History
In the early decades of the Space Age—1950s–2000s—the government space agencies of the Soviet Union and the United States pioneered space technology. This was augmented by collaboration with affiliated design bureaus in the USSR and contracts with commercial companies in the US. All rocket designs were built explicitly for government purposes. The European Space Agency (ESA) was formed in 1975, largely following the same model of space technology development. Other national space agencies—such as China's CNSA[1] and India's ISRO[2]—also financed the indigenous development of their own national designs.
Communications satellites were the principal non-government market after the 1970s. Although launch competition in the early years after 2010 occurred only in and among global commercial launch providers, the US market for military launches began to experience multi-provider competition in 2015, as the US government began to move away from their previous monopoly arrangement with United Launch Alliance (ULA) for military launches.[3][4][5] By 2018, the ULA monopoly on US national security space launch had evaporated.[6][5]
By mid-2017, the results of this multi-year competitive pressure on commercially bid launch prices was being observed in the actual number of launches achieved. With frequent recovery of first-stage boosters by SpaceX, expendable missions had become a rare occurrence for them.[7] But the new landscape did not come without a cost. Many space launch providers are expending capital to develop new lower-cost reusable spaceflight technologies. SpaceX alone had expended about US$1 billion by 2017 in order to develop the capability to reuse orbital class boosters on a subsequent flight.[8]
By 2021, the monopoly previously held by nation states to be the only entities to fund, train, and send astronauts for human space exploration was ending as the first mission with exclusively private citizens—Inspiration4—was launched in September 2021. The rocket and capsule for the flight, the training, and the funding are all provided by private entities outside of the traditional NASA process that had held the US monopoly since the early 1960s.[9]
1970s and 1980s: Commercial satellites emerge
Non-military commercial satellites began to be launched in volume in the 1970s and 1980s. Launch services were supplied exclusively with launch vehicles developed originally for various Cold War military programs, with their attendant cost structures.[10]
SpaceNews journalist Peter B. De Selding has asserted that French government leadership, and the Arianespace consortium "all but invented the commercial launch business in the 1980s" principally "by ignoring U.S. government assurances that the reusable U.S. space shuttle would make expendable launch vehicles like Ariane obsolete."[11]
2000-2010
Little market competition emerged inside any national market before approximately the late 2000s. Some global commercial competition arose between the national providers of various nation states for international commercial satellite launches. Within the US, as late as 2006, the high cost structures built in to government contractors'—Boeing's Delta IV and Lockheed Martin's Atlas V—launch vehicles left little commercial opportunity for US launch service providers but considerable opportunity for low-cost Russian boosters based on leftover Cold War military missile technology.[12]
DARPA's Simon P. Worden and the USAF's Jess Sponable analyzed the situation in 2006 and offered that, "One bright point is the emerging private sector, which [was then] pursuing suborbital or small lift capabilities." They concluded, "Although such vehicles support very limited US Department of Defense or National Aeronautics and Space Administration spaceflight needs, they do offer potential technology demonstration stepping stones to more capable systems needed in the future.";[12] demonstrating capabilities that would grow in the next five years while supporting published list prices substantially below the rates on offer by the national providers.[13]
2010-2020s: Competition and pricing pressure
| Rocket | Origin | First launch | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ariane 5 |  Europe
|
1996 | 12 | 8 | 12 | 6 | 10 | 12 | 10 | 10 | 9 | 8 | 7 | 4 | 6 | 2 | |
| Proton-M |  Russia
|
2001 | 8 | 7 | 11 | 8 | 8 | 7 | 3 | 3 | 0 | 3 | 1 | 2 | 1 | 2 | |
| Soyuz-2 | Russia
|
2006 | 1 | 5 | 4 | 5 | 8 | 6 | 5 | 5 | 5 | 15 | 15 | 22 | 25 | 15 | |
| PSLV |  India
|
2007[a] | 1 | 2 | 2 | 2 | 1 | 3 | 3 | 2 | 3 | 3 | 1 | 1 | 3 | 3 | |
| Falcon 9 / Falcon Heavy |  United States
|
2010 | 0 | 0 | 0 | 2 | 4 | 5 | 8 | 12 | 16 | 11 | 26 | 31 | 61 | 91 | |
| Electron | United States New Zealand
|
2017 | — | — | — | — | — | — | — | 0 | 3 | 6 | 6 | 6 | 8 | 8 | |
| Vega | Europe
|
2012 | — | — | 0[b] | 1 | 1 | 2 | 2 | 4 | 2 | 2 | 1 | 3 | 2 | 1 | |
| Kuaizhou 1A |  China
|
2017[c] | — | — | — | — | — | — | — | 1 | 1 | 4 | 1 | 3 | 5 | 4 | |
| Others[d] | - | - | 7 | 10 | 5 | 7 | 5 | 6 | 6 | 4 | 5 | 1 | 4 | 3 | 8 | 3 | |
| Total market | 29 | 32 | 34 | 31 | 37 | 41 | 37 | 41 | 44 | 44 | 50 | 62 | 93 | 129 | |||
Since the early 2010s, new private options for obtaining spaceflight services emerged, bringing substantial price pressure into the existing market.[13][14][15][16]
Before 2013, Europe's Arianespace, which flies the Ariane 5, and International Launch Services (ILS), which marketed Russia's Proton vehicle dominated the communications satellite launch market.[17] In November 2013, Arianespace announced new pricing flexibility for the "lighter satellites" it carries to orbits aboard its Ariane 5 in response to SpaceX's growing presence in the worldwide launch market.[18]
| Launch Vehicle | Payload cost per kg |
|---|---|
| Vanguard | $1,000,000 [19] |
| Space Shuttle | $54,500 [19] |
| Electron | $19,039 [20][21] |
| Ariane 5G | $9,167 [19] |
| Long March 3B | $4,412 [19] |
| Proton | $4,320 [19] |
| Falcon 9 | $2,720 [22] |
| Falcon Heavy | $1,500 [23] |
In early December 2013, SpaceX flew its first launch to a geostationary transfer orbit providing additional credibility to its low prices which had been published since at least 2009. The low launch prices offered by the company,[24] especially for communication satellites flying to geostationary (GTO) orbit, resulted in market pressure on its competitors to lower their prices.[17]
By late 2013, with a published price of US$56.5 million per launch to low Earth orbit, "Falcon 9 rockets [were] already the cheapest in the industry. Reusable Falcon 9s [were project to potentially decrease] the price by an order of magnitude, sparking more space-based enterprise, which in turn would drop the cost of access to space still further through economies of scale."[14]
Falcon 9 GTO mission pricing in 2014 was approximately US$15 million less than a launch on a Chinese Long March 3B.[25] Despite SpaceX prices being somewhat lower than Long March prices, the Chinese Government and the Great Wall Industry company—which markets the Long March for commsat missions—made a policy decision to maintain commsat launch prices at approximately US$70 million.[26]
In early 2014, the ESA asked European governments for additional subsidies to face the competition from SpaceX.[27] Continuing to face "stiff competition on price",[13] in April seven European satellite operator companies—including the four largest in the world by annual revenue—asked that the ESA
"find immediate ways to reduce Ariane 5 rocket launch costs and, in the longer term, make the next-generation Ariane 6 vehicle more attractive for smaller telecommunications satellites. ... [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."[28]
In competitive bids during 2013 and early 2014, SpaceX was winning many launch customers that formerly "would have been all-but-certain clients of Europe's Arianespace launch consortium, with prices that are $60 million or less."[28] Facing direct market competition from SpaceX, the large US launch provider United Launch Alliance (ULA) announced strategic changes in 2014 to restructure its launch business—replacing two launch vehicle families (Atlas V and Delta IV) with the new Vulcan architecture—while implementing an iterative and incremental development program to build a partially reusable and much lower-cost launch system over the next decade.[29]
In June 2014, Arianespace CEO Stéphane Israël announced that European efforts to remain competitive in response to SpaceX's recent success had begun in earnest. This included the creation of a new joint venture company from Arianespace's two largest shareholders: the launch-vehicle producer Airbus and engine-producer Safran. No additional details of the efforts to become more competitive were released at the time.[30]
In August 2014, Eutelsat, the third-largest fixed satellite services operator worldwide by revenue, indicated that it planned to spend approximately €100 million less each year in the next three years, due to lower prices for launch services and by transitioning their commsats to electric propulsion. They indicated they are using the lower prices they can get from SpaceX against Arianespace in negotiations for launch contracts.[31]
By December 2014, Arianespace had selected a design and commenced development of the Ariane 6, its new entrant into the commercial launch market aiming for more competitively priced launch service offerings, with operational flights planned to begin in 2020.[32]
In October 2014, ULA announced a major restructuring of processes and workforce with the stated objective to decrease launch costs by half. One of the reasons given for the restructuring and new cost reduction goals was competition from SpaceX. ULA had less "success landing contracts to launch private, commercial communications and earth observation satellites" than it had with launch US military payloads, but CEO Tory Bruno stated that the new lower-cost ULA launcher could be competitive and succeed in the commercial satellite sector.[33] In 2014, the US GAO calculated the average cost of each ULA rocket launch for the US government had risen to approximately US$420 million.[34]
By November 2014, SpaceX had "already begun to take market share"[35] from Arianespace. Eutelsat CEO Michel de Rosen said, in reference to ESA's program to develop the Ariane 6, "Each year that passes will see SpaceX advance, gain market share and further reduce its costs through economies of scale."[35] European government research ministers approved the development of the new European rocket—Ariane 6—in December 2014, projecting the rocket would be "cheaper to construct and to operate" and that "more modern methods of production and a streamlined assembly to try to reduce unit costs" plus "the rocket's modular design can be tailored to a wide range of satellite and mission types [so it] should gain further economies from frequent use."[13]
In 2015, the ESA was attempting to reorganize to reduce bureaucracy and decrease inefficiencies in launcher and satellite spending which had been tied historically to the amount of tax funds that each country has provided to it.[36]
In May 2015, ULA stated it would go out of business unless it won commercial and civil satellite launch orders to offset an expected slump in U.S. military and spy launches.[37] As of 2015[update], SpaceX remained "the low-cost supplier in the industry."[38] However, in the market for launches of US military payloads, ULA faced no competition for nearly a decade, since the formation of the ULA joint venture from Lockheed Martin and Boeing in 2006. However, SpaceX was also upsetting the traditional military space launch arrangement in the US, which in 2014 was called a monopoly by space analyst Marco Caceres and criticized by some in the US Congress.[39] By May 2015, the SpaceX Falcon 9 v1.1 was certified by the USAF to compete to launch many of the expensive satellites which are considered essential to US national security.[40] And by 2019, ULA, with their next-generation, lower-cost Vulcan/Centaur launch vehicle, was one of four launch companies competing for the US military's multi-year block-buy contract for 2022–2026 against SpaceX (Falcon 9 and Falcon Heavy), Northrop Grumman (Omega), and Blue Origin (New Glenn), where only the SpaceX vehicles are currently flying and the other three are all slated to make their initial launch in 2021.[5]
University of Southampton researcher Clemens Rumpf argued in 2015 that the global launch industry was developed in an "old world where space funding was provided by governments, resulting in a stable foundation for [global] space activities. The money for the space industry [had been] secure and did not encourage risk-taking in the development of new space technologies. ... the space landscape [had not changed much since the mid-1980s]." As a result, the emergence of SpaceX was a surprise to other launch providers "because the need to evolve launcher technology by a giant leap was not apparent to them. SpaceX show[ed] that technology has advanced sufficiently in the last 30 years to enable new, game changing approaches to space access."[41] The Washington Post said that the changes occasioned from multiple competing service providers resulted in a revolution in innovation.[16]
By mid-2015, Arianespace was speaking publicly about job reductions as part of an attempt to remain competitive in the "European industry [which is being] restructured, consolidated, rationalized and streamlined" to respond to SpaceX price competition. Still, "Arianespace remained confident it could maintain its 50% share of the space launch market despite SpaceX's slashing prices by building reliable rockets that are smaller and cheaper."[42]
Following the first successful landing and recovery of a SpaceX Falcon 9 first stage in December 2015, equity analysts at investment bank Jefferies estimated that launch costs to satellite operators using Falcon 9 launch vehicles may decline by about 40% of SpaceX' typical US$61 million per launch,[43] although SpaceX had only forecast an approximately 30 percent launch price reduction from the use of a reused first stage by early 2016.[44] In early 2016, Arianespace was projecting a launch price of €90–100 million, about one-half of the 2015 Ariane 5 per launch price.[11]
In March 2017, SpaceX reused an orbital booster stage that had been previously launched, landed and recovered, stating the cost to the company of doing so "was substantially less than half the cost" of a new first stage. COO Gwynne Shotwell said the cost savings "came even though SpaceX did extensive work to examine and refurbish the stage. We did way more on this one than [is planned for future recovered stages]."[45]
A 2017 industry-wide view by SpaceNews reported: By 5 July 2017, SpaceX had launched 10 payloads during a bit over six months—"outperform[ing] its cadence from earlier years"—and "is well on track to hit the target it set last year of 18 launches in a single year."[7] There were indeed 18 successful Falcon 9 launches in 2017. By comparison,
France-based Arianespace, SpaceX’s chief competitor for commercial telecommunications satellite launches, is launching 11 to 12 times a year using its fleet of three rockets—the heavy-lift Ariane 5, medium-lift Soyuz and light-lift Vega. Russia has the ability to launch a dozen or more times with Proton doing both government and commercial missions, but has operated at a slower cadence the past few years due to launch failures and [the] discovery of an incorrect material used in some rocket engines. United Launch Alliance, SpaceX’s chief competitor for defense missions, regularly conducts around a dozen or more launches per year, but the Boeing-Lockheed Martin joint venture has only performed four missions through mid-year 2017.[7]
By 2018, the monopoly ULA had held on US national security space launch was over.[6] ULA responded to the Falcon 9 by beginning development in 2014 on the Vulcan rocket, a partly reusable vehicle powered by Blue Origin BE-4 engines, intended to replace its ageing expendable Atlas V and Delta IV rockets.[5] In early 2018, SpaceNews reported that "[t]he rise of SpaceX has disrupted the launch industry at large."[6] By mid-2018, with Proton flying as few as two launches in an entire year, the Russian state corporation Roscosmos announced they would retire the Proton launch vehicle, in part due to competition from lower-cost launch alternatives.[46]
In 2018 SpaceX launched a record 21 times, exceeding the 18 launches in 2017; ULA had flown just 8 flights in 2018.[47] That record was again beaten in 2020 with 26 Falcon 9 launches and 2021 with 31 launches.[48]
In early 2019, the French "Court of Audit criticized Arianespace for what it "perceived as an unsustainable and overly cautious response to the swift rise of SpaceX’s affordable and reusable Falcon 9 rocket." The Ariane 6 was found to be uncompetitive with SpaceX launch service provider options, and further found that "the most probable outcome for Ariane 6 is one in which the very existence of the rocket will be predicated upon continual annual subsidies from the European Space Agency (ESA) in order to make up for the rocket’s inability to sustain commercial orders beyond a handful of discounted shoo-in contracts."[49]
Raising private capital
Private capital invested in the space launch industry prior to 2015 was modest. From 2000 through the end of 2015, a total of US$13.3 billion of investment finance had been invested in the space sector. US$2.9 billion of that was venture capital financing,[50] of which $1.8 billion was invested in 2015 alone.[50]
For the space launch sector, this began to change with the January 2015 Google and Fidelity Investments investment of US$1 billion in SpaceX. While private satellite manufacturing companies had previously raised large capital rounds, that has been the largest investment to date in a launch service provider.[51]
SpaceX developed the Falcon Heavy (first flight in February 2018), and are developing the Starship launch vehicle with private capital. No government financing is being provided for either rocket.[52][53]
After decades of reliance on government funding to develop the Atlas and Delta families of launch vehicles, in October 2014 the successor company—ULA—began development of a rocket, initially with private funds, as one part of a solution for its problem of "skyrocketing launch costs".[15] However, by March 2016 it had become clear that the new Vulcan launch vehicle would be developed with funding via a public–private partnership with the US government. By early 2016, the US Air Force had committed US$201 million of funding for Vulcan development. ULA has not "put a firm price tag on [the total cost of Vulcan development but ULA CEO Tory Bruno has] said new rockets typically cost $2 billion, including $1 billion for the main engine".[54] ULA had asked the US government in 2016 to provide a minimum of US$1.2 billion by 2020 to assist it in developing the new US launch vehicle.[54] It was unclear how the change in development funding mechanisms might change ULA plans for pricing market-driven launch services.[55] Since Vulcan development began in October 2014, the privately generated funding for Vulcan development has been approved only on a short term basis.[15][54] The ULA board of directors—composed entirely of executives from Boeing and Lockheed Martin—is approving development funding on a quarter-by-quarter basis.[56]
Other launch service providers are developing new space launch systems with substantial government capital investment. For the new ESA launch vehicle—Ariane 6, aiming for flight in the 2020s—€400 million of development capital was requested to be "industry's share", ostensibly private capital. €2.815 billion was slated to be provided by various European government sources at the time the early finance structure was made public in April 2015.[57] In the event, France's Airbus Safran Launchers—the company building the Ariane 6—did agree to provide €400 million of development funding in June 2015, with expectation of formalizing the development contract in July 2015.[58]
As of May 2015[update], the Japanese legislature was considering legislation to provide a legal framework for private company spaceflight initiatives in Japan. It was unclear whether the legislation would become law and, if so, whether significant private capital would subsequently enter the Japanese space launch industry as a result.[59][needs update]In the event, the legislation appears not to have become law, and little change in the funding mechanism for Japanese space vehicles are anticipated.
The economics of space launch are driven, in part, by business demand in the space economy. Morgan Stanley projected in 2017 that "revenue from the global industry will increase to at least US$1.1 trillion by 2040, more than triple the figure in 2016. This does not include "the more aspirational possibilities presented by space tourism or mining, nor by [NASA] megaprojects."[60]
2014 and beyond
A number of market responses to the increase of lower-cost competition in the space launch market began in the 2010s. As rocket engine and rocket technologies have fairly long development cycles, most of the results of these moves would not be seen until the late-2010s and early 2020s.
ULA entered into a partnership with Blue Origin in September 2014 to develop the BE-4 LOX/methane engine to replace the RD-180 on a new lower-cost first stage booster rocket. At the time, the engine was already in its third year of development by Blue Origin. ULA indicated then they expected the new stage and engine to start flying no earlier than 2019 on a successor to the Atlas V[61] A month later, ULA announced a major restructuring of processes and workforce to decrease launch costs by half. One of the reasons given for the restructuring and new cost reduction goals was competition from SpaceX. ULA intended to have preliminary design ideas in place for a blending of the Atlas V and Delta IV technology by the end of 2014,[33][62] but in the event, the high-level design was announced in April 2015.[55] By early 2018, ULA had moved the first launch date for the Vulcan launch vehicle to no earlier than mid-2020,[63] and by 2019, were aiming to launch in 2021.[5]
Blue Origin is also planning to begin flying its own orbital launch vehicle—the New Glenn—in 2021[5], a rocket that will also use the Blue BE-4 engine on the first stage, the same as the ULA Vulcan. Blue Origin's Jeff Bezos initially said they did not plan to compete for the US military launch market, stating the market is "a relatively small number of flights. It's very hard to do well and ULA is already great at it. I'm not sure where we would add any value."[64] Bezos sees competition as a good thing, particularly as competition leads to his ultimate goal of getting "millions and millions of people living and working in space."[64] This decision was reversed in 2017, with Blue Origin saying it did intend to compete for US national security launches.[65][66] In 2019, Blue was not only competing to offer the New Glenn launch vehicle for the US military's multi-year block-buy contract for "all [US] national security launches from 2022 to 2026" against SpaceX, ULA (for which Blue is on contract to provide the BE-4 engines for the ULA Vulcan), and others, it had "said the Air Force competition was designed to unfairly benefit ULA."[5]
In early 2015, the French space agency CNES began working with Germany and a few other governments to start a modest research effort with a hope to propose a LOX/methane reusable launch system, to supplement or replace the Ariane 6 that was only then beginning full development in Europe,[67] by mid-2015, and subsequently[when?] renamed Ariane Next,[citation needed] with flight testing unlikely before approximately 2026. The stated design objective was to reduce both the cost and duration of reusable vehicle refurbishment and was partially motivated by the pressure of lower-cost competitive options with newer technological capabilities not found in the Ariane 6.[68][69] Responding to competitive pressures, one stated objective of Ariane Next is to reduce Ariane launch cost by a factor of two beyond improvements brought by Ariane 6.[70][needs update] Ariane 6, the European launch vehicle design prior to Ariane Next has seen delays. In 2014, operational flights of the expendable Ariane 6 were slated to begin in 2020,[32] but by mid-2021 had slipped to 2022.[71]
SpaceX stated in 2014 that if they were successful at developing the reusable technology, launch prices in the US$5 to 7 million range for the reusable Falcon 9 could be achieved in the longer term.[72] In the event, SpaceX did not choose to develop the reusable second stage for the Falcon 9, but are doing so for their next-generation launch vehicle, the new fully reusable Starship. SpaceX indicated in 2017 that the single-launch marginal cost of the Starship would be approximately US$7 million.[73] In November 2019, Elon Musk reduced this figure to $2 million -- $900,000 for fuel and $1.1 million for launch support services.[74] After the mid-2010s, prices for smallsat and cubesat launch services began to decline significantly. Both the addition of new small launch vehicles to the market (Rocket Lab, Firefly, Vector, and several Chinese service providers) and the addition of new capacity of rideshare services are putting price pressure on existing providers. "Cubesats that used to cost US$350,000–400,000 to launch are now US$250,000 and going down."[75]
According to an industry panel interviewed in October 2018, an industry shakeout is expected between 2019 and 2021 due to the excess supply compared to demand. Prices should reach stability once the new entrants have demonstrated their capabilities.[76][needs update]
In the first quarter of 2020, SpaceX launched over 61,000 kg (134,000 lb) of payload mass to orbit while all Chinese, European, and Russian launchers placed approximately 21,000 kg (46,000 lb), 16,000 kg (35,000 lb) and 13,000 kg (29,000 lb) in orbit, respectively, with all other launch providers launching approximately 15,000 kg (33,000 lb).[77]
Competition for the American heavy-lift market
As early as August 2014, media sources noted that the US launch market may have two competitive super-heavy launch vehicles available in the 2020s to launch payloads of 100 metric tons (220,000 lb) or more to low-Earth orbit. The US government is developing the Space Launch System (SLS), capable of lifting very large payloads of 70 to 130 metric tons (150,000 to 290,000 lb) from Earth. On the commercial side, SpaceX has been privately developing their next-generation Starship launch system,[78] featuring fully reusable boosters and spacecraft, and targeting 150 metric tons (330,000 lb) of payload. Development of the methalox Raptor engine began in 2012,[79] first flight tests were done in 2019.[80] By 2014, NASASpaceflight.com reported: "SpaceX [had] never openly portrayed its BFR plans in competition with NASA’s SLS. ... However, should SpaceX make solid progress on the development of its BFR over the coming years, it is almost unavoidable that America’s two HLVs will attract comparisons and a healthy debate, potentially at the political level."[78]
The Starship is planned to replace the Falcon 9 and Falcon Heavy launch vehicles, as well as the Dragon spacecraft, initially aiming at the Earth-orbit launch market, but explicitly adding substantial capability to support long-duration spaceflight in the cislunar and Mars mission environments.[81] SpaceX intends this approach to bring significant cost savings that will help the company justify the development expense of designing and building the Starship system.[82]
Following the successful maiden flight of the SpaceX Falcon Heavy in February 2018, and with SpaceX advertising a US$90 million list price for transporting up to 63,800 kg (140,700 lb) to low-Earth orbit, U.S. President Donald Trump said: "If the government did it, the same thing would have cost probably 40 or 50 times that amount of money. I mean literally. When I heard $80 [sic] million, I'm so used to hearing different numbers with NASA."[83] Space journalist Eric Berger extrapolated: "Trump seems to be siding with commercial space advocates, who say that, while rockets like the Falcon Heavy may be slightly less capable than the SLS, they come at a drastically reduced price that will enable much quicker, broader exploration of the Solar System."[83]
A consolidated Arianspace reported 15 total launches for the Ariane, Soyuz, and Vega rockets in 2021.[84]
