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SpaceX ‘discount’ welcomed by market

March 14, 2016

Last week rocket company SpaceX said it expected satellite launch costs to fall some 30 per cent once it had perfected its landing and thus re-use of its Falcon-9 rockets.

The news was welcomed by equity analysts at Exane-BNP/Paribas, who said that this could mean the launch costs for a satellite operator falling from today’s $60 million, to nearer $40 million.

“Launch costs account for around one third of total satellite capital expenditure,” said the bank. “We believe they are likely to continue to come down in the next 5 years and see Space X comments as supportive of our view. This is positive for both Eutelsat and SES.”

Gwynne Shotwell, president/COO at SpaceX told delegates that she was hopeful that a recovered first-stage rocket launch could happen this year. She admitted that successfully landing every launched rocket was a bit ambitious, she nevertheless looked to recovering 75-80 per cent of those rockets used for Low Earth Orbit launches, and 50-60 per cent of those used for geostationary launches.

But she also said that SpaceX’s concept was not about the complete refurbishing of rockets that had gone into space. “You can’t take a rocket that was never designed to be reusable and turn it into a reusable rocket, that’s inviting disaster. The aircraft industry doesn’t refurbish their airplanes after every flight — you can imagine what the turnaround at major airports would look like if you had to. So the key is to design a system that you don’t need to refurbish,” Shotwell said, and smiling that passengers would rather fly on an aircraft that’s flown a few times. “Hopefully our customers get comfortable flying the third or fourth time.”

SpaceX already operates at a significant price discount to France’s Arianespace which is placing extreme pressure on the French consortium looking to build a rival ‘Ariane 6’ vehicle to launch communications satellites into orbit.

Stephane Israel, chairman/CEO of Arianespace, said the company’s Ariane 6 launch vehicle will provide the same performance of Ariane 5 while reducing costs by 40 to 50 per cent. “We have key drivers for that: a new governance, the fact that we are going to produce the same booster at a high cadence, so it will reduce the cost, and we have been manufacturing designed to cost and, doing all that; at the end of the day in 2020 we will have a new rocket that is 40 to 50 per cent cheaper than Ariane 5,” Israel stated.

Arianespace is looking to launch eight rockets this year and is targeting 11 to 12 launches per year in the future, according to Israel.  Arianespace, however, has a distinct advantage in that its launch success rate is unmatched. Even the current Ariane-5 rockets can usually manage to launch two satellites (dependent on size/weight) at the same time.

SpaceX can also manage to launch two satellites at the same time but its overall cargo weight limits are lower than Arianespace.

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