ILS complains to EU about Ariane subsidies
March 23, 2011
By Chris Forrester
International Launch Services (ILS), the Washington-located company that is best known for its Proton rocket launches from Kazhakstan, is complaining to the European Union about what it claims is the unfair subsidisation of arch-rival Arianespace satellite launch activities.
Ariane launches its rockets from Kourou in French Guiana, and on March 17th received a €250 million ($318m) infusion of funds from the European Space Agency. The continued subsidization of Arianespace to run their commercial operations at a loss, ILS president Frank McKenna said, and “dis-incentivizes cost reduction and efficiencies, prevents other launch providers from competing on a level playing field, deters new providers from entering the market and is detrimental to the long-term health of the commercial launch industry.”
McKenna held meetings with key members of the European Commission and the European Parliament this week to discuss the issues and determine their level of interest in restoring fair competition to the commercial satellite launch sector. With that objective, ILS intends to file a State Aid Complaint with the European Commission pursuant to articles 107 and 108 of the Treaty on the Functioning of the European Union (TFUE) and is evaluating legal remedies available through the World Trade Organisation (WTO).
“The EGAS funding was specifically put in place in 2003 to help Ariane ‘get back on its feet’ according to ESA, as a short term recovery effort. ILS waited patiently for this 5-year funding period to end, along with the €175 million extension granted in 2007. Between the years of 2003-10, Ariane received over €1 billion from the EGAS program, and now, with these new price supports to Arianespace, we find it necessary to take all available steps to ensure fair competition,” said McKenna.
Last week Arianespace boss Jean-Yves Le Gall said that ILS also receives subsidies. . “In this business there are many announcements, but what is important it is what is actually achieved. We are launching from two locations: French Guiana, and from Baikonur with Soyuz. I would love to have the level of support we get from Baikonur at French Guiana. We do not pay anything at Baikonur. In French Guiana we pay for everything, including paying the French army.”
“For us the ILS/Proton launchers are heavily subsidised by the Russian government. The level of subsidy is probably greater than for any other launch programme in the world. Russia, India and China all have high levels of subsidy. Arianespace, by definition, does not have to be profitable. A large part of our expenses are paid by the European taxpayer. If Arianespace was profitable then the taxpayer would say ‘we have paid too much’.”
“There are hidden subsidies, and subsidies that are transparent,” Le Gall said. “There is a huge effort made by the Russian government to support the launch sector. But it is not support that is made directly to the launch company. In Baikonur, there are thousands of people working full-time, and all these people are free to the launch operation.”