable GEO Launch Services.

ILS’ backlog was already considerably down before the last failure, and the latter will make ILS’ potential return to normal more difficult, providing a welcome window of opportunities to other providers.

SpaceX saw its backlog of GEO launches grow in the last years, but it is not yet operating at a fast pace, resulting in repeated delays and a worrying growing backlog to GEO and other orbits. Moreover, the Falcon 9 does not have the mass capability to launch satellites that should have used Proton.

After several years focusing on the U.S. governmental and military market, Lockheed Martin Commercial Launch Services is now trying to grow back its share of the commercial market. In late 2013, it won a commercial contract stating it was able to drop its costs by 20%. It seems the price is not yet at market levels as this win was not followed by any other since then, but  it aims at securing  one commercial launch per year.

Mitsubishi Heavy Industries (MHI), like Lockheed, is turning its attention back to the commercial market. Restrained by high costs and a launch site not ideally located, it is currently working on an improvement and cost reduction program. MHI recently received an order from Sky Perfect JSAT, based in Japan for a launch in 2016. This tends to indicate that MHI’s efforts are paying off but another order, not from a Japan-based company, would be the best confirmation. In any case, MHI does not have a huge launch capability and aims at 3 commercial missions per year.

Finally, Sea Launch had some difficulties in growing its market share since emerging from bankruptcy. On May 26, Sea Launch succeeded in delivering a GTO satellite into orbit. It is a long awaited success for the firm, and a very well-timed one, contributing to reinforce Sea Launch’s image as a reliable provider.

As a direct consequence of this situation, Arianespace’s backlog of GEO launches has been growing. However, its launch rate is already at its maximum and the rocket is actually regularly delayed due to issues with satellite deliveries. This already caused Arianespace’s low activity level in 2013, and it is not improving as illustrated by the recent delay of Measat-3b’s launch from May to September 2014.

Bottom Line

The current situation in the Launch Services market is a perfect storm that creates scarcity in a market that should normally be in a position of oversupply.  Sea Launch seems to be in a very good position to take advantage of this situation, but one should not forget MHI and Lockheed Martin Commercial Services (although they are both hampered by high costs). A shortage of reliable launch services places higher value on their reliability, partially compensating their lack of competitiveness. If they play their cards smartly, fulfilling their sales target (3 per year for MHI and 1 for Lockheed) should prove easy. While Sea Launch does not feature a perfect reliability score, it is nonetheless at a very decent level and its availability and price should prove a powerful complement. Thus, while too many players vie for a piece of the pie, easy pickings in GEO launch contracts are there for the players with the right cards.