The competition heats up: Arianespace’s Ariane 5 rocket on Thursday launched two commercial satellites into orbit, including Argentina’s first home-built communications satellite.
Europe’s six biggest satellite makers have written Arianespace to demand that the company build its next generation Ariane 6 rocket by 2019 or face a significant loss of business.
Given the advent of electric propulsion and the dramatic launch-cost reduction offered by Space Exploration Technologies Corp., the operators say, the new Ariane 6 needs to be in service by 2019 or face the risk that Europe’s Arianespace launch consortium will be permanently sidelined. The letter was signed by six members of the European Satellite Operators Association. Signatories included the chief executives of Intelsat, SES, Eutelsat, Inmarsat, Hispasat and HellasSat.
This letter is clearly intended to help prod Arianespace into making a decision on whether to build a new rocket, Ariane 6, or upgrade Ariane 5. Right now the company’s partners have been unable to come to an agreement about what to do.
The competition heats up: As a result of lowering its prices to compete with SpaceX, Arianespace on Monday announced four new launch contracts for lighter weight commercial satellites.
At a press briefing here during the World Satellite Business Week conference, organized by Euroconsult, Arianespace said the contracts illustrate the company’s ability to win business in head-to-head competition with what has become its principal competitor, Space Exploration Technologies Corp. and the Falcon 9 rocket. Individual satellite operators choose satellite and rocket suppliers using a range of criteria including schedule, price, recent launch record and export credit-agency financing.
It was not immediately clear how many of the latest satellite wins for Arianespace followed competitions in which SpaceX offered bids compatible with customer specifications and still lost.
These satellites will be launched in the lower berth of the Ariane 5 rocket, which launches two satellites with each launch. Thus, these contracts — while encouraging for Arianespace — still leave the company with the need to find customers to fill that upper berth.
The competition is burning them up! With Germany and France unable to come to an agreement about the next Arianespace commercial rocket, the company is considering cancelling a December conference that was supposed to settle the issue.
The basic division remains despite the German government’s alignment with the French view that Europe needs a lower-cost rocket to maintain its viability in the commercial market — which in turn provides European governments with a viable launch industry.
Despite the consensus over the longer term, the two sides remain split on whether European Space Agency governments should spend 1.2 billion euros ($1.6 billion) to complete work on a new upper stage for the existing Ariane 5 rocket, which could fly in 2018-2019, or abandon the upgrade to focus spending on a new Ariane 6 rocket, whose development would cost upwards of 3 billion euros over 7-8 years. [emphasis mine]
Though SpaceX is not mentioned in this particular article, numerous previous articles on this subject (such as this one) have made it very clear that it is SpaceX’s low prices that are driving the need for Arianespace to cut costs. The problem, as this article makes very clear, is that Arianespace’s partners can’t figure out how to do it, at least in a manner that will still provide them all an acceptable share in the pie. The result might be that the entire partnership falls apart.
The competition heats up: In an effort to compete with SpaceX, Arianespace has lowered the price it charges for launching smaller satellites on its Ariane 5 rocket.
According to Stephen Israel, the company’s CEO, the lower prices have already produced some contracts. However, the company has not been able to institute comparable cost savings in its operations, which means it
…will force the European launch supplier to ask European governments this year for a 16 percent increase in annual support payments. In its 2013 annual report, Evry, France-based Arianespace said it will ask European Space Agency governments in December to allocate 116 million euros ($158 million) per year for the period between 2015 and 2018 to enable Arianespace to reach financial break-even. That figure compares to the current allocation of about 100 million euros per year for 2013 and 2014 that ESA governments approved in late 2012.
I wonder if the company will get these additional subsidies. In the past there were complaints from the European partners about the inability of Arianespace to make a profit. For it to lose even more money now will not make people happy.
I think, however, that Israel recognizes this. He has been pushing the organization to streamline its operation. Whether he can succeed against Arianespace’s entrenched pork-laden structure remains the big question.
Recognizing the competition: In a speech in Singapore, the head of Arianespace said that the company urgently needs to overhaul its Ariane 5 rocket in order to meet tough competition from SpaceX and Russia’s Proton rocket.
“We have a newcomer in America with SpaceX. Yes, competition is increasing, but when competition is increasing, we need to be more and more agile,” said Israel. While recognising that Arianespace was the market leader, “we have to ask ourselves one question: what should we do to remain the leader? Europe is very serious about launchers, and Europe will not give up when it comes to launchers.”
For Arianespace this speech is a very good thing, as it demonstrates again that Israel — and the company — are aware of the competitive challenge put forth by SpaceX and are not making believe it doesn’t exist.
Arianespace struggles to schedule its customers for launch.
The editorial describes the juggling act the company is often forced to perform organizing the duel payloads required by the Ariane 5, with the launch of some customers’ satellites delayed because of the late arrival of other customers. From this information it is clear that the competition coming from SpaceX is not limited only to price. Arianespace’s requirement on Ariane 5 that there be two satellites means that sometimes they have to do harm to one of their customers by delaying their launch, even if that customer delivered on time. I can imagine some of those customers quite willing to go elsewhere should this happen too often.
European satellite operators are pressing Arianespace to find ways to immediately reduce the cost of launching satellites on now Ariane 5 and in the future on Ariane 6.
And why are they doing this? To quote them:
“What is sure is that Europe deserves and requires a [reorganized launcher sector] ahead of 2019, the letter says. “[C]onsiderable efforts to restore competitiveness in price of the existing European launcher need to be undertaken if Europe is [to] maintain its market situation.
“In the short term, a more favorable pricing policy for the small satellites currently being targeted by SpaceX seems indispensable to keeping the Ariane launch manifest strong and well-populated.” [emphasis mine]
It seems that they take very seriously the competitive challenge being presented by SpaceX.
The competition heats up: On Saturday Arianespace’s Ariane 5 rocket has successfully launched two commercial satellites, its 59th straight successful launch.
According to the former CEO of Arianespace, now head of the French space agency, SpaceX’s Falcon 9 costs significantly less to launch than the Ariane 5.
How big is the difference? Jean-Yves Le Gall, who until mid-2013 was chief executive of Evry, France-based Arianespace and is now president of the French space agency, CNES, addressed the point in Feb. 25 testimony to the French Senate. According to Le Gall, launching a satellite on an Ariane 5 costs around 100 million euros ($137 million). After subtracting the amount of European Space Agency subsidies to Arianespace, the per-satellite cost drops to about $100 million, he said.
Hawthorne, Calif.-based SpaceX, he said, would charge $60 million to $70 million to launch the same satellite aboard the Falcon 9. In fact SpaceX has charged even less than that to its first few commercial customers.
It is for this reason that Arianespace is struggling to decide how to build its next generation rocket. They have find a way to do it cheaper, something that is very difficult for this multi-headed European conglomerate to do.
The competition heats up? Arianespace, under severe competitive price pressure from SpaceX, begs for more subsidies from ESA.
In comments responding to a Feb. 11 audit of the French Accounting Court, Cour des Comptes, Israel said that since 2005 Arianespace has improved its competitiveness to the extent that some €200 million ($273 million) in annual subsidies from the 20-nation European Space Agency (ESA) have been halved. In addition, the reliability of the Ariane 5, which has seen 58 consecutive successes since 2002, has allowed the company to increase launch prices. The company also has reduced costs with a recent bulk buy of 18 Ariane 5 rockets that saved Arianespace 5%.
Nevertheless, Israel said the arrival of the medium-lift Falcon 9 as a competitor at the low end of the commercial communications satellite market, with prices substantially lower than what Arianespace charges for Ariane 5, means the company may be forced to ask ESA governments to increase price supports beyond the current €100 million per year. [emphasis mine]
In other words, this government-funded boondoggle doesn’t know how to compete effectively on the open market, and wants an additional government bailout to keep its head above water.
Note also the text in bold. Several commenters on this website have repeatedly insisted that SpaceX’s Falcon 9 was not the bargain claimed, despite numerous examples in the past three years of their competition saying they were that inexpensive. This statement by Arianespace’s CEO reaffirms the fact that SpaceX is cheaper, and is forcing major changes to the launch industry.
In related news, French government auditors have found much wrong with Arianespace’s current long term commercial strategy.
The European Space Agency has now released its first cost estimates for upgrading and replacing its Ariane 5 rocket.
Europe needs to find about 1 billion euros ($1.35 billion) to complete development of an upgrade to its current Ariane 5 heavy-lift rocket, which would fly in 2018 and be capable of lifting satellites weighing 11,000 kilograms into geostationary transfer orbit, European Space Agency Director General Jean-Jacques Dordain said Jan. 17. The Ariane 5 upgrade, called Ariane 5 ME, will be on the table for ESA governments to decide, alongside the new Ariane 6 rocket, at a meeting scheduled for December in Luxembourg.
In a press briefing in Paris, Dordain said it is too early to say how much Ariane 6 will cost to develop. Government and industry estimates have ranged between 3 billion and 4 billion euros, with an inaugural flight in 2021.
As Doug Messier notes in his worthwhile analysis of these numbers, “Europe is in deep trouble.” From a customer’s perspective, these new rockets won’t fly (pun intended). The cost is too high and the development time too long. By the time they get both Ariane 5 and Ariane 6 ready for launch they will be obsolete and overpriced, when compared to the rocket’s that will already be available from their competitors.
Arianespace has ordered the construction of an additional 18 Ariane 5 rockets.
This construction order, if it reflects actual launch contracts, gives Arianespace some margin while it works to find ways to compete in the launch business, as expressed by the last sentence of the above article: “Astrium managers recently called for a thorough overhaul of the Ariane contractor mix with a view to reducing prices to stay viable in the competitive world commercial launch market.”
The competition heats up: Arianespace has signed a contract to build 18 more Ariane 5 rockets.
This order takes the number of Ariane 5 launchers in production for Arianespace to 38, and guarantees the continued provision of launch services for the European operator’s customers at the Guiana Space Centre through to the end of the decade.
Without doubt Arianespace is now in a solid position through the end of the decade. What will happen to them, however, when Falcon 9 and other cheaper rockets begin to fly regularly will be the real story. They have not yet found a way to cut their costs.
The competition heats up: While the launch industry eagerly awaits SpaceX’s first commercial Falcon 9 launch on September 10, Arianespace has been signing up customers.
Arianespace Chief Executive Stephane Israel said Aug. 29 after the last Ariane 5 launch that the company has booked around 300 million euros ($400 million) in new orders in recent weeks, bringing this year’s total contract volume to 1 billion euros. Industry officials said the contracts are for government missions in Brazil and Japan, and commercial operators in Brazil, the United States, Mexico and Spain.
The Ariane 5 is incredibly reliable, having successfully completed more than fifty launches in a row. It is also much more expensive that Falcon 9, which is expected to cost a customer about half as much to get a payload into orbit.
Until SpaceX proves Falcon 9, Arianespace will be in a strong position to get customers. Once Falcon 9 starts flying regularly however, Arianespace will begin to lose business to this cheaper alternative. Thus, the new contracts will help tide the company over while they scramble to figure out how to reduce costs in order to compete.
In related news, SpaceX readies the new upgraded Falcon 9 for launch.
The competition heats up: Arianespace’s Ariane 5 rocket successfully launched two commercial satellites into orbit late yesterday.
The competition heats up: Arianespace will not be able to set its launch manifest for the remainder of this year until late July.
The year’s third Ariane 5 mission is scheduled for launch in late July carrying the large Alphasat satellite for mobile satellite services operator Inmarsat of London and the European Space Agency (ESA); and India’s Insat-3D telecommunications satellite.
Beyond that, Israel said, it is unclear which commercial payloads will be placed on which of the two remaining Ariane 5 flights, scheduled for this fall, or what the Ariane 5 manifest looks like for 2014. A big question is whether Arianespace has any slots open in the Ariane 5 manifest in 2014 to accommodate new customers who want to switch to Ariane 5 because their selected vehicle is late.
This article not only suggests that Arianespace has more business than it can handle, it is also provides evidence that the company is scrambling to cut costs in order to compete.
The competition heats up: At a briefing at the Paris Air Show this week Arianespace admitted that its planned accelerated upgrades to Ariane 5 are intended to counteract the competition from both Russia’s Proton and SpaceX’s Falcon 9 rockets.
I love competition. It energizes everything.
Update: This long article specifically discusses how Arianespace is scrambling to meet the competition. Key quote:
» Read more
The competition heats up: Arianespace is considering accelerating upgrades to its Ariane 5 rocket so that it can carry larger satellites.
The competition heats up: Echostar signs a multi-satellite deal using the Ariane 5 rocket.
Several points:
» Read more
In meetings today the European Space Agency (ESA) has decided to upgrade Ariane 5 rather than immediately build a new Ariane 6 rocket.
Normally I would label this story as an example of “the competition heating up.” In this case, however, I don’t see how an upgrade of Ariane 5 can possibly be competitive. The rocket has been so expensive to operate that — even though it has dominated the launch market for years and is very reliable — ESA has had to subsidize its cost. It has never made a profit. I don’t see how they can reconfigure it enough to bring its cost down to compete with Falcon 9. In other words, they are trying to put lipstick on a pig.
Nor is this surprising. Arianespace is a government-run business, operated like a committee with the member nations of ESA all having a say. Under this arrangement, it is difficult if not impossible to get a quick and efficient decision. Moreover, political concerns will often outweigh issues of efficiency and profits.
In the open competitive market of privately-run companies that the launch market is becoming, I am very skeptical this kind of business can survive.
SpaceX’s launch manifest for 2013 includes three commercial launches in addition to its cargo flights to ISS.
All told, it appears that 2013 will a crucial year for SpaceX. They first need to solve the question of that engine failure from their October Falcon 9 launch. Then they need to begin putting into orbit the long list of private satellites that they have contracts for but have held off launching pending the success of the NASA deal. Once they do that, set to begin next year, they will have proven – beyond a shadow of a doubt — that they are for real.
And on that subject, Elon Musk had some thoughts yesterday about his European competitors: “Europe’s rocket has no chance.”
SpaceX’s Falcon is a new entrant to the launcher market. It has so far made only four flights, but it has a backlog already of more than 40 contracted launches. Its quoted price under $60m per flight is proving highly attractive to satellite operators who have to pay substantially more to get on an Ariane. “Not only can we sustain the prices, but the next version of Falcon 9 is actually able to go to a lower price,” warned Mr Musk. “So if Ariane can’t compete with the current Falcon 9, it sure as hell can’t compete with the next one.”
Faced with stiff competition in the launch market, Europe struggles to come up with a competitive replacement for Ariane 5
“I strongly believe we have to decide, as quickly as possible, to develop a new-generation launcher to be competitive in the market as it is forecast, and with the competitors,” [ESA Director General Jean-Jacques] Dordain said at the Berlin air show last month, a reference to new launch vehicle developments in India, China and the U.S., where Space Exploration Technologies’ low-cost Falcon 9 is challenging the global launcher market.
While space cadets might argue about launch prices till the cows come home, the actual competitors in the industry know better: SpaceX’s low prices are real and are forcing everyone to find ways to lower costs or lose business.
The competition heats up: France and Germany in the European Space Agency are in serious disagreement about whether to replace the Ariane 5 or upgrade it.
The French space agency, CNES, quietly backed by Europe’s Arianespace launch consortium, has argued that the current Ariane 5 heavy-lift vehicle has only a fragile hold on its current 50 percent commercial market share. Just as important, according to the French reasoning, is that the entire Ariane 5 system, including its ground infrastructure, is expensive to operate and likely to remain so. Because money is short in Europe, it would be preferable to move immediately to a next-generation vehicle that would carry payloads ranging from 2,500 kilograms to 6,000 kilograms — with an extension to 8,000 kilograms — into geostationary transfer orbit, one at a time. This modular vehicle ultimately would replace not only today’s Ariane 5, but also the Russian Soyuz rocket that is now operating from Europe’s Guiana Space Center in French Guiana.
Set against this reasoning are industrial policy issues raised by the German space agency, DLR, and by Astrium, which is Ariane 5’s prime contractor. They say Europe needs to complete development of an upgraded Ariane 5 — at a cost of about 1.4 billion euros ($1.8 billion) — before embarking on a decade-long development of an Ariane 6 whose cost and industrial work-share distribution are unknown. [emphasis mine]
It is very clear that ESA has recognized that once Falcon 9 becomes completely operational, it will be difficult to get anyone to buy tickets on the very expensive Ariane 5. From the article it appears the battle centers on the fact that the French realize this, while the Germans are willing to look the other way.
Europe ponders the design choices for the next generation of their Ariane rocket.
Though the article above makes no mention of Falcon 9 and its very low launch costs, I have no doubt that Falcon 9 hovers like a ghost over the negotiations on what ESA will do with Ariane 5, a rocket that despite an excellent launch record has never really been able to make a profit due to high costs.
ArianeSpace will make a profit in 2011, the first time in three years.
Helped by the two Soyuz campaigns, which occurred in October and December, Arianespace in 2011 apparently averted a third consecutive year of losses. Its financial accounts are not finalized until June, but Le Gall said the company expects to report a slight profit on about 985 million euros in revenue.
In other words, it was the addition of the Russian low-cost Soyuz rocket to their fleet that helped avoid another year’s loss. This doesn’t reflect well on the profitability of the Ariane 5 rocket.
A labor strike today has canceled an Ariane 5 rocket launch.
Subsidies to the Ariane 5 rocket to keep it afloat.
Something is seriously wrong with any operation (like Ariane) that dominates the market and still loses money the past two years.
