Launch politics in an increasingly competitive global market

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Anti-competitive politics is rearing its head as the global launch industry undergoes significant shifts in its competitive landscape and incumbent providers are struggling to keep up.

Ariane Group’s CEO Alain Charmeau complained about dropping launch costs, which he deemed unsustainable for his business, in an interview with German publication Der Spiegel earlier this year. Ariane Group’s Ariane 6 vehicle promises to cost about half as much as the Ariance 5 vehicle, but will still be more expensive than SpaceX’s Falcon 9. Charmeau explained that Ariane Group needs government orders to sustain its business:

“According to our plans, we need five launches in total for 2021 and eight launches for 2022. Some of those have to be administered by the governments or the EU Commission…And we need seven contracts for guaranteed launches by the end of June…the production of the first rockets is already running. Our factories, our teams need need more orders to continue their work. Without contracts, we will have to halt the production.”

Charmeau complained that SpaceX charges its own government $100 million per launch, but offers launches for $50-60 million to its commercial customers — including foreign governments like Germany. Charmeau argued that the US government is subsidizing SpaceX in order to kick Europeans out of the launch market.

“They do that to kick Europe out of space,” he said. “The public and the politicians should know that. It is about the question, if Europe will still be active in space tomorrow.”

When asked why the government should pay top dollar for an Ariane 6 launch when it can spend less on a SpaceX launch, Charmeau responded:

“The simplest reason: It creates jobs in Germany. And those companies and their workers do pay taxes, which end up in the German state budget. I am pretty sure, that SpaceX workers do not pay to the German tax office.”

US-based ULA has found itself in a similar position. To his credit, ULA CEO Tory Bruno seems determined to trim some of its fat off the launch provider – itself a joint venture from two legacy rocket companies Boeing and Lockheed Martin – in order to compete for new business in the commercial space market. When SpaceX began offering launch services at a fraction of the cost of incumbent providers, ULA responded by dropping the price of its Atlas 5.

“We’re seeing that price is even more important than it had been in the past,” Bruno told Reuters in 2017. “We’re dropping the cost of Atlas almost every day. Atlas is now down more than a third in its cost.”

That was about a month after ULA lost a big USAF contract to SpaceX. ULA cut is workforce by 25% that same year, representing 875 jobs.

This week, ULA announced it had selected Blue Origin’s BE-4 engine to power ULA’s Vulcan Centaur rocket. The Vulcan Centaur is ULA’s latest launch vehicle that the company says will be primed and ready to perform in an increasingly competitive launch market.

“Vulcan Centaur will revolutionize spaceflight and provide affordable, reliable access to space for our current and future customers,” Bruno said this week. “We are well on our way to the introduction of Vulcan Centaur – the future of U.S. rocket manufacturing. With state-of-the-art engineering and manufacturing techniques, this rocket is designed specifically for low recurring cost.”

The announcement has been deemed an important win for New Space: Blue Origin’s BE-4 engine is by all reports significantly cheaper than Aerojet Rocketdyne’s AR-1, which was also in the running for the contract. ULA’s Bruno was lavished with praise for picking Blue Origin’s engine, despite facing pressure from business stakeholders, colleague companies and Congressional members to do otherwise – particularly those in Huntsville, Alabama, where Aerojet Rocketdyne is building its AR-1 engine.

But it’s worth noting Blue Origin promised to open its own engine plant in Huntsville if it won the ULA contract. That decision was part business, part politics, and it certainly helped Blue Origin appease the meddling US Sen. Richard Shelby (R-Ala.), who also serves as the chairman of a Senate subcommittee that oversees all federal spending for NASA, and the other Congressional members who attempted to block ULA from making its own engine selection decision.

ULA’s BE-4 news was followed just a few days later with rumors that a recent “competitive” ViaSat contract awarded to ULA wasn’t so competitive after all, according to a report from SpaceNews’ Caleb Henry. After ViaSat announced it had chosen ULA over SpaceX and Arianespace in September, Henry reported this week that neither SpaceX nor Arianespace had actually bid on the contract.

Meanwhile, Russia’s new space head Dmitry Rogozin claimed – just as Charmeau did earlier this year – that SpaceX’s ultra-low launch prices amount to “dumping”. Speaking to Russia’s Channel One, Rogozin claimed SpaceX charges the US DoD $150 million per launch:

“If you look at the price at which [Musk] sells Falcon [rocket launch vehicles] to the Pentagon and what its price is on the market, you’ll see that it is pure dumping. In order to drive Russia out of this market he sells launches for $40-50 million, sometimes $50-60 million…So you see, [Musk] is paid more in order to enable him to offer cheaper items on the market. And, clearly, Russia cannot compete [in such conditions]. We cannot ask [the Russian] Defense Ministry for a price for launch which is three, four or five times higher in the interest of our national security.”

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