Abstract
For over 50 years, the economics of satellite launchers has reflected the military and strategic interests of government customers. Launcher economics have generally been shaped by explicit or implicit subsidies and a range of market distortions. This business model is now under threat from new entrants offering to undercut established players. While this challenge may be in some degree more illusory than real, there is sufficient novelty in the new approach to disturb established launch service providers. A more disruptive threat is possibly on the far horizon of innovation. There is the prospect—although highly problematic at this stage—of a fully-fledged technological transformation in accessing space. Radically new technologies could revolutionise the economics of space operations—the equivalent of the jet engine’s impact on air travel.
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Notes
- 1.
Herzfeld (2005): Henry R. Herzfeld, Ray A. Williamson, Nicolas Peter, Launch Vehicles: an Economic Perspective, Space Policy Institute, The George Washington Institute, September 2005: https://www.gwu.edu/~spi/.../NASA%20L.Vehicle%20Study%20V-5.pdf, p. 3.
- 2.
Herzfeld, op cit., p. 5; this is still largely the case. While scientific payloads are important and there is an emerging market for Earth Resources Satellites, the commercial satellite operators are the dominant customers for commercial launches.
- 3.
Herzfeld, op cit., p. 7.
- 4.
Attempts to force European public customers to use the Ariane have proven nugatory, although there are implicit rules, especially on the part of Ariane’s main government sponsors, to use Ariane for military launches and some European funded civilian satellites.
- 5.
Space News, 22 June 2010, “The ITAR Quagmire”.
- 6.
Space News, 1 July 2013, Jeff Foust, “The ITAR Shift”.
- 7.
Blue Origin is funded by Amazon’s Jeff Bezos, although recorded an important milestone in April 2015 with the successful launch of its test rocket New Shepard with a prototype BE-4 engine. It is also designed to be re-usable. Its initial purpose is space tourism.
- 8.
Arianespace is also responsible for marketing and launching the Ariane 5, a “Europeanized” Soyuz and the ESA developed Vega small rocket.
- 9.
Space News, 26 October 2015, Peter de Selding, “With Revenue Looking Up, Arianespace Seeks to Bring Costs Down”. This might be feasible if LEO satellite constellations become the norm, with more initial launches and then regular replenishment.
- 10.
Space News, 26 October 2015.
- 11.
Aviation Week, 3 August 2015, Guy Norris, “Reusable Race”.
- 12.
Financial Times, 1 November 2015: Peggy Hollinger and Clive Cookson, “BAE Systems to pay £20.6m for 20% of space engine group”.
- 13.
The emergence of highly capable micro satellites is itself a potentially transformative event in satellite technology. However, low cost launching would still facilitate more extensive use of constellations, especially in replenishing satellites that have failed or re-entered the Earth’s atmosphere.
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Hayward, K. (2017). The Economics of Launch Vehicles: Towards a New Business Model. In: Al-Ekabi, C., Baranes, B., Hulsroj, P., Lahcen, A. (eds) Yearbook on Space Policy 2015. Yearbook on Space Policy. Springer, Vienna. https://doi.org/10.1007/978-3-7091-4860-0_12
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DOI: https://doi.org/10.1007/978-3-7091-4860-0_12
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