Europe’s old aerospace industry struggles with the concept of competition
Two stories today from Europe’s aerospace industry suggest that its older big space companies are having real difficulties dealing with the new space landscape of competition and freedom.
First, Arianespace and Avio issued a statement demanding that Europe require that all European launches occur on European rockets.
The statement warned that without “sustained support,” European rocket builders were at risk of losing out to institutionally backed competitors from the US. “Major space powers support their industries through stable and guaranteed institutional markets, enabling long-term investments, innovation, and the preservation of leadership,” explained the statement.
…The pair argue that Europe risks falling behind not due to a lack of technical capability, but because of structural market weaknesses. While Ariane 6 and Vega-C have demonstrated competitiveness and reliability, they caution that this progress is fragile in the absence of guaranteed long-term demand.
While a preference for European launch providers is clearly in the best interest of both Avio and Arianespace, the pair did reserve a slice for new entrants to the market. “Enshrining European preference as an untouchable principle would support not only Ariane and Vega, but also foster the development of emerging projects in the small launcher sector.” [emphasis mine]
The highlighted sentence reveals the true reasons behind this call against competition. Neither the Ariane-6 rocket (controlled at present by Arianespace) nor the Vega-C rocket (owned by Avio) have “demonstrated competitiveness and reliability,” as claimed. Instead, both are expendable and too expensive, which is why their progress is “fragile” and lack “guaranteed long-term demand.” Satellite companies don’t want to buy their services. Thus, this call by these companies to require European satellite companies to use them is simply an effort to protect them from competition. Rather than innovate and lower costs, they want the European governments to enshrine them as favored launch providers, even though they provide an inferior product.
In a second story, three major European space companies announced that they are considering merging their space divisions into one separate company.
At a press conference during the Paris Air Show June 17, Roberto Cingolani, chief executive of Leonardo, said discussions among Airbus Defence and Space, Thales Alenia Space and his company about merging their space businesses in some way were approaching a “go/no-go” decision. “By the end of July, we would like to have a global go/no-go about the feasibility of the initiative,” he said. That includes as assessment of antitrust concerns, due diligence regarding the companies’ finances and “value creation” such a combination would offer. “I like to say that one plus one plus one should be bigger than three, otherwise we don’t do it,” he said.
Both Thales Alenia and Leonardo are mostly focused on building orbital spacecraft and large space station modules. Airbus does similar work, as well as participate in a partnership with Safran in building and launching the Ariane-6 rocket.
Apparently, all three are having the same trouble competing in the international market as Arianespace and Avio. Rather than demand the government guarantee them work (as Arianespace and Avio have done), or work harder to make their products more competitive (as SpaceX and Rocket Lab have done), they are considering merging as a way to survive.
Both of these stories suggest that the older big space companies in Europe have the same problems as the older big space companies in America (Boeing, Lockheed Martin, Northrop Grumman). They have too much fat, no longer know how to innovate, and their management doesn’t have the will to change things.
The consequences however of both two stories are decidedly different. If the demand for protectionism in the first story becomes reality, Europe’s entire space industry will suffer considerably. Launch costs will go up, and thus its satellite business will shrink.
The merger proposed in the second story however might actually turn out to be the right choice, as it will force a major restructuring of all these companies, which in turn might make them more competitive, efficient, and capable.
Readers!
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As I have said many times before, I can’t express what it means to me to get such support, especially as no one is required to pay anything to read my work. Thank you all again!
For those readers who like my work here at Behind the Black and haven't contributed so far, please consider donating or subscribing. My analysis of space, politics, and culture, taken from the perspective of an historian, is almost always on the money and ahead of the game. For example, in 2020 I correctly predicted that the COVID panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Every one of those 2020 conclusions has turned out right.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
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Two stories today from Europe’s aerospace industry suggest that its older big space companies are having real difficulties dealing with the new space landscape of competition and freedom.
First, Arianespace and Avio issued a statement demanding that Europe require that all European launches occur on European rockets.
The statement warned that without “sustained support,” European rocket builders were at risk of losing out to institutionally backed competitors from the US. “Major space powers support their industries through stable and guaranteed institutional markets, enabling long-term investments, innovation, and the preservation of leadership,” explained the statement.
…The pair argue that Europe risks falling behind not due to a lack of technical capability, but because of structural market weaknesses. While Ariane 6 and Vega-C have demonstrated competitiveness and reliability, they caution that this progress is fragile in the absence of guaranteed long-term demand.
While a preference for European launch providers is clearly in the best interest of both Avio and Arianespace, the pair did reserve a slice for new entrants to the market. “Enshrining European preference as an untouchable principle would support not only Ariane and Vega, but also foster the development of emerging projects in the small launcher sector.” [emphasis mine]
The highlighted sentence reveals the true reasons behind this call against competition. Neither the Ariane-6 rocket (controlled at present by Arianespace) nor the Vega-C rocket (owned by Avio) have “demonstrated competitiveness and reliability,” as claimed. Instead, both are expendable and too expensive, which is why their progress is “fragile” and lack “guaranteed long-term demand.” Satellite companies don’t want to buy their services. Thus, this call by these companies to require European satellite companies to use them is simply an effort to protect them from competition. Rather than innovate and lower costs, they want the European governments to enshrine them as favored launch providers, even though they provide an inferior product.
In a second story, three major European space companies announced that they are considering merging their space divisions into one separate company.
At a press conference during the Paris Air Show June 17, Roberto Cingolani, chief executive of Leonardo, said discussions among Airbus Defence and Space, Thales Alenia Space and his company about merging their space businesses in some way were approaching a “go/no-go” decision. “By the end of July, we would like to have a global go/no-go about the feasibility of the initiative,” he said. That includes as assessment of antitrust concerns, due diligence regarding the companies’ finances and “value creation” such a combination would offer. “I like to say that one plus one plus one should be bigger than three, otherwise we don’t do it,” he said.
Both Thales Alenia and Leonardo are mostly focused on building orbital spacecraft and large space station modules. Airbus does similar work, as well as participate in a partnership with Safran in building and launching the Ariane-6 rocket.
Apparently, all three are having the same trouble competing in the international market as Arianespace and Avio. Rather than demand the government guarantee them work (as Arianespace and Avio have done), or work harder to make their products more competitive (as SpaceX and Rocket Lab have done), they are considering merging as a way to survive.
Both of these stories suggest that the older big space companies in Europe have the same problems as the older big space companies in America (Boeing, Lockheed Martin, Northrop Grumman). They have too much fat, no longer know how to innovate, and their management doesn’t have the will to change things.
The consequences however of both two stories are decidedly different. If the demand for protectionism in the first story becomes reality, Europe’s entire space industry will suffer considerably. Launch costs will go up, and thus its satellite business will shrink.
The merger proposed in the second story however might actually turn out to be the right choice, as it will force a major restructuring of all these companies, which in turn might make them more competitive, efficient, and capable.
Readers!
My annual February birthday fund-raising drive for Behind the Black is now over. Thank you to everyone who donated or subscribed. While not a record-setter, the donations were more than sufficient and slightly above average.
As I have said many times before, I can’t express what it means to me to get such support, especially as no one is required to pay anything to read my work. Thank you all again!
For those readers who like my work here at Behind the Black and haven't contributed so far, please consider donating or subscribing. My analysis of space, politics, and culture, taken from the perspective of an historian, is almost always on the money and ahead of the game. For example, in 2020 I correctly predicted that the COVID panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Every one of those 2020 conclusions has turned out right.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
Rocket technology experience demands remaining in practice. They simply don’t support it as well as SpaceX or China.
Yurp will do Yurpy stuff – as always. And there’s nothing more Yurpy than mandates.
Thing is, even if the requested mandate is enacted, it isn’t likely to save either Arianespace or Avio in the long term. Arianespace, in particular, has a rocket – Ariane 6 – that is designed to address a market that was still large when design work started, but which has diminished greatly since – namely, the launching of large geosynchronous orbit comsats.
Ariane 6 will see modest service deploying a fraction of the initial Kuiper constellation, but is unlikely to get any more Kuiper work beyond that already contracted as the partially reusable New Glenn, Neutron and Eclipse rockets in the US will all have better economics.
Avio’s rockets – the Vega and Vega-C – have not proven to be reliable. Perhaps that will change and perhaps the upcoming Vega-E will avoid the same teething troubles. But the Vegas are still entirely expendable – which makes them quite pricey – and use solid motors for all but their uppermost kick stages – which provides a rougher ride uphill than do liquid-propellant rockets.
The various European small rocket start-ups will, under any Europe-launches-on-European-launchers-only mandate, have room – perhaps quite a bit of it – to undercut the legacy players for launches of small and medium satellites, especially to LEO where most new payloads seem to be headed. If one or two of them succeed well enough to follow in the footsteps of Rocket Lab and Firefly and gin up new partially-reusable medium launchers, they will be able to put both Arianespace and Avio entirely out of business not too far down the road.
As for “practice,” the reason the European launch companies don’t get as many launch opportunities as US and PRC providers is that Europe doesn’t generate many. The biggest difference is in LEO broadband and direct-to-device satellite constellation launches. The only two such already in service are Starlink and OneWeb which both had their origins in the US private sector. So do the nascent third and fourth such, Kuiper and AST Spacemobile.
Europe, in contrast, is, as is its usual wont, trying to gin up an all-governmental LEO broadband constellation effort dubbed IRIS2. The project will probably never materialize as it would have hopeless economics if launched on Ariane 6s. Even the Europeans are beginning to see the future limits of business-as-usual European-style.
The only substantive European space endeavors a decade hence are going to be those that emerge from the European private sector and which, additionally, are built by their founders to be competitive in a global market, not just a mingy European one with a fence around it.