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AEROSPACE REPORT NO. ATR-2002(9385)-1

Launch Industry Competitive Market Assessment

August 2001

Prepared by

F. C. WONG Economic and Market Analysis Center Systems Engineering Division

Prepared for

VICE PRESIDENT Engineering and Technology Group

PUBLIC RELEASE IS AUTHORIZED

AEROSPACE REPORT NO. ATR-2002(9385)-1

LAUNCH INDUSTRY COMPETITIVE MARKET ASSESSMENT

Prepared by

F. C. WONG Economic and Market Analysis Center

Systems Engineering Division

August 2001

Engineering and Technology Group THE AEROSPACE CORPORATION

El Segundo, CA 90245-4691

Prepared for

VICE PRESIDENT Engineering and Technology Group

PUBLIC RELEASE IS AUTHORIZED

Contents 1. Executive Summary ....................................................................................................... 1 2. Purpose and Scope ......................................................................................................... 3 3. Industry Overview.......................................................................................................... 5 4. Market Demand.............................................................................................................. 7 5. Market Share .................................................................................................................. 9 6. Launch Vehicle Classification ...................................................................................... 11 7. Launch Industry by Geographical Region .................................................................... 13 7.1 China .......................................................................................................................... 13 7.1.1 Launch Service Provider: China Great Wall Industry Corporation ........................ 13 7.1.2 Management/Partnerships ....................................................................................... 13 7.1.3 Launch Vehicle Capabilities and Pricing ................................................................ 14 7.1.4 Launch Sites ............................................................................................................ 14 7.1.5 Historical Performance............................................................................................ 16 7.1.6 Launch Vehicles...................................................................................................... 17 7.1.7 Chinese LV Demand Forecast................................................................................. 17 7.1.8 Evaluation of Chinese Space Industry .................................................................... 19 7.2 Russia/Ukraine ........................................................................................................... 19 7.2.1 Launch Service Providers Using Russian LVs ....................................................... 20 7.2.2 Management/Partnerships ....................................................................................... 22 7.2.3 Launch Vehicle Capabilities and Pricing ................................................................ 23 7.2.4 Launch Sites ............................................................................................................ 24 7.2.5 Historical Performance............................................................................................ 28 7.2.6 Launch Vehicles...................................................................................................... 28 7.2.7 Russian LV Demand Forecast................................................................................. 34 7.2.8 Evaluation of Russian Space Industry..................................................................... 34 7.3 Europe ........................................................................................................................ 36 7.3.1 Launch Service Providers........................................................................................ 36 7.3.2 Management/Partnerships ....................................................................................... 39 7.3.3 Launch Vehicle Capabilities and Pricing ................................................................ 40 7.3.4 Launch Site.............................................................................................................. 41 7.3.5 Historical Performance............................................................................................ 41 7.3.6 Launch Vehicles...................................................................................................... 42 7.3.7 Evaluation of European Space Industry .................................................................. 44 7.4 Multinational LSPs..................................................................................................... 45 7.4.1 Launch Service Providers........................................................................................ 45 7.4.2 Management/Partnerships ....................................................................................... 45 7.4.3 Launch Vehicle Capabilities and Pricing ................................................................ 46 7.4.4 Launch Site.............................................................................................................. 46 7.4.5 Historical Performance............................................................................................ 47 7.4.6 Launch Vehicles...................................................................................................... 47 7.4.7 Sea Launch Forecast................................................................................................ 48 7.4.8 Evaluation of Sea Launch ....................................................................................... 48 7.5 United States .............................................................................................................. 49 7.5.1 Launch Service Providers........................................................................................ 49 7.5.2 Management/Partnerships ....................................................................................... 50

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7.5.3 Launch Vehicle Capabilities and Pricing ................................................................ 51 7.5.4 Launch Sites ............................................................................................................ 52 7.5.5 Launch Vehicles...................................................................................................... 54 7.5.6 U.S. Launches and Revenues .................................................................................. 59 7.5.7 U.S. LV Demand Forecast ...................................................................................... 60 7.5.8 Evaluation of U.S. Launch Vehicles ....................................................................... 63

8. Launch Vehicle Capabilities ........................................................................................ 65

9. Price.............................................................................................................................. 67

10. Schedule ..................................................................................................................... 71 10.1 Capacity Utilization.................................................................................................. 73 10.2 Cycle Times.............................................................................................................. 74

11. Reliability ................................................................................................................... 79

12. Customer Preference .................................................................................................. 83 12.1 Correlation Matrices................................................................................................. 84 12.2 Impact of Satellite Manufacturer Mergers ............................................................... 87 12.3 Satellite Service Providers’ Purchasing Behavior.................................................... 88

13. Launch Service Provider Strategic Alliances............................................................. 91 13.1 Cooperation Between Companies ............................................................................ 91 13.2 Cooperation Between Countries............................................................................... 92

14. Launch Service Provider Competitive Analysis ........................................................ 93

15. U.S. Export Policy...................................................................................................... 99

16. Launch Fee Comparisons ......................................................................................... 101 16.1 Chinese Launch Fee Estimates............................................................................... 101 16.1.1 Bottom-Up Costing Method................................................................................ 102 16.1.2 Percentage of Revenues Method ......................................................................... 104 16.2 Russia Launch Fee Estimate .................................................................................. 105 16.2.1 Amortizing Lease Method................................................................................... 105 16.2.2 Bottom-Up Costing Method................................................................................ 105 16.2.3 Percentage of Revenues Method ......................................................................... 106 16.2.4 Europe Launch Fee Estimate............................................................................... 107 16.2.5 Comparable Fees Method.................................................................................... 107 16.3 United States Launch Fee Estimates ...................................................................... 107 16.3.1 Industry-Provided Method .................................................................................. 108 16.3.2 U.S. Launch Fee Scenarios ................................................................................. 109

17. Conclusions .............................................................................................................. 113

Appendix A: Space Insurance and Risk Mitigation ........................................................ 117 A.1 Insurance Claims ..................................................................................................... 121 A.2 Premiums................................................................................................................. 122 A.3 Government Insurance ............................................................................................ 124 A.4 Risk Mitigation........................................................................................................ 125

Appendix B: Satellite Industry Financing....................................................................... 127

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Appendix C: Fuel Costs .................................................................................................. 129

Appendix D: Historical Launch Metrics ......................................................................... 131

Appendix E: Future Commercial Launch Sites............................................................... 135 E.1 Alcantara, Brazil ...................................................................................................... 135 E.2 Kourou, French Guiana............................................................................................ 135 E.3 Christmas Island, Australia...................................................................................... 135 E.4 Hainan, China .......................................................................................................... 136

Appendix F: Future Heavy-Lift LVs............................................................................... 137 F.1 Angara...................................................................................................................... 137 F.2 H-2A......................................................................................................................... 138 F.3 GSLV ....................................................................................................................... 138

Appendix G: Foreign TT&C Stations ............................................................................. 139 G.1 China TT&C............................................................................................................ 139 G.2 Russian TT&C........................................................................................................ 139 G.3 Europe TT&C.......................................................................................................... 140 G.4 Sea Launch .............................................................................................................. 141

Appendix H: Launch Site Locations ............................................................................... 143

Acronyms ........................................................................................................................ 145

Bibliography.................................................................................................................... 147

Relevant Web Sites ......................................................................................................... 149

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Figures Figure 3-1. Launch Industry Value Chain.......................................................................... 5 Figure 4-1. Market Share by Launch Vehicle Type (1997–2000) ..................................... 8 Figure 5-1. Market Share (2000)........................................................................................ 9 Figure 5-2. Launch Vehicle Market Share and Growth Matrix ....................................... 10 Figure 6-1. FAA Launch Vehicle Classification.............................................................. 11 Figure 8-1. Heavy and Intermediate LV LEO Capability................................................ 65 Figure 8-2. Heavy and Intermediate LV GTO Capability ............................................... 66 Figure 10-1. Medium-Heavy LV Capacity Utilization (2000) ........................................ 73 Figure 10-2. Medium-Heavy LV Capacity Utilization (2008) ........................................ 73 Figure 10-3. Small-Medium LV Capacity Utilization (2000).......................................... 74 Figure 16-1. Total Estimated Commercial Launch Fees (2000).................................... 110 Figure 16-2. Range Fee Response Model ...................................................................... 111 Figure 16-3. U.S. Launch Fee Increase Impact.............................................................. 112

Tables

Table 3-1. Market Analysis Scope ..................................................................................... 6 Table 5-1. 2000 International Launch Statistics................................................................. 9 Table 7-1. Long March Launches, Launch Capabilities, and Pricing.............................. 14 Table 7-2. Chinese Launch Site Capabilities ................................................................... 15 Table 7-3. Chinese Launch Industry Revenues and Launches......................................... 17 Table 7-4. Chinese Launch Forecast ................................................................................ 18 Table 7-5. Russian/Ukraine Launches, Launch Capabilities, and Pricing ....................... 24 Table 7-6. Russian Launch Site Capabilities ................................................................... 25 Table 7-7. Russian/Ukraine Launch Industry Revenues and Launches........................... 28 Table 7-8. Russian Launch Forecast ................................................................................ 34 Table 7-9. European Launches, Launch Capabilities, and Pricing .................................. 40 Table 7-10. European Launch Site Capabilities............................................................... 41 Table 7-11. Ariane Revenues and Launches.................................................................... 42 Table 7-12. Ariane Launch Forecast ................................................................................ 44 Table 7-13. Sea Launch Partnerships............................................................................... 46 Table 7-14. Sea Launch Launches, Launch Capabilities, and Pricing............................. 46 Table 7-15. Sea Launch Site Capabilities ........................................................................ 47 Table 7-16. Sea Launch Revenues and Launches ............................................................ 47 Table 7-17. Sea Launch Forecast ..................................................................................... 48 Table 7-18. U.S. Launches, Launch Capabilities, and Pricing......................................... 51 Table 7-19. United States Launch Site Capabilities......................................................... 54 Table 7-20. U.S. Launch Industry Revenues and Launches ............................................ 59 Table 7-21. U.S. Launch Forecast 2000–2008................................................................. 62 Table 7-22. Launch Industry SWOT Analysis by Country.............................................. 63 Table 8-1. Expected Delta IV and Atlas V LEO & GTO Capabilities ............................ 66 Table 9-1. Winning Launch Cost/Pound Metric (2000 Data).......................................... 68 Table 9-2. Forecasted U.S. Heavy-Lift LV Cost/Pound Metric....................................... 69 Table 10-1. Launch Vehicle Cycle Times (2000) ............................................................ 72 Table 10-2. 1997–2000 Launch Intervals by Launch Site ............................................... 75 Table 10-3. Launch Intervals by Launch Complex (1997–2000) .................................... 76

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Table 10-4. 1997–2000 Launch Intervals by LSP............................................................ 76 Table 11-1. Launch Vehicle Reliability ........................................................................... 81 Table 12-1. Launch Service Purchasing Criteria ............................................................. 83 Table 12-2. S/C Customer Country to LV Country Correlation (2000) .......................... 85 Table 12-3. S/C Manufacturer Country to LV Country Correlation (2000) .................... 85 Table 12-4. S/C Purchaser and LV Country Correlation (1997–2000)............................ 86 Table 12-5. S/C Manufacturer and LV Country Correlation (2000)................................ 86 Table 12-6. FSS Operators’ Purchasing Power................................................................ 88 Table 14-1. Launch Service Provider SWOT Analysis ................................................... 94 Table 14-2. LV Market Competitiveness (2000) ............................................................. 95 Table 14-3. Market Survivability Criteria........................................................................ 97 Table 16-1. Xichang Facility Fee Estimate (Depreciation of Launch Site) ................... 103 Table 16-2. Bottom-Up Fee Estimate (China) ............................................................... 104 Table 16-3. Percentage of Revenues Fee Estimate (China) ........................................... 104 Table 16-4. Amortizing Baikonur Lease Fee Estimate (Russia).................................... 105 Table 16-5. Bottom-Up Fee Estimate (Russia) .............................................................. 106 Table 16-6. Percentage of Revenues Fee Estimate (Russia).......................................... 107 Table 16-7. U.S. Launch Fee Scenarios ......................................................................... 109 Table 17-1. Satellite System Cost Comparison.............................................................. 113 Table A-1. Health of the Space Insurance Industry .................................................... 119 Table A-2. Top Six Underwriters’ Single Launch Maximum Coverage (1998) ........... 120 Table A-3. Recent Insurance Claim Examples ........................................................... 121 Table A-4. New Launch Vehicle Failure Claims........................................................... 122 Table A-5. Price Impact of Launch Insurance (2002 Scenario)..................................... 124 Table C-1. Estimated Range-Provided Fuel Cost ......................................................... 129 Table D-1. Occurrence of Monthly Launch Rates by Site............................................. 131 Table D-2. Occurrence of Monthly Launch Rates by Country ...................................... 131 Table D-3. 1997–2000 Average Monthly Launch Rate by Site..................................... 132 Table D-4. 1997–2000 Peak Monthly Launch Rate by Site .......................................... 132 Table D-5. 1997–2000 Average Monthly Launch Rate by Country.............................. 133 Table D-6. 1997–2000 Peak Monthly Launch Rate By Country................................... 133 Table G-1. European Space Agency TT&C Locations.................................................. 140 Table H-1. Launch Site Locations.................................................................................. 143

I

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1. Executive Summary The launch service industry is becoming increasingly more competitive. Simultaneously, launch service demand has decreased or remained relatively flat—due, in part, to the cancellation, delay, or bankruptcy of several high-profile satellite systems. U.S. launch service providers (LSPs), once the dominant players in the space launch field, have seen their commercial market share drop from 54 percent in 1998 to 38 percent in 1999 to 20 percent in 2000.1 Meanwhile, Russia's and Europe's respective market shares have increased. Annual demand is expected to average 41.4 commercial space launches worldwide through 2010.2 As a result, it is possible that some U.S. LSPs and satellite manufacturers will be forced to leave the low-profit-margin Launch Vehicle (LV) industry. By some estimates, current and projected world launch markets can sustain three LSPs and two satellite manufacturers.3 Given that there are currently seven major commercial LSPs and five major satellite manufacturers as well as a number of smaller LSPs and satellite manufacturers, industry consolidation is inevitable. As the industry continues to evolve and mature, the technology advantage that U.S. LSPs once enjoyed has diminished. The United States may lose even more of its market share since U.S. launch quotas on Russian LVs have been removed. To improve its competitiveness, the U.S. launch industry will need to modify its launch capability, and implement infrastructure and policy changes. Many factors—LV performance, price, schedule flexibility, reliability, insurance premiums, customer preferences, strategic partnerships, and launch site and range policies—influence customers’ purchase decisions. To respond to customer demands for cheaper and faster launches, LSPs must fund ongoing LV cost and cycle time reduction initiatives. However, even being the lowest-priced LSP for a given performance range does not necessarily guarantee market share, nor does possession of a sizeable LV inventory guarantee reduced cycle times. In addition, LSPs have no control over some of the factors that influence LV-specific demand. For instance, government export policy can systematically restrict the use of certain LVs. Likewise, a government's willingness to support and maintain launch infrastructure, which is often a national asset, can impact the rate and volume of launches from that country. The availability of insurance also plays a part in this competitive environment. LV failures affect not only the LSP, the LV manufacturer, and the customer involved, but also the industry as a whole, resulting in a gradual industry-wide reduction in insurance

1 “Launch Companies Facing Buyer's Market,” Ben Iannotta, Space News, February 26, 2001 2 2000 Commercial Space Transportation Forecast, Federal Aviation Administration's Associate

Administrator for Commercial Space Transportation (AST) and the Commercial Space Transportation Advisory Committee (COMSTAC), May 2000, p. iii

3 “What Industry Needs,” Al Smith, Space News, February 19, 2001

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availability and an increase in insurance premiums. Furthermore, satellite and launch failures make it more expensive and difficult to obtain satellite venture capital for future systems, which in turn reduces LV demand. Whether the U.S. government is adequately funding the modernization of its aging launch infrastructure, keeping it in par with investments and modernization efforts of foreign governments, needs to be investigated in more detail.4 Although U.S. launch sites are considered to be some of the best, additional research is needed to compare the quality of these facilities with those at foreign sites, and to determine in more detail other governments’ funding levels. Launch site fees are another important issue. Raising these fees, which are small relative to the full cost of the satellite or the LV, could significantly impact the health of U.S. LSPs. LSPs must already deal with a price-sensitive customer, low market demand, low profit margins, and high investments in research and development. If the U.S. government raises launch fees, it may have to provide improved launch site cycle time, schedule guarantees, improved facilities, or improved customer service to help U.S. LSPs support the higher LV prices necessary to offset fee increases.

4 “Air Force Short of Funds for Range Upgrades,” SMV, Space News, July 16, 2001, p. 2

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2. Purpose and Scope The purpose of this report is to evaluate launch industry economic and market forces, detailing the competitive environment that U.S. LSPs and LV manufacturers face, and to quantify the impact of U.S. range user fees on this industry. A macro-level launch service buyer and LSP perspective of the industry is taken. All integral parts of the LV industry—LV manufacturers, LSPs, launch sites and ranges, satellite manufacturers, satellite operators, and finance and space insurance companies—are covered in some detail. Most of these LV industry participants are located in China, Russia, the United States and a consortium of European countries. Some foreign LSPs and LVs that are not currently commercially viable are also included. The report evaluates launch service purchasing criteria in order to explain the impact of raising U.S. launch-site-associated fees. The U.S. launch service industry is benchmarked against those of other countries, providing fee estimates at major launch sites, evaluating key industry competitive factors, and creating metrics for comparing the utilization and competitiveness of different launch systems. The impact of industry mergers and strategic alliances is also addressed. Finally, the report proposes various U.S. launch-site fee structures that might be considered as alternatives to the current U.S. fee structure. Information in this report was obtained informally from numerous industry experts. However, most were willing or able to share only limited information since detailed costing and funding information is company proprietary. As a result, only publicly available information was used in the report's analyses and conclusions.

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3. Industry Overview The launch industry consists of LV manufacturers, LSPs, launch sites, ranges, satellite manufacturers, and satellite service providers (SSPs). Supporting this industry are finance companies, insurance companies, and governments. Figure 3-1 shows the key entities engaged in the launch services business and their interactions with each other.

Customer(End User)

Satellite ManufacturingCompany

Launch Service Provider(LSP)

LV ManufacturingCompanies

Ranges

Finance Companies

Insurance Companies

Satellite Service Provider(SSP)

Figure 3-1. Launch Industry Value Chain.

LSPs either market their own LVs or provide marketing and customer support for LV manufacturers. Launch sites include launch pads, launch site infrastructure, and processing and storage facilities. Ranges include various instrumentation and other assets used to track the LV and maintain a safe launch environment. SSPs such as DirecTV or PanAmSat order satellites from satellite manufacturers to meet user demand for satellite-based services. These SSPs may negotiate directly with the LSPs, insurance companies, or financial companies. In other cases, satellite manufacturers bundle launch services with satellite contracts, providing SSPs with a complete package, including insurance and financing. In most cases, either the SSP or the satellite manufacturer acts as a prime contractor, negotiating all the contracts necessary for delivering a satellite into orbit. LSPs often establish strategic alliances to increase their competitiveness. For example, they may offer a wide selection of LVs produced by different LV manufacturers in order

5

to cover several market segments. However, on occasion LSP partners that manufacture LVs may compete with their partners for commercial business, especially when their country has an interest in developing its own commercial space industry. In the United States, LSPs normally negotiate fees directly with U.S. launch site and range operators. On occasion, the spacecraft manufacturer may choose to submit its requirements directly to the launch site/range operator. Launch site operators may also provide support to nonlaunch programs that “contract” for their support through base support agreements. These fees, which may change at any time, are included as part of fixed-priced launch service price quotes that are then provided to the LSP customers several months prior to launch. Satellite manufacturers and SSPs often have little visibility into these fees and little appreciation of their variability. In the long run, LSPs are expected to try to pass range fee increases to their customers. However, since the launch service industry is highly price-competitive, U.S. LSPs may be forced to absorb future U.S. range fee increases unless they are able to also simultaneously reduce LV production costs or provide enhanced services. Chapter 6 provides additional information about each of the major launch sites, LSPs, and LVs listed in Table 3-1. This information is separated by geographical regions: China, Russia, Europe, the United States, and the multinational Sea Launch. Future launch sites are covered in Appendix E, while future heavy-lift LVs, such as India's GSLV and Japan's H-2A, are covered in Appendix F. These launch sites and LVs are not currently commercially viable.

Table 3-1. Market Analysis Scope

Country China Russia Europe Multi-National U.S.Launch Sites Xichang Baikonur Kourou Mobile KSC, CCAFS

Taiyuan Plesetsk VAFBJiuquan Svobodny Kodiak

Service CGWIC StarSem Arianespace Sea Launch Orbital SciencesProviders ILS Eurorockot Lockheed Martin

StarSem BoeingLaunch Long March Proton Ariane 4 Zenit 3SL PegasusVehicles Soyuz Ariane 5 Taurus

Rockot Vega MinotaurStart Athena

Cosmos AtlasCyclone 3 Delta

Shuttle

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4. Market Demand The number of commercially available LVs continues to grow, while the market demand for them remains relatively flat. Market share and profitability will influence which LVs—and hence which LSPs—will survive. COMSTAC and the Federal Aviation Administration (FAA) forecast that an average of 41.4 commercial space launches worldwide will occur annually through 2010. These forecasts assume that on average the following types and number of launches will be conducted each year: • 23.5 launches of medium-to-heavy LVs to geosynchronous orbit (GSO) • 7.5 launches of medium-to-heavy LVs to LEO, or nongeosynchronous orbit (NGSO)

orbits • 10.4 launches of small LVs to LEO5 The FAA's 2000 forecast is roughly one-third lower than its 1999 forecast, which had assumed a large increase in launches in 2002 and 2003. This decline was caused by the Iridium LLC and ICO Global Communications bankruptcies and lowered expectations for Globalstar's business plan. Arianespace's launch forecasts are consistent with the FAA's, predicting that Arianespace's addressable market is between 20–22 satellites in 2001, increasing to 30–35 satellites by 2008.6 Demand for specific major LVs is covered in Section 6. FAISat is expected to be the next major group of LEO mobile communications satellites to be launched in 2002–2003. Iridium replacement satellites and Teledesic spacecraft will probably not be launched in 2003–2005 as previously forecasted. ORBCOMM replenishments, which were forecasted in 2002–2004, are also at risk, pending a successful restructuring by Orbital Sciences and ORBCOMM's emergence out of Chapter 11 bankruptcy.7 Many satellite systems have been cancelled, delayed, or gone bankrupt. More than a dozen Ka-band satellites that were expected to offer high-speed data services have slipped initial service dates to 2002–04 and beyond. Teledesic is now expected to launch in 2004 or 2005, but is dependent on potential New ICO and Ellipso strategic partnering agreements.8 However, Ellipso recently lost its Federal Communication Commission (FCC) license. New ICO has put its 12-satellite project on hold until it is granted approval to deploy thousands of ground-based signal repeaters around urban areas to extend its coverage beyond core rural and suburban markets.9 The 40-satellite SkyBridge

5 2000 Commercial Space Transportation Forecast, Federal Aviation Administration's Associate

Administrator for Commercial Space Transportation (AST) and the Commercial Space Transportation Advisory Committee (COMSTAC), May 2000, p. iii

6 e.space, Arianespace newsletter, March 2001 7 “Investor Disinterest Stymies Commercial Satellite Industry,” Marco Antonio Caceres, Aviation Week

and Space Technology, January 15, 2001 8 “Technology, Money Issues Slow Broadband Debut,” James M. Gifford, Space News, April 2, 2001 9 “New ICO On Hold Until FCC Grants More Spectrum,” Peter B. de Seldo, Space News, April 2, 2001

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constellation deployment, which would use Delta 3 and Delta 4 LVs, has slipped from 2001 to beyond 2003.10 Satellite weights continue to grow. Figure 4-1 shows that from 1997 to 2000, the heavy-lift LV market share grew at the expense of small LVs. This trend is expected to continue according to FAA and Arianespace forecasts. Both forecasts predict that a growing percentage of the satellites will require intermediate to heavy LVs. Demand for small to medium LVs that can lift satellites weighing less than 9,000 lb to GSO is expected to decline.11

Launch Vehicle Market Share

0%

20%

40%

60%

80%

100%

1997 1998 1999 2000

HeavyIntermediateMediumSmall

Figure 4-1. Market Share by Launch Vehicle Type (1997–2000) Financing availability will continue to limit LV demand (this topic is covered in detail in Appendix B). Furthermore, a number of satellite companies will have their Federal Communications Commission (FCC) licenses revoked for not meeting FCC construction and launch milestones. The FCC has already revoked the licenses for NetSat 28, Morning Star, PanAmSat, and Ellipso because of schedule slips.12 In summary, the overall picture for commercial LSPs is bleak. With flat demand and growing overcapacity, future mergers and buyouts are inevitable. LSPs will face continued pressures to reduce prices and delivery schedules in order to maintain market share, forcing them to seek ways to cut costs and increase customer service.

10 “SkyBridge Plans Early Broadband Foray,” Peter B. de Selding, Space News, March 19, 2001 11 “2000 Commercial Space Transportation Forecast,” Federal Avaiation Administration's Associate

Administrator for Commercial Space Transportation (AST) and the Commercial Space Transportation Advisory Committee (COMSTAC), May 2000, p. 10

12 “Investor Disinterest Stymies Commercial Satellite Industry, Marco Antonio Caceres, Aviation Week and Space Technology, January 15, 2001

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5. Market Share Table 5-1 shows the number of commercial and noncommercial launches that took place in 2000. These numbers were then used to generate the pie charts in Figure 5-1. In this report, launches are defined as either commercial (a launch that is internationally competed or has a primary payload that is commercial in nature) or noncommercial.

Table 5-1. 2000 International Launch Statistics13

Commercial Launches

Non-commercial Launches

Total Launches

United States 7 21 2Russia 13 23 36Europe 12 0 12China 0 5 5Multinational 3 0 3Japan 0 1 1Total 35 50 85

8

Commercial Launches


Total Launches

United States 7 21 2Russia 13 23 36Europe 12 0 12China 0 5 5Multinational 3 0 3Japan 0 1 1Total 35 50 85

8

Figure 5-1 shows that Europe and Russia dominate the 2000 commercial launch service industry. However, when noncommercial launches are included in the total, the U.S market share remains significant.

Commercial Market Share

Russia37%

United States20%

Multinational9%

Europe34%

Total Market Share

United States33%

Russia42%

Multinational4%

Europe14%

China6% Japan

1%

Figure 5-1. Market Share (2000) Figure 5-2 compares the competitiveness of the major LSP countries from 1998 to 2000 by evaluating their normalized market share and market growth rates. Each colored line represents a country and consists of three data points corresponding to the country's

13 Commercial Space Transportation: 2000 Year in Review, Associate Administrator for Commercial

Space Transportation (AST), January 2001

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market share and market growth data for 1998, 1999, and 2000. The data point at the tail of each arrow is for 1998, while the data point at the head of the arrow is for 2000. Commercial launch data was provided by the FAA. Market share is normalized to the U.S. 1998 market share, while market growth rates were normalized to China's 1998 growth rate. Trend lines approaching the origin indicate declining market share and growth rates. Trend lines that terminate in the shaded area show deterioration relative to their position in 1998. Both China and the United States lost market share and experienced negative growth rates. Europe’s and Russia's market share improved, resulting in positive growth rates. The multinational Sea Launch, which only began launching in 1999, has increased its market share. Figure 5-2 emphasizes the need for the United States to improve its competitiveness in order to recapture its LV market share.

Low High

Hig

hLo

w

Normalized (‘98) Market Share

Nor

mal

ized

(‘98

) Mar

ket G

row

th

1998 Baseline

(U8)

(U9)(U0)

(R8)

(R9)

(R0)

(E8)(E9)

(E0)

(C8)

(C9)

(C0)

(M0)(M9)

Grey area - loss of market share and negative growth compared to ‘98 baseline

(U) United States (R) Russia (M) Multi-National (Sea Launch)(E) Europe(A,N) = (Country,Year) 98, 99, 00

Commercial Launches 98-00(By Country)

United StatesRussia EuropeChinaMultinational

United StatesRussia EuropeChinaMultinational

Normalized ('98) Market Share1998 1999 20001.00 0.76 0.420.35 0.76 0.790.53 0.47 0.730.24 0.06 0.000.00 0.06 0.18

1997 1998 1999 2000United States 14 17 13 7Russia 7 6 13 13Europe 11 9 8 12China 3 4 1 0Multinational 0 0 1 3Total Commercial 35 36 36 3

Commercial Launches

5

Normalized ('98) Market Growth 1998 1999 20000.91 0.59 0.430.64 1.67 0.790.61 0.69 1.191.00 0.19 0.00N/A N/A 2.38

(C) China

Figure 5-2. Launch Vehicle Market Share and Growth Matrix

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6. Launch Vehicle Classification The FAA divides LVs into weight classes based on their ability to lift Low Earth Orbit (LEO) payloads. Figure 6-1, column one, lists FAA-defined LV weight classes and their corresponding LEO lift capabilities. Column two lists current LVs by weight class, while column three lists future LVs by weight class. Current LVs are being incrementally modified to support heavier satellites as new technology is developed and made commercially available, and as demand grows for heavier lift capability. Similarly, future LVs are being designed to meet expected growth in satellite size, reduced delivery schedules, lower pricing, and increased payload orbit delivery requirements. An LV’s capability determines its addressable market segment, and is a major and sometimes determining factor for launch service selection. The United States currently does not have a commercially viable heavy-lift LV, reducing U.S. opportunities for dual satellite and multisatellite launches, which in turn limits its potential market share.

FAA Vehicle ClassLaunch vehicles classified by mass of payloadthat can be placed in LEO equatorial orbit

Ariane 42’s, 44’s (14,600-22,500 lbs)Long March 2E, 2F (20,950/ 18,480 lbs)Atlas IIA, III, IIIA (16,130-19,050 lbs)Delta III (18,280 lbs)Soyuz U (15,430 lbs)

Titan IVB (47,800 lbs)Proton K/Block DM (44,200 lbs)Ariane 5 (39,700 lbs)Zenit 2SL, 3SL (29,750/ 35,000 lbs)Long March 3B (24,700 lbs)

Delta II (11,330 lbs)Ariane 40 (11,000 lbs)Soyuz U/Fregat, Ikar (9,038-15,430 lbs)Long March 2C, 2D, 3 (7,700-10,582 lbs)Dnepr-1(9,920 lbs)Cyclone 2, 3 (7,370/ 9,020 lbs)PSLV (8,150 lbs)Titan II (4,200 lbs)

Athena 1, 2 (1,805/4,520 lbs)M-5 (4,000 lbs)Rockot (3,970 lbs)Molniya (3,970 lbs)Cosmos (3,100 lbs)Taurus (2,910 lbs)J-1 (1,980 lbs)Start-1 (1,650 lbs)Minotaur (1,470 lbs)Pegasus XL (977 lbs)VLS (840 lbs)Shavit (495 lbs)

LEO Mass capacity

25,000 lbs(11363 kg)<<12,001 lbs

(5455 kg)

Not capable of putting anymass in orbit

LEO Masscapacity

5,000 lbs(2273 kg)<

LEO Mass capacity

12,000 lbs(5454 kg)<<5,001 lbs

(2274 kg)

LEO Mass capacity

25,000 lbs(11364 kg)<Heavy

Intermediate

Medium

Small

Suborbital

Current Future

Angara 1 (4,400 lbs) ‘02Strela (3,750 lbs) ‘01Vega (3,300 lbs) ‘05LK-1,-2 (1,200-3,420 lbs) ‘01

Angara 5 (54,000 lbs) ‘03Delta IV Heavy (50,800 lbs)‘03Proton M (46,300 lbs) ‘01Atlas V(27,550-45,238 lbs) ‘02H2 (38,100 lbs) ‘01Delta IVM (17,500-25,300) ‘02

Dnepr M (9,130 lbs) ‘01Athena 2 (8,800 lbs) Cyclone 4 (8,800 lbs) ‘01Angara 2 (8,160 lbs) ‘03

Atlas IIIB (23,630 lbs) ‘02Soyuz ST (17,200 lbs) ‘01












LEO Mass capacity

25,000 lbs(11363 kg)<<12,001 lbs

(5455 kg)


LEO Masscapacity

5,000 lbs(2273 kg)<

LEO Mass capacity

12,000 lbs(5454 kg)<<5,001 lbs

(2274 kg)

LEO Mass capacity

25,000 lbs(11364 kg)<Heavy

Intermediate

Medium

Small

Suborbital

LEO Mass capacity

25,000 lbs(11363 kg)<<12,001 lbs

(5455 kg)


LEO Masscapacity

5,000 lbs(2273 kg)<

LEO Mass capacity

12,000 lbs(5454 kg)<<5,001 lbs

(2274 kg)

LEO Mass capacity

25,000 lbs(11364 kg)<

LEO Mass capacity

25,000 lbs(11363 kg)<<12,001 lbs

(5455 kg)LEO Mass capacity

25,000 lbs(11363 kg)<<12,001 lbs

(5455 kg)


LEO Masscapacity

5,000 lbs(2273 kg)<LEO Mass

capacity5,000 lbs

(2273 kg)<

LEO Mass capacity

12,000 lbs(5454 kg)<<5,001 lbs

(2274 kg)LEO Mass capacity

12,000 lbs(5454 kg)<<5,001 lbs

(2274 kg)

LEO Mass capacity

25,000 lbs(11364 kg)<

LEO Mass capacity

25,000 lbs(11364 kg)<Heavy

Intermediate

Medium

Small

Suborbital

Heavy

Intermediate

Medium

Small

Suborbital

Current Future

Angara 1 (4,400 lbs) ‘02Strela (3,750 lbs) ‘01Vega (3,300 lbs) ‘05LK-1,-2 (1,200-3,420 lbs) ‘01

Angara 5 (54,000 lbs) ‘03Delta IV Heavy (50,800 lbs)‘03Proton M (46,300 lbs) ‘01Atlas V(27,550-45,238 lbs) ‘02H2 (38,100 lbs) ‘01Delta IVM (17,500-25,300) ‘02

Dnepr M (9,130 lbs) ‘01Athena 2 (8,800 lbs) Cyclone 4 (8,800 lbs) ‘01Angara 2 (8,160 lbs) ‘03

Atlas IIIB (23,630 lbs) ‘02Soyuz ST (17,200 lbs) ‘01

Figure 6-1. FAA Launch Vehicle Classification14

14 Commercial Space Transportation Quarterly Report, First Quarter 2001, U.S. Department of

Transportation, FAA; http://www.ilslaunch.com; http://www.boeing.com

11

7. Launch Industry by Geographical Region 7.1 China The Chinese government and state-owned companies continue to support the growth of China's space industry as China strives to develop its own satellite manufacturing, commercial launch, and manned mission capabilities. The Chinese space industry, which employs more than 200,000 people, including more than 50,000 scientists and engineers, had approximately $1.2B in revenues in 2000.15

7.1.1 Launch Service Provider: China Great Wall Industry Corporation The China Great Wall Industry Corporation (CGWIC) was created on October 16, 1980 to develop China's commercial space industry. Its Long March LV was made commercially available in October 1985, launching its first commercial payload in mid-1987. Hughes, the first U.S. satellite manufacturer to sign a Long March contract with CGWIC in November 1988, launched the AsiaSat-1 satellite in April 1990. Since that time the Long March LV has been launched over 61 times, including 11 launches carrying 22 of Iridium's 66 satellites into LEO orbits. Through December 2000, the company has successfully completed 47 out of 54 launch missions, of which 30 were foreign satellites.

7.1.2 Management/Partnerships Long March commercial launch services are provided internationally through CGWIC. CGWIC works directly with the customer and coordinates the work performed by the China Academy of Launch Vehicle Technology (CALT), Shanghai Academy of Spaceflight Technology (SAST), and China Satellite Launch and Control General (CLTC). CGWIC has two major shareholders, China Aerospace Science and Technology Corporation and China Aerospace Machinery and Electronics Corporation, each of which owns 50 percent of CGWIC. CGWIC is responsible for marketing launch services, negotiating launch service contracts, and managing the execution and performance of the mission for all commercial missions. CGWIC does not play a significant role in Chinese government missions, nor does it produce or operate the LVs. CLTC is responsible for managing China's three launch sites at Xichang, Taiyuan, and Jiuquan. It provides launch site technical interface coordination; launch site operations and control; telemetry, tracking, and command (TT&C); launch site and launch safety; and launch campaign planning and organization.

15 “Chinese Government Backs Commercial Space Push,” Wei Long, SpaceDaily, Oct. 13, 2000

13

CALT and SAST are responsible for developing, producing, and testing the LVs. These organizations perform mission analysis, LV technical interface coordination, and flight safety engineering. CALT has 27,000 employees.

7.1.3 Launch Vehicle Capabilities and Pricing Table 7-1 lists the number of Long March LVs launched, their capabilities, and the prices charged. The Long March is competitively priced. The price of each Long March LV is independent of the weight of the satellite being launched.

Table 7-1. Long March Launches, Launch Capabilities, and Pricing16

Launch Vehicle

Flights thru

(12/31/00)Launch

SiteLEO (Lbs)

GTO (Lbs)

LowPrice($M)

HighPrice($M)

Long March-2A 2 Xichang - - - -Long March-2E 7 Xichang 20,950 7,710 $45 $55Long March -3 11 Xichang 10,582 3,086 $35 $40Long March-3A 8 Xichang - 5,952 $45 $55Long March-3B 5 Xichang 24,700 11,250 $50 $70

Long March-2C 21Taiyuan, Jiuquan 8,600 2,200 $20 $25

Long March-4A 2 Taiyuan - - $20 $30Long March-4B 3 Taiyuan - - $25 $35Long March-1D 1 Jiuquan - - $12 $12Long March-2D 3 Jiuquan 7,700 - $10 $15Long March-2F 2 Jiuquan 18,480 - - -

Launch Vehicle

Flights thru

(12/31/00)Launch

SiteLEO (Lbs)

GTO (Lbs)

LowPrice($M)

HighPrice($M)

Long March-2A 2 Xichang - - - -Long March-2E 7 Xichang 20,950 7,710 $45 $55Long March -3 11 Xichang 10,582 3,086 $35 $40Long March-3A 8 Xichang - 5,952 $45 $55Long March-3B 5 Xichang 24,700 11,250 $50 $70

Long March-2C 21Taiyuan, Jiuquan 8,600 2,200 $20 $25

Long March-4A 2 Taiyuan - - $20 $30Long March-4B 3 Taiyuan - - $25 $35Long March-1D 1 Jiuquan - - $12 $12Long March-2D 3 Jiuquan 7,700 - $10 $15Long March-2F 2 Jiuquan 18,480 - - -

7.1.4 Launch Sites China uses three launch sites for commercial and government launches. The Xichang Satellite Launch Center (XSLC) supports Long March 2C, Long March 3, Long March 3A, Long March 2E, and Long March 3B launches. The Jiuquan Satellite Launch Center (JSLC) currently supports Long March 2C launches and is being expanded to support the Long March 2F launches. The Taiyuan Satellite Launch Center (TSLC) launches Long March 2C, Long March 2C/SD, and the Long March 4 series launches. Additional launch site information is included in Table 7-2. Launch site capacity is the estimated total capacity for the combined LVs launched at that site per year.

16 Commercial Space Transportation: 2000 in Review, Associate Administrator for Commercial Space

Transportation (AST); International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA, January 2001; Forecast International, December 1999; Teal Group Corporation, World Space Systems Briefing, September 1999

14

Table 7-2. Chinese Launch Site Capabilities17

Site LocationMin/Max

Inclination PadsMobile Tower

Estimated Capacity (Annual) Launch Vehicles

Government / Commercial

First Launch

Xichang 28.25° N 102° E

28°/36° 2 1 6-8 Long March -2C G,C 1990

Long March-2E - -Long March-3 G,C 1984Long March-3A G,C 1994Long March-3B G,C 1996

Taiyuan 37.5° N 112.6° E

99°/99° 1 0 4-5 Long March-2C G,C 1975

Long March-2D G,C 1992Long March-4A G,C (?) 1988Long March-4B G,C (?) 1999

Jiuquan 40.6° N 99.9° E

56°/40° 2 1 (shared)

4-5 Long March-1 (discontinued)

NA 1970

Long March-2C G,C 1975Long March-2D G,C 1992Long March-2F G 2000

7.1.4.1 Xichang Satellite Launch Center XSLC is located in Xichang, Sichuan Province, in southwestern China. It is used to launch commercial and government satellites into low-inclination and geostationary orbits. All GEO commercial satellites launched in China are launched from this site. The Technical Center is equipped for testing and integration of the payload and LV. The Mission Command and Control Center, located 7 km southwest of the launch pad, provides flight and safety control during launch rehearsal and launch. The downrange tracking stations are located in Xichang, in Yibin, in Sichuan Province, and in Guiyang, in Guizhou Province.18 The climate at XSLC is subtropical, the average temperature is 61°F, and ground wind is generally very mild during all seasons. Xichang, which is subject to periods of intense rain, suffered flooding in the summer of 1999. The airport closest to this launch site is capable of supporting Boeing 747, Lockheed C-130, and AN 124 aircraft. Xichang is also linked to the National Chengdu-Kumming Railway and the Sichuan-Yunnan Highway.

17 Min/max inclination from http://www.friends-partners.org/mwade/sites/lauindex.htm; estimated

capacity from discussion with CGWIC marketing representative, number of launches from CGWIC website

18 http://www.friends-partners.org/mwade/sites/lauindex.htm

15

7.1.4.2 Taiyuan Satellite Launch Center (TSLC) TSLC is located northwest of Shanxi Province and is suitable for launching meteorological, earth resource, and scientific satellites, especially for LEO, Sun Synchronous Orbit (SSO) and polar missions. TSLC was used to launch a number of commercial Iridium spacecraft on Long March 2C/SD LVs. TSLC consists of a technical center; a mission command and control center; a telemetry, tracking and communications system; and technical and logistic support systems. TSLC, located in a temperate zone, lies 1,400–1,900 km above sea level. The temperature usually ranges from 39°F to 50°F, rising to 82°F in the summer and dropping to -38°F in the winter. The average humidity is 50–60 percent and the average annual precipitation is 21.3 inches.19 Taiyuan Airport is 300 km away, and can support jumbo aircraft. Two feeder railways link to this launch site. 7.1.4.3 Jiuquan Satellite Launch Center Built in 1958, JSLC was China's first launch center. JSLC has been mainly used to conduct scientific and recoverable satellite missions with MEO, LEO and high-inclination orbits, and has been used to launch pairs of Iridium satellites. A new Long March 2F launch pad and a vertical assembly building for manned flights started operation in 1999. This construction allows three or four LVs to be stacked simultaneously, each of which is then transported to the launch pad in an upright position. This system minimizes time spent (less than a week) on the pad prior to the launch. The new complex will also be used for launching the Long March 2E (A), which can place a 14-metric-ton space station module into orbit as part of the manned program. The climate is desert-like. It is dry during all seasons, with little rain and long daylight hours. The average temperature is 47°F. The relative humidity is 35–55 percent. JSLC includes a technical center, a launch complex, a launch control center, a mission command and control center, propellant fuelling system, tracking systems, communications systems, gas supply systems, weather forecast systems, and logistic support systems. Dingxin Airport, located 75 km away, can accommodate Lockheed C-130 and Boeing 747 aircraft. A dedicated railway to JSLC also services this launch site.

7.1.5 Historical Performance Table 7-3 shows estimated Chinese launch industry revenues based on the number of launches/year. Chinese revenues are based on FAA price estimates, which have been applied equally to commercial and government launches.

19 http://www.friends-partners.org/mwade/sites/lauindex.htm

16

Table 7-3. Chinese Launch Industry Revenues and Launches20

1995 1996 1997 1998 1999 2000

Est. Commercial Revenue ($M)

$142 $95 $148 $92 $23 $0

Commercial Launches

3 3 3 4 1 0

Est. Noncommercial Revenue ($M)

$0 $15 $96 $130 $115 $167

Noncommercial Launches

0 1 3 2 3 5

7.1.6 Launch Vehicles The Long March family consists of approximately 10 active LV types that can be divided into four series: Long March 1, Long March 2, Long March 3, and Long March 4. The Long March 1 is no longer used. The Long March 2 series includes both medium and large LVs for LEO missions. The Long March 3 series uses a cryogenic upper stage for geosynchronous transfer orbit (GTO) missions. The Long March 4 series is used for sun-synchronous orbit (SSO) missions. Not all versions of the Long March are commercially available; some are for military usage only. Commercial marketing currently focuses on the Long March 2C and the Long March 3B. The Long March 2C was used to deploy pairs of Iridium spacecraft and has lifted several large communications spacecraft to GTO. The duration between contract signing to launch is typically 18–24 months. However, satellites using U.S. components or built by U.S. manufacturers may experience delays since these satellites require U.S. government export licenses. The build time of an LV after contract signing is approximately 16 months.

7.1.7 Chinese LV Demand Forecast The Chinese government will continue to be the biggest consumer of Chinese LVs, using Long March LVs for China's manned mission program and for 10 new weather satellites over the next decade. The China National Space Administration (CNSA) estimates that the Chinese space industry will launch 30 spacecraft over the next 5 years.21 Table 7-4 provides an estimate of the number of Chinese LVs to be launched through 2008. The Chinese government will determine the actual mix of LVs as satellites and manned missions are scheduled for launch.

20 Revenue estimates from: Commercial Space Transportation: 1999 Year in Review, Associate

Administrator for Commercial Space Transportation (AST), January 2000 21 “China Space Agency Sees 30 Launches on Horizon,” Space News, April 30, 2001

17

China plans to develop a domestic commercial satellite industry, which will increase domestic demand for its LVs. However, China must first overcome significant funding problems and satellite technical issues. One way that China can overcome these problems is by partnering with other countries. For instance, the European Space Agency (ESA) recently signed an agreement with CNSA that would provide CNSA with $6.8M in ESA funding for ESA instruments and data-acquisition services on two of China's Double Star satellites. These satellites will be launched on Long March 2C LVs in December 2002 and March 2003.22 China continues to invest in its launch capability and plans to add strap-on boosters to its Long March 3B. Strap-on boosters will allow the Long March 3B to lift 15,400 lb into GTO.23 China plans to build a new LV capable of lifting 25 tons to LEO and 14 tons to GTO by 2007. Demand for commercial Long March LVs, which has suffered due to poor commercial marketing and China’s poor relations with the U.S. government, has recently improved. CGWIC, which did not sign any commercial contracts in 2000, won two commercial launches in 2001. The first was to Hong Kong-based APT Satellite Co. Ltd. for a 2003 launch of its Apstar 5. The second contract was for the 2001 launch of Intelsat's APR-3 satellite. A U.S. presidential waiver is required for any satellite that incorporates U.S.-built components before it can be launched on a Long March LV. This has been necessary since 1989, when the U.S. government imposed an embargo following the Chinese government's violent suppression of protesters in Tiananmen Square in Beijing. The APR-3 satellite serves as a good example of China's ability to bundle satellite purchase orders with Long March LVs. Intelsat leased six of APR-3's 30 transponders to China's Sino Satellite Communications Co. (Sinosat) for the life of the spacecraft. In return, Intelsat agreed to launch the satellite on a Long March LV.

Table 7-4. Chinese Launch Forecast24

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

LongMarch 3

4 3 4 4 3 3 3 3 3

LongMarch(other)

1 3 2 2 3 3 4 4 3

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

LongMarch 3

4 3 4 4 3 3 3 3 3

LongMarch(other)

1 3 2 2 3 3 4 4 3

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

LongMarch 3

4 3 4 4 3 3 3 3 3

LongMarch(other)

1 3 2 2 3 3 4 4 3

A = Actual E = Estimate

22 “Europe to Aid China In Science Mission,” Space News, July 16, 2001, p. 9 23 “Long March Builder Considers Upgrade,” Space News, March 26, 2001 24 Chinese Space News, Feb 22, 2001;

http://www.geocities.com/CapeCanaveral/Launchpad/1921/news.htm; World Space Systems Briefing, Teal Group Corporation, September 1999; Space Systems Forecast, Forecast International, December 1999

18

7.1.8 Evaluation of Chinese Space Industry The CGWIC Los Angeles marketing office was unable to provide Chinese launch site fee information. Fees are negotiated between CALT and SAST, two state-owned companies, resulting in a budget-allocation type fee rather than a market-generated price. Launch sites are leased to CGWIC. Great Wall pays a per-launch fee specific to a particular LV rather than an annual fee for launch site usage. U.S. government import/export laws have significantly hurt Chinese commercial launches. These laws were more strictly enforced after the United States accused China of illegal technology transfer during the launch of U.S. commercial spacecraft, which purportedly significantly improved China's launch reliability. U.S. export laws have caused some U.S. satellite manufacturers to lose existing satellite contracts or delay satellite launches indefinitely. The United States has recently started to lift its ban of Chinese launches as an incentive for China to refrain from selling military goods and services to Iraq and Pakistan. Meanwhile, China is well-positioned to be a low-cost provider of LVs. It is able to build LVs cheaply, since its labor costs are about one-tenth of those of manufacturing operations in North America. Favorable tax structures and other incentives also make land in China as much as 100 times cheaper than land in some U.S. locations.25 7.2 Russia/Ukraine Russian military and civil funding financed the creation of the Russian launch industry during the 1960s–1980s. When the Soviet Union broke up in the ‘90s, defense orders decreased significantly, causing a corresponding drastic drop in Russian space industry funding. The breakup also redefined state borders, causing Baikonur, which had been Russia's largest spaceport, to fall within Kazakhstan’s borders. Inflationary pressures skewed production and operation costs. From 1990 to 1994 the average cost of space hardware and services increased by a factor of 172, the cost of materials increased by a factor of 384, and the cost of labor increased by a factor of 82.26 Wages for those working in the space industry, which had been significantly higher than average, dropped below the national average. Loss of prestige, industry chaos, and decreased salaries resulted in the loss of highly qualified personnel. During 1990–1994 the total number of people supporting the space complex decreased 35 percent, while the number of engineering specialists decreased 50 percent. In an attempt to reverse these trends, Russia chose to develop a commercial launch service that could be marketed to foreign markets in exchange for hard currency. By implementing this new strategy Russia increased LV production. 25 “Investors Study the China Conundrum,” Stephen Lucey, Redherring Web site, April 11, 2001 26 FAS Space Policy Project, Economics of Space Activity in Russia, Chapter 2

http://www.fas.org/spp/civil/russia/chap_2.htm

19

Russia abandoned costly projects that no longer met new objectives, leveraging existing ground space support infrastructure, and using accumulated reserves (material and parts) and prior investments to produce low-cost but reliable LVs that were cheaper than those produced in the United States. Concerns that the availability of these inexpensive LVs could derail U.S. commercial launch capabilities caused the United States to impose launch quotas on Russia. The commercial launch revenues bolstered Russian civil space activities that previously had been funded through general military outlays. This commercial funding supplemented declining Russian government space budgets hurt by the unstable Russian economy, unstable legal base, accelerating inflation, and spending overruns.

7.2.1 Launch Service Providers Using Russian LVs There are two LSPs, Starsem and International Launch Services (ILS), that use Russian LVs. ILS is based in the United States; STARSEM is based in Europe. 7.2.1.1 Starsem Starsem is a European-Russian company created in 1996 to provide commercial Soyuz launch services. It employs more than 50 people at its Paris headquarters, assuming the role of a prime contractor for its Russian partner's work. It is 50 percent European-owned and 50 percent Russian-owned. Starsem's shareholders are European Aeronautic Defense and Space Company (EADS) (35 percent), Arianespace (15 percent), Russian Aviation and Space Agency (25 percent), and the Samara Space Center (25 percent). • EADS is the world’s third largest aerospace and defense company, created through

the merger of France’s Aerospatiale Matra, Spain’s CASA, and Germany’s DASA. EADS is also the main industrial architect and stage integrator of Ariane LVs.

• Arianespace, created in 1980, has successfully launched more than 200 payloads on 100 LVs. Arianespace, based in Evry, France, has 53 European corporate shareholders. It also oversees the marketing, sales, production, and operation of the Ariane 4 and Ariane 5 LVs.

• The Russian Aviation and Space Agency (Rosaviacosmos) was created in February

1992 by a Russian presidential decree. This agency defines the Russian Federation's national policy on space research and exploration. The agency also coordinates national scientific and application space programs among Russia's space companies and government organizations.

• The Samara Space Center "TsSKB Progress" was created by Russian presidential decree in 1996 by combining the TsSKB Central Samara Design Bureau and the Progress production plant. The Samara Space Center manufactures the first three Soyuz stages.

20

This venture has been very successful. Since 1999, Starsem has helped launch 22 missions from Baikonur. Of these missions, 10 have been for international commercial satellites, nine for manned missions, and three for domestic Russian missions. Starsem was responsible for launching 24 out of the total 48 Globalstar satellites in 1999, and up to 10 Soyuz flights are scheduled during 2001 from the Baikonur Cosmodrome.27 In April 2000, Starsem won a contract to launch SkyBridge's 32 broadband multimedia satellites. The first SkyBridge launch has been delayed to 2002. Starsem is also negotiating the launch of a number of small 1.5-ton geosynchronous satellites. 7.2.1.1.1 Price. The cost of a launch, depending on satellite and launch specifications, is typically around $30M. Starsem provides a rough price estimate based on customer- provided mission details. The Starsem estimate covers prelaunch and launch support plus any other customer requests. A detailed invoice for launch services is not provided to the customer; instead, the customer is given a single line item-type launch price. 7.2.1.1.2 Schedule. The time between contract signing to launch is typically 18 months, although it can range between 12–24 months depending on the customer's needs. Events occurring during this period include building the LV, designing and building the satellite dispenser, and integrating and processing the satellite and LV at the launch site. The Soyuz LV, which is built to order for Starsem, normally takes 15 months to build, but the process can be shortened to 12 months. Another schedule driver is the design and manufacture of the spacecraft-LV adapter/dispenser. Dispenser build-time depends on its complexity, the maturity of the dispenser design, and customer schedule requirements. The Globalstar dispenser, which was not needed quickly, took 18 months to design and build. Once the LV and spacecraft is delivered to the launch site, the nominal time to prepare the satellite for launch is about 30 days. The length of this time period is also customer-driven, and depends on the amount of prelaunch satellite preparation that has been accomplished. 7.2.1.1.3 Facilities. The Soyuz rocket manufacturing and processing facilities are well-maintained, since they are used frequently. There are two Soyuz launch pads and two Soyuz assembly facilities at Baikonur. There is plenty of excess launch capacity; Russia has processed as many as 40–60 Soyuz LVs annually, although its current annual launch rate is between 12–13. In August 2000, two Soyuz LVs were launched in a 3-day time period, demonstrating the Soyuz short launch cycle time. 7.2.1.2 International Launch Services International Lauch Services (ILS) was formed in 1995, and provides international customers with launch services on the U.S. Atlas and the Russian Proton LVs. ILS is a joint venture between Lockheed Martin Space Systems (Denver), Khrunichev State Research and Production Space Center (Moscow), and Rocket Space Corporation

27 “Starsem to Launch Metop Meteorological Satellites for the European Eumetsat Organization,”

Company Announcement, December 18, 2000; http://www.starsem.com/news/release.htm#METOP

21

Energia (Korolev, Russia). In 2000, ILS set a new record for number of flights with 14 launches for the year, six of which were commercial flights. ILS currently has a 42-launch backlog. Six of these orders were placed in 2001.28 7.2.1.2.1 Price. Proton launches were offered unsuccessfully for $28–35M in the mid-1980s in an attempt to attract new customers. ILS’ first major sale to Western customers occurred after the collapse of the Soviet Union; Inmarsat and Societe European des Satellites (SES) each purchased Proton launches for $35–50M. Proton prices were gradually increased to $60–75M as ILS marketing efforts and anti-dumping agreements between Russia and the United States took place. These anti-dumping agreements required that Proton prices not undercut those of other commercial launch services by more than 15 percent. Current prices for Proton K/Block DM launch services are between $90–$98M. The price of the new Proton M/Breeze M that is scheduled for its first launch in April 2001 is $110–112M. 7.2.1.2.2. Schedule/Capacity. In 1998, the maximum Proton production rate was 15 LVs/year, three of which were reserved for Russian government payloads; the remaining 12 were used for commercial launches. In mid-1998, the Russian government authorized increasing Proton production rates in order to meet growing commercial demand. The Proton launch site can easily support additional launches since the typical turnaround time per pad is approximately 25 days and there are two active commercial Proton launch pads.

7.2.2 Management/Partnerships The Central Science and Research Institute of Machine-building (TsNIImash) developed the Russian Federal Space Program. Through 2000, the Russian Federal Space Program was supported by the Russian Space Agency, the Space Forces of the Ministry of Defense, the Russian Academy of Science, and the Ministry of Science. This program covered essentially all major components of the space industry, including space communications, remote sensing, manned missions, LVs, launch site maintenance, and space technology and scientific research. The Russian Space Agency (RSA) is a federal executive body that implements research and exploitation of outer space and manages the Russian federal space program. The RSA is a state customer for scientific and economic space-technology applications and a co-customer for dual-use (military/commercial) space systems. The Ministry of Defense (MoD) manages most of the space ground support infrastructure. MoD accepts space hardware for the state, and acts as a state customer for defense, security and dual-use space technology. The general staff is responsible for defining the general military technological policy for the development and use of space assets for defense purposes. Since 1997, the strategic rocket forces (SRF) have been 28 “ILS Chief Expects New Proton Rocket Orders,” Space News, April 2, 2001, Pg. 18

22

responsible for procurement, launch, and operation of all military space systems. The air force manages the Yuri A. Gagarin Cosmonauts Training Center and the navy participates in projects associated with the conversion of Russian ballistic missiles into commercial LVs. Khrunichev Space Center is a Russian aerospace enterprise that helped develop the Proton LV, the Salyut family of space stations, and the Mir space station. Khrunichev also built the Zarya cargo module and the Zvezda service module, which were successfully launched in November 1998 and July 2000, respectively, for the ISS. The center is currently developing the Angara, Rokot, and Yakhta LVs for the Russian government. The development cost is being paid in part by money earned by the center. Khrunichev also financially supports the Baikonur and Plesetsk Cosmodrome launch infrastructures.29 The Khrunichev facility employs 22,000 people. An additional 120,000 employees work for the center’s various subcontractors, factories and design bureaus. Although Khrunichev’s current financial and economic situation is considered stable and its employees are said to have secure jobs through 2002 that on average are higher-paying than jobs in other Russian industries, there is some indication that all may not be well. In 2000, the state owed the center almost $18M. Furthermore, approximately 45 percent of Khrunichev's budget was used for activities that were supposed to have been state-funded.30 In February 2001, President Putin ordered a major reorganization of the Russian space agencies. The former Military Space Force and Russia's Forces of Rocket Space Defense were pulled out of the Strategic Missile Force (RSVN) to become an independent arm of the military, dubbed the Space Forces (KV). The KV will focus on buying and launching telecommunications and intelligence satellites as well as replenishing Russia's Glonass fleet of navigation and targeting satellites.31 The impact of this reorganization is not apparent at this time.

7.2.3 Launch Vehicle Capabilities and Pricing Table 7-5 lists the number of Russian LVs launched through December 2000. It includes launch sites, launch capabilities, and commercial launch prices. Russian government launch prices are believed to be 25 percent lower than comparable commercial launches.

29 “Head of Russia's Khrunichev Space Center Resigns,” Yuri Karash, Space.com, January 10, 2001;

http://www.space.com/peopleinterviews/kiselev_resign_010110.html 30 “Medvedev Confirmed as Khrunichev Director General,” Yuri Karash, Space.com, February 12, 2001;

http://www.space.com/news/medvedev_khrunichev_010125.html 31 “Russian Defense Minister to Focus on Former Space Force,” Simon Saradzhyan, Space News, April

9, 2004

23

Table 7-5. Russian/Ukraine Launches, Launch Capabilities, and Pricing

Launch Vehicle

Flights thru

(12/31/00)Launch

SiteLEO (Lbs)

GTO (Lbs)

Price Low ($M)

Price High ($M)

Cyclone 2 102 Baikonur 7,370 0 $20 $25Dnepr-1 2 Baikonur 9,920 310 $10 $20Proton 273 Baikonur 44,200 10,150 $75 $95Soyuz-TM Orbiter 31 Baikonur - - - -

Soyuz U 680Baikonur, Plesetsk 15,430 - $30 $50

Soyuz U/ Fregat 4 Baikonur 11,000 2,975 - -Soyuz U/ Ikar 6 Baikonur 9,038 - - -Zenit 2 34 Baikonur 29,750 - $35 $50Cosmos 48 Plesetsk 3,100 - $12 $14Cyclone 3 119 Plesetsk 9,020 - $20 $25Molniya 238 Plesetsk 3,970 - $30 $40Molniya -3 52 Plesetsk - - - -

Rockot 4Plesetsk, Baikonur 3,970 - $12 $13

Start-1 5Plesetsk, Svobodny 1,650 - $5 $10

Zenit 3SL 5Sea Launch

(U.S.) 35,000 11,050 $75 $95

7.2.4 Launch Sites The three main launch sites used by Russia are Baikonur, Plesetsk and Svobodny. Baikonur, in Kazakhstan, is the only site used by Russia capable of launching geostationary payloads or Proton LVs. If Russia wants to reduce its dependency on Kazakhstan, it will need to spend between $250–$500M over the next 6–7 years to improve the Plesetsk site. 32 Launch azimuths at these sites are limited to avoid impacts near populated or foreign regions, such as China to the east. Previous launches over Baikonur and Plesetsk's land-locked launch corridors, especially of Proton LVs, have resulted in tens of thousands of tons of spent boosters, many with toxic residual propellants still on board, littering the countryside. Baikonur and Plesetsk need to address the continued littering of the surrounding area by suborbital Proton stages.

32 “Russians: Baikonur Alternative Years Away,” Daniel Sorid, Space.com, July 20, 1999;

http://www.space.com/news/baikonur_alt.html

24

Launch capacity for each LV in Table 7-6 is assumed to be the maximum number of launches for the LV, assuming launch site availability. In actuality, LV capacity is often dependent on the number of launches of other LVs being supported by the launch site.

Table 7-6. Russian Launch Site Capabilities33


Inclination PadMobile Tower

Estimated Capacity (Annual)

Launch Vehicles


First Launch

Launches (1990-2000)

Baikonur 45.6° N 63.3° E

49°/99° 1 0 1-2 Cyclone 2 G 196715

4 Silos 0 25-27 Dnepr G,C 1999 22 2 5-6 Molniya-M G,C 1964 513 1 per pad 14 Proton G,C (one pad,

Govt. only)1967

901 Silo 0 6 Rockot G,C 1994 3

2 2 25-30 Soyuz G,C 1963 1441 1 6-12 Zenit 2 G,C 1985 19

Plesetsk 62.7° N 40.4° E

62°/83° 3 3 30 Cosmos-3M

G 1967 48

2 0 3 Cyclone 3 G,C 1977 291 1 6 Rockot G,C 1994 0

Mobile 0 1 START G,C 1993 53 3 25-30 Soyuz/

MolnyaG,C 1963

144Svobodny 51.5° N

138.5° E51°/110° Mobile 0 1 per year START G,C 1993 5

7.2.4.1 Baikonur Built in 1955, the Baikonur Cosmodrome is located 1,500 miles southeast of Moscow and covers a 78-by-58-mile area. It is larger than the Kennedy Space Center and includes dozens of launch pads, five tracking-control centers, nine tracking stations, and a 1500 km rocket test range. It is used for manned launches and has facilities for the larger Proton, N1, and Energia LVs. Almost all of the Baikonur Cosmodrome is under the civilian authority of the Russian Aviation and Space Agency, Rosaviakosmos, with only general support facilities like telemetry and tracking stations being supported by the military. Since the breakup of the USSR, the military support component at Baikonur has fallen to just 10 percent, creating a need to further develop its commercial base.34 In 1994, Russia agreed to pay Kazakhstan $115M per year to lease this facility. However, actual payments did not start until 1999 with $50M of the payment in cash and

33 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001; Forecast International; Teal Group Corporation, World Space Systems Briefing 34 “Baikonur Cosmodrome Eyeing the Future,” Federic Castel, Space.com, July 10, 2000.

25

the remaining $65M in commodities and services. In addition, Russia has invested $950M to restore Baikonur's technical systems.35 The Soyuz and Proton launch pads can be prepared quickly for consecutive launches. LVs are held in place by mechanical arms that are counterbalanced by the weight of the LVs. The rocket is ignited for 20 seconds and, if everything looks good, is powered at full thrust. As the LV lifts off, the mechanical beams drop. Baikonur's desert-like weather results in long cold winters and hot summers. Temperatures range from -40°F to 122°F. On average, it rains only 3 days per year. Baikonur is supported by the Yubeleini airport, railroads, and highways. The Yubeleini airport is a Category 3 airport facility capable of supporting all large transport aircraft. Three hotels are located nearby for housing personnel during launch campaigns. Russia's 20-year lease of Baikonur expires in 2014. The Baikonur site is also used by Starsem to launch commercial Soyuz LVs and has received foreign investment from Starsem and ILS to modernize its integration and processing facilities. Baikonur is also the potential launch site for commercial Rockot launches. Starsem has invested $35M to build state-of-the-art facilities with Class 100 cleanrooms to process satellites, fund upgrades of the Soyuz launch pads, and to build a new luxury hotel. There are three main rooms, two for processing the spacecraft and one for the hazardous fueling of the LV. Starsem facilities should be able to handle 12 or more launches per year. Russia's partnerships with ILS and Starsem continue to be a source of revenue. In 2000, Russia launched 36 LVs, 13 of them commercial flights. ILS was responsible for six of the commercial launches, while Starsem was responsible for two of them. Another source of revenue is ISS resupply missions, for which Baikonur will probably remain the key launch site. However, even with foreign investments, many of Baikonur's facilities are in need of repair. Funding is inadequate to maintain all facilities. Electrical power, heating and water supply lines often break down. There are many unfinished buildings from the "Golden Years" of the Soviet space program. 7.2.4.2 Plesetsk Plesetsk, which is located in Russia, was previously a military-only launch site. It has felt the impact of defense spending and military space activity reductions. It was the world's busiest spaceport in the 1970s and 1980s. However, since then launches at Plesetsk have fallen from 47 in 1988 to six in 1996.

35 “Russia Slices and Dices Baikonur Rents,” Space Daily, April 25, 2000

26

There are two types of launch pads at Plesetsk. The first type of pad is similar to Cape Canaveral's Titan launch pads, where the booster is assembled on the launch pad and surrounded by a moveable building or service structure until launch. The other type of pad requires that the LV be assembled and integrated with its payload in the horizontal position. The LV is then transported to the launch pad by railway. Plesetsk supports four LV types: Kosmos-3M (three launch pads), Soyuz/Molniya (three launch pads plus one in mothballs), Tskylon-3 (two launch pads), and Start (one launch pad). It is also the most likely future site for launching the Angara and Zenit LVs. Plesetsk provides telemetry and tracking services via its existing ground measurement infrastructure. Facilities for launch personnel include a hotel and apartment buildings in Mirniy, a town located 42 km from the Rockot launch complex. The launch site is accessible from the Pevo Airport, the railroad linking to Mirniy, and local highways. The temperature at this site ranges from 86°F in the summer to -40°F in the winter. Russia launches polar and high-inclination flights from Plesetsk to reduce the risk of boosters falling in populated areas. Plesetsk will become increasingly more important to Russia as future Russian LV developments and launch pad infrastructure are made at Plesetsk. Some of Plesetsk's launch pads are more modern than Baikonur's. In the meantime, Plesetsk suffers from its inability to support Proton launches and some Rockot launches requiring specific inclinations, such as that necessary for the Leo One satellites. Plesetsk also faces similar environmental problems as Baikonur in the launch corridors where spent boosters fall. Further development of Plesetsk, especially for the Angara LV (discussed in detail in Appendix F), requires Russian funding commitments. The RSVN has been unwilling to invest significant sums of money in the Angara project because Russia's Military Space Force, which is set to run the Plesetsk Cosmodrome, is slated to come out from under RSVN control in the next several years. The Angara launch complex was originally designed for the Zenit-2 rocket. Construction of the complex began in the 1980s, but was suspended in 1993 when RVSN decided to eliminate its dependence on non-Russian rockets. At the time, the complex was about 65 percent complete; little has been achieved since then.36 7.2.4.3 Svobodny Svobodny Cosmodrome, a former intercontinental ballistic missile (ICBM) base, is located 7,777 km east of Moscow. It was established as the second state space trials launch center on February 2, 1996 and was, until recently, a military-only launch site. Its latitude is essentially equivalent to the minimum orbital inclination now permitted from Baikonur. The first space launches from Svobodny in 1997 used Start boosters. A proposal to launch the Angara LV from Svobodny was rejected by the Russian government.

36 “Funding Woes Slow Construction of Russian Launch Complex,” Space News, December 18, 2000

27

There are no plans to further develop Svobodny. The Start and Strela are currently the only two light LVs that can be launched from this facility. A Category 1 airport, a railroad, and a paved road network support this launch site. Svobodny has a modified ICBM base for supporting Rokot and Start LVs and accommodations for 6,000 personnel. Other infrastructure, such as hotels and processing facilities, is minimal.

7.2.5 Historical Performance Table 7-7 shows the number of known launches and estimated equivalent commercial revenues generated by Russian LVs. Revenues are based on FAA launch price estimates, which are applied uniformly to all Russian launches. However, it is believed that Russian government launches are priced as much as 25 percent less than commercial launches.37

Table 7-7. Russian/Ukraine Launch Industry Revenues and Launches38

1996 1997 1998 1999 2000

Est. CommercialRevenue ($M)

$120 $351 $348 $670 $671

CommercialLaunches

2 7 6 13 13

Est. Non-CommercialRevenue ($M)

- $555 $799 $733 $1,189

Non-CommercialLaunches

- 22 19 15 23

7.2.6 Launch Vehicles 7.2.6.1 Cosmos Demand for the Cosmos LV, which was used to launch small Russian military LEO satellites, has decreased in favor of the heavier Cyclone LV. The estimated launch price for this LV was $12M, with secondary payloads costing between $500K to $1.5M. Cosmos LV production was halted in 1995 but could be restarted again for orders of five or more LVs. There are 15 LVs in storage that could be used for commercial launches. Cosmos LVs can be launched quickly, within 3 days of each other from the same pad, resulting in a peak launch rate of 42 launches per year. The near-term flight rate forecast is two to four Cosmos launches annually.

37 “Sales Drop at Russia's Progress Organization,” Simon Saradzhyan, Space News, February 26, 2001 38 Commercial Space Transportation: 1999 Year in Review, Associate Administrator for Commercial

Space Transportation (AST), January 2000.

28

7.2.6.2 Cyclone 3 The Cyclone 3 is a modification of the 8K68 (SS-9 Mod 2) ICBM with an S5M third stage. The Cyclone 3, an upgraded version of the Cyclone 2, provides greater payload capacity, completely automated launch operation, and improved orbital injection accuracy. From its inaugural launch in June 1977 through December 2000, the Cyclone 3 was launched 119 times, 113 of them successfully. After the disintegration of the Soviet Union and the redefinition of its borders, the Cyclone 3 was no longer used for Russian national security payloads since its manufacturer was located outside the redefined Russian borders. Existing stocks of the booster were used, but no new ones were built. In 1998 the launch team at Baikonur was disbanded with only four boosters remaining. A December 27, 2000 launch failure reduced the current stock to three boosters.39

7.2.6.3 Proton The Proton LV is the Russian workhorse for geostationary launches. It can lift up to 10,000 lb to GTO, costs between $75 to $95M per launch, and has a shelf life of 2 years, at which time its batteries must be replaced. Its stages are manufactured and assembled at the Khrunichev factory in Moscow, and then shipped by rail to Baikonur for integration. Through December 2000, commercial Proton launches of U.S. satellites were limited by a May 1993 agreement between the United States and Russia. Under this agreement, Proton LVs could not be sold commercially for less than 7.5 percent below the lowest offer from Western LSPs.40 This restriction was imposed as punishment for certain unfavorable Russian trade practices, including exporting missile technology to Iran. The agreement, which allowed the Proton to launch up to 20 satellites to GEO or GTO between 1993 and 2000, expired December 2000. Two versions of the Proton have been sold commercially: the three-stage Proton K, and the four-stage Proton K that uses an additional Block DM upper stage. The Proton K has been used to launch ISS modules and other heavy payloads to LEO. This version is expected to ramp down from 7–9 per year to 2–5 per year, as the next generation Proton M/Breeze M becomes operational. The more common four-stage Proton K version is capable of restarting its fourth-stage engines up to seven times. The ability to restart the engine adds payload delivery flexibility, allowing the payload to coast for several revolutions in the support orbit for proper phasing prior to delivering the spacecraft to GSO close to its planned longitude. The Block DM has been used to place communications satellites into GTO, medium Earth orbit (MEO), or directly into GEO. The next-generation Proton, the Proton M, and its upper stage, the Breeze M, are now available for launch. Similar to the Ariane 5, the Proton M targets large satellites in the

39 “Tsiklon 3 Booster Fails, Six Satellites Lost,” Yuri Karash, Space.com, Dec. 28, 2000;

http://www.space.com/missionlaunches/launches/tsiklon_launch_001227.html 40 Forecast International, Proton, December 1999

29

5.5-ton range, a market segment that could result in as many as 32 launches through 2008.41 The planned flight rate for the Proton M/Breeze M is 8–10 per year. Like the Block DM, the Breeze M is capable of 24 hours of on-orbit operations and multiple restarts. The Proton M and Breeze M are expected to be available through 2010, after which time the Angara LV will be used in its place. Additional details about the Angara are provided in Appendix F. The Proton M/Breeze M made its maiden flight on April 7, 2001 and is capable of lofting up to 6,200 kg to GEO.42 This is a considerable increase to the Proton K's upper limit of roughly 5,000 kg. The Proton M/Breeze M is comparable to the Ariane 5, a 6,200 kg LV, and has greater launch capability than Sea Launch's Zenit 3SL, a 5,250 kg LV. The Proton M/Breeze M will be a backup LV for the Atlas V. The Atlas V, which will be able to lift up to 8,650 kg, will be marketed together with the Proton by ILS. The Proton facilities are well-equipped to support multiple launches with short cycle times. Up to six boosters can be stored in the assembly room and up to four Protons can be processed simultaneously. Each LV is assembled and integrated in a horizontal position. This process requires 2 weeks for assembly and 1 week of end-to-end tests. Once fully prepared, the Proton is transported to the launch pad. The Baikonur Cosmodrome has two Proton launch complexes, each with two launch pads. One pad is not operational, and another is used for government launches only. The launch pad includes a launch mount and a mobile service tower mounted on railway tracks for access to the LV and payload once the LV is erected. In surge mode, two Protons can be launched from the same pad within 25 days of each other. With three available pads, Proton LVs have on occasion been launched 4 days apart. Launch preparation is fairly quick, requiring only 4 hours to erect and install the Proton on the launch pad. Attachment and removal of all connections, including fuel and compressed gas loading, are fully automated.43 7.2.6.4 Rockot Under the START 2 treaty, approximately 160 of Russia's SS-19 ICBM missiles will be retired, making them candidates for conversion into Rockot LVs. The Rockot booster uses the first two stages of the SS-19 and a new Breeze upper stage. Commercial Rockots will be launched from a renovated Cosmos 3-M launch complex in Plesetsk and possibly from refurbished test silos in Baikonur, where several test launches have already occurred. However, Eurockot, the LSP marketing the Rockot, must still deal with profit-sharing issues and environmental concerns with Kazakhstan. The Rockot booster uses the same toxic propellant combination as the Proton, which failed twice in 1999, scattering toxic fuel and debris over a populated area in Kazakhstan. 41 “Medvedev Confirmed as Khrunichev Director General,” Yuri Karash, Space.com, February 12, 2001;

http://www.space.com/news/medvedev_khrunichev_010125.html 42 “Russia's New Proton Version Set for April Launch,” Jason Bates, Space News, March 19, 2001 43 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001, Third edition, 1999

30

Launch campaigns are conducted by RSVN. A nominal launch campaign requires that the satellite and supporting teams be onsite in Plesetsk approximately 23 working days before launch. However, launch campaigns can be shortened by round-the-clock operations down to 14 days. Eurockot is looking for customers. The Iridium satellite-phone company, which was to be Eurockot's first client, filed for bankruptcy. Eurockot's next scheduled payload, NASA's GRACE research satellite planned for launch in 2001, will not be delivered on time.44 Several launches booked for Leo One communications satellites could be in jeopardy since these satellites require a relatively low-inclination orbit available only from Baikonur. However, Baikonur is currently not equipped to support Rockot launches.45 Future Rokot flight rates are dependent on market demand. In the meantime, a capacity to launch six commercial flights per year is planned.46 7.2.6.5 Soyuz/Molynia Two versions of the Soyuz LV, the Soyuz U and the Molynia-M, are currently in use. The Soyuz is a medium- to heavy-lift, liquid-fueled expendable LV consisting of strap-on boosters and either two or three stages. It is used for low-orbit spacecraft and manned missions, launching ISS crew and supply capsules, and carrying a variety of military spacecraft. The Molniya adds an additional upper stage to the three-stage Soyuz, deploying communications and missile launch warning spacecraft into highly elliptical orbits. The Soyuz is launched from Baikonur and Plesetsk, while the Molynia is primarily launched from Plesetsk. Baikonur has two operational pads for launching these LVs; Plesetsk has three. The Soyuz LV is manufactured by TsSKB-Progress, Russia. Progress sells Soyuz launches to Russian government clients directly but markets the LV in the West through Paris-based Starsem. Most of the Progress plant's revenue comes from sales of Soyuz launches from Baikonur. The FAA estimates that a commercial Soyuz LV costs $30–50M while a Molniya LV costs between $30–40M. Peak launch rates for the Soyuz/Molynia were reached during the 1970s and 1980s, when more than 60 LVs per year were launched. During this time, the average annual launch rate was 40 flights, requiring more than one complete LV to be produced per week. Since then, Soyuz production has dropped to about a dozen per year because of decreased government demand, though the ability to build 25–30 LVs per year still exists.

44 “Russian 'Rockot' Ready for Demo Launch,” Anatoly Zak, Space.com, May 15, 2000;

http://www.space.com/missionlaunches/launches/eurockot_preview_000515.html 45 “Rocket Program With Big Business Ties In Limbo After Plesetsk Accident,” Anatoly Zak,

Space.com, Dec. 30, 1999; http://www.space.com/news/plesetsk_accident_991231.html 46 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001

31

Soyuz/Molniya launch rates have declined significantly to about 12 per year in the 1990s; there were 12 launches in 1999 and 13 launches in 2000. However, Starsem could increase the launch rate to one commercial launch every two weeks from Baikonur should demand increase. Launch campaigns are roughly 1 month long, and two can be carried out simultaneously. The entire process, from LV and payload arrival at the Cosmodrome until launch, requires 121 hours, including 18 hours for on-pad activities. The Soyuz can be launched even under severe weather conditions, including dense fog, wind, rain, snow, and the wide temperature variations (-40°F to 122°F) experienced at Baikonur.47 The Soyuz ST and the Soyuz FG are upgraded versions of the Soyuz. These increase launch capacity and reduce reliance on non-Russian component suppliers. The new Soyuz ST configuration will be used for commercial missions and should be available in 2001. The Soyuz FG will be used for Russian government missions, including support of the ISS. Soyuz-2 flight tests may begin in 2003 or 2004.48 Two new upper stages, the Ikar and Fregat, will be made available for both the Soyuz and Soyuz ST for commercial launches. The Ikar upper stage was first demonstrated in early 1999, while the improved Fregat upper stage was introduced in 2000. These new upper-stage options for the Soyuz may lead to the eventual retirement of the Molynia, which has an older upper stage. On the other hand, the Molynia could continue operating at a low rate (two to three flights annually) well into the next century, depending on Russian government needs and the number of available LVs. The Soyuz, limited by its inability to loft large commercial satellites to GSO, targets Russian government satellites and LEO constellations such as SkyBridge and Galileo. There were no commercial Soyuz launches scheduled for 2001. However, Rosaviakosmos booked nine Soyuz launches for 2001; eight for the ISS program and one to loft the Resurs F2 environmental satellite. ISS program launches include the Russian-built space station docking port and airlock.49 The Defense Ministry has ordered three Soyuz launches, but these contracts may not be used. In any case, Progress will continue to enjoy a steady stream of "not so lucrative" Russian government launches. Starsem recently secured a $120M contract to launch a pair of weather satellites for the European Meteorological Satellite Organization in 2005 and 2009 and is under contract for 11 SkyBridge Soyuz launches. The SkyBridge launches will probably be delayed, as the program has been hobbled by financing difficulties. The Galileo project has been approved by ESA, making the Soyuz a likely candidate to complement the Ariane 5 for the initial launch and in-orbit maintenance of the Galileo satellites. The Soyuz is able to boost at least two Galileo satellites into MEO per launch. The Galileo program requires three satellites to be launched in 2003 and the rest in 2006–2007.


January 2001 48 Space News interview of Aleander Kuznetsov, Space News, April 16, 2001 49 “Russia's Debt May Deplete Space Fund,” Space News, March 5, 2001

32

The ISS will be a regular user of the Soyuz. The Soyuz spacecraft is attached to the ISS, serving as a lifeboat. The Soyuz must be replaced every 180 days before its batteries expire. Without Soyuz replacements every 6 months, the ISS would have to be abandoned for months at a time or used only during shuttle missions.50 7.2.6.6 Start The Start LV, currently launched from Plesetsk, is a converted SS-25 ICBM using all-solid propulsion. It has been commercially available since 1997 at an estimated cost of $10.5M. Since it is based on actively deployed ICBMs, only limited technical information is publicly available. Spacelift Australia has proposed launching Start LVs from Woomera, Australia. However, Spacelift Australia still needs to obtain approval from the Russian government to export Start LVs to Australia and to acquire funding for renovating the launch pad. Spacelift Australia has considered sharing launch facilities with Kistler, another LSP. 7.2.6.7 Angara The Angara is a family of small- to heavy-lift LVs being designed and built by the Khrunichev State Research and Production Space Center. These LVs will support both LEO and GEO payloads and are expected to cost between $15M and $90M.51 The initial Angara launches will carry small satellites. Most of the smaller Angara LVs assume a low flight rate. Availability of the larger Angara LVs is dependent on development funding. It is expected that demand for the larger Angara LVs will ramp up as demand for heavy launch services is shifted from the Proton to the Angara. Additional details on the Angara, which is not currently available, are provided in Appendix F.

50 “Bush's Risky Station Strategy,” Space News Commentary, March 5, 2001 51 Forecast International, Angara, April 2000

33

7.2.7 Russian LV Demand Forecast

Table 7-8. Russian Launch Forecast52

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Angara - - - - 2 3 3 4 4

Cosmos 3 3 3 3 3 3 3 3 3

Cyclone 1 4 4 4 4 4 4 4 4

Dnepr 1 2 2 2 2 3 3 3 -

Proton 14 10 10 9 9 9 8 8 7

Rockot 1 6 7 8 7 4 3 3 4

Soyuz 13 11 13 14 14 14 13 12 10

Start 1 1 1 1 1 1 - - -

Zenit 2 2 1 1 1 1 1 1 - -

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Angara - - - - 2 3 3 4 4

Cosmos 3 3 3 3 3 3 3 3 3

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Angara - - - - 2 3 3 4 4

Cosmos 3 3 3 3 3 3 3 3 3

Cyclone 1 4 4 4 4 4 4 4 4

Dnepr 1 2 2 2 2 3 3 3 -

Cyclone 1 4 4 4 4 4 4 4 4

Dnepr 1 2 2 2 2 3 3 3 -

Proton 14 10 10 9 9 9 8 8 7

Rockot 1 6 7 8 7 4 3 3 4

Proton 14 10 10 9 9 9 8 8 7

Rockot 1 6 7 8 7 4 3 3 4

Soyuz 13 11 13 14 14 14 13 12 10

Start 1 1 1 1 1 1 - - -

Zenit 2 2 1 1 1 1 1 1 - -

Soyuz 13 11 13 14 14 14 13 12 10

Start 1 1 1 1 1 1 - - -

Zenit 2 2 1 1 1 1 1 1 - -

A = actual E = estimate

7.2.8 Evaluation of Russian Space Industry Russian LVs are relatively cheap, in part because of Russia’s inexpensive—though highly skilled—labor force. Russian technicians’ monthly salaries run from U.S. $150 to $300.53 Russia's long launch history has also helped it to develop and maintain a high launch capability. The two biggest hindrances to Russia's LV industry are insufficient government budget and loss of its Baikonur launch site to Kazakhstan. Although Russia has two other launch sites at Plesetsk and Svobodny, neither of these sites is currently able to launch geostationary satellites or Proton LVs. Russia needs to address Kazakhstan's environmental and profit-sharing concerns. Russia has talked about developing its Plesetsk site to get around the Kazakhstan issue, but this strategy would take 7–8 years to implement and would require a budget that it does not have.

52 World Space Systems Briefing; Forecast International 53 “The Changing Face of Baikonur,” Fedreric Castel, Space.com, Oct 28, 1999

34

Strategic partnering with foreign entities has helped Russia to acquire access to foreign markets and secure funding necessary to improve its launch facilities. U.S.-based ILS markets the Proton and will market the Angara LV. The French Starsem markets the Soyuz and Rockot. Both companies have also invested into Baikonur launch facilities. Sea Launch and Lockheed Martin continue to generate regular revenues for Russian hardware. In December 2000, the U.S. State Department decided to allow the bilateral quota agreement limiting the number of commercial launches on the Proton to expire. This permits the sale of an unlimited number of Proton LVs and will help provide the 88 American and Russian space flights necessary for building, outfitting, and staffing the ISS through 2005.54 Russian President Putin is expected to spearhead cooperative efforts with the U.S. government and Western aerospace businesses. In 1998 alone, Russia made $1.8B from commercial rocket launches.55 In addition, the sector was responsible for raising $3B in financing from foreign sources. The Russian space sector has been growing 22 percent per year from 1997–2000; 36 percent of this sector's financing comes from the state, while the remainder comes from foreign payments for Russian services. 56 The Russian space industry still faces the problem of an aging work force. Russia needs to recruit young people into the space program to replace space workers who have retired or changed careers. The average age of the industry's employees is 50 years.57 Some of these people can be replaced through international joint ventures, but the majority of them, especially those supporting Russian military and civilian projects, will need to be Russian. Competition for federal funds will remain a concern for Russian space agencies. ISS schedule slips and cost overruns continue to place financial pressures on both the United States and Russia. Both countries will have to curtail other space-related projects to meet ISS funding shortfalls. Two Russian projects were discontinued due to funding shortfalls—the Energia LV and the Russian-led international Spektrum Roentgen-Gamma space observatory. In 2001, Russia's space programs also competed with Russia's foreign debt obligations for budget. Export tax revenues provide $38M of Russia's $268M space budget. However, the Russian parliament is considering reallocating these export tax revenues towards debt payments. Should this occur, the ISS program budget would lose $17M and the Glonass satellite navigation fleet budget would lose $21M.58

54 “Investigation Begins Into Russian Proton Rocket Failure, Service Module Delay Could Result,” Justin

Ray, Florida Today, July 7, 1999 55 “Kazakhstan Bans Russian Launches,” Almaty, Space Daily, October 28, 1999. 56 “Russian Space Industry Recovers to 1993 Levels,” Space Daily, May 1, 2000. 57 “Russian Leader Could Revive Nation's Space Agenda,” Yuri Karash, Space.com, 18 January 2000,

http://www.space.com/news/putin_space_000118.html 58 “Russia's Debt May Deplete Space Fund,” Space News, March 5, 2001

35

Russia hopes to raise funding through space tourism. Russia flew Dennis Tito, an American businessman, aboard a Soyuz-exchange mission to the ISS for $20M and has signed other contracts for transporting people to the ISS. France has agreed to pay Russia approximately $12M to send Andre-Deshays, a French astronaut, to the ISS.59 Andre-Deshays will be part of a three-member crew that will deliver a fresh Russian Soyuz capsule to the station and return with the Soyuz previously docked there in October 2001. France sees this as a necessary public relations maneuver to increase public interest in France's space effort and thereby encourage continued funding for its space program. Another problem facing Khrunichev is that launch facilities at Baikonur will exceed existing safety warranties within a few years. Russia will need to either invest heavily in Baikonur to correct this problem or begin developing its two other launch sites to support future launches.60 7.3 Europe The European space industry developed the Ariane 4 and Ariane 5 LVs to address the heavy-lift launch market segments. Strategic partnering agreements to market the Soyuz and the Rockot are in place, and development of the Vega LV for small LEO payloads has begun. As a result, the European space industry hopes to address all launch service market segments.

7.3.1 Launch Service Providers There are three European LSPs: Arianespace, Starsem, and Eurockot. 7.3.1.1 Arianespace Arianespace, based in Evry, France, was incorporated in 1980. Its shareholders comprise 41 aerospace manufacturers and engineering companies from 12 European countries, 11 banks, and one space agency. Arianespace has strategic partnerships with Starsem, Eurockot, and FiatAvio, giving it access to a family of LVs suitable for meeting the requirements of all launch market segments. Arianespace acquired just over half the total commercial market orders in 2000 and is the highest-priced commercial launch service available, receiving from $40M for a 2,200 lb satellite to $140M for a 12,100 lb satellite. It also has a somewhat captive European military and civil-military customer base. Customers pay a launch premium—in part, because the Guiana Space Center's (CSG) equatorial launch site at Kourou provides a 15 percent performance advantage compared

59 “French Minister Says France Needs Station Astronaut,” Peter B. de Selding, Space News, February

19, 2001 60 “Angara Awaits Funds”, Simon Saradzhyan, Satellite Finance, March 14, 2001, p. 33

36

to Cape Canaveral Air Station (CCAFS).61 The Ariane 4 has also been able to split launch costs between dual payloads, bringing Ariane launch costs in line with its competitors. 7.3.1.1.1 Scheduling. There is normally 2 years’ lead time between contract signing and launch.62 However, because Arianespace stores extra LVs at the launch site, Arianespace has been able to offer considerable schedule flexibility to its customers. In 1999, Arianespace was able to launch both the GE-4 communication satellite and the Telstar 7 satellite within 3 months of signing launch contracts.63 During peak periods, Arianespace has launched at 3-week intervals. Arianespace's continued facility improvements have reduced payload-processing times. The new S5 facility at CSG allows four payloads to be processed in parallel; two in checkout/preparation halls, and two more in the fueling zones. The processing time for satellites has also been reduced through colocating payload checkout and fueling operations. Schedules can be further accelerated through appropriately sized dedicated mission teams working 6-day workweeks, and through quick mission analysis. With an accelerated schedule, the standard preparation time for a typical telecommunication satellite can be reduced from 20 days to 18 days. A 10-satellite constellation payload's preparation time can thus be cut by 1 month.64 Because Arianespace has only two types of LVs, their launch facilities' scheduling issues are much simpler than those of the United States. Arianespace maintains total control over all shipments, from supplier to the launch site, making sure its partners deliver parts, supplies, and propellants on time while maintaining quality assurance and full traceability of all hardware.65 As a result, Arianespace teams have also reduced procurement lead times for satellite-launcher adapters. 7.3.1.1.2 Costs. Arianespace's current operational and development costs are high relative to its revenues. Its investment in Ariane 5's production and launch capacity and satellite delivery delays have pushed Arianespace deeply in the red for the first time in the company's 20-year history. In 2000, Arianespace lost $191M on $1.1B in sales.66 2001 could also be financially difficult as Arianespace reduces the number of its Ariane 4 launches without any near-term reduction of the 1,400-member permanent staff supporting CSG's launch facilities. The Ariane 4 facilities may eventually be leased out to another LSP for another use, such as launching Soyuz LVs. However, during this phaseout period, operational costs will remain constant as the number of Ariane 4 launches gradually declines. 61 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001 62 “Arianespace's Fortunes Hang on Success of Ariane 5,” Peter B. de Selding, Space News, January 15,

2001 63 e.space, Arianespace newsletter, Dec. 1999 64 e.space, Arianespace newsletter, July 2000 65 e.space, Arianespace newsletter, November 1999 66 See note 52 above

37

Arianespace pays a $5.6M annual fixed fee for using CSG in addition to a 2.75 percent variable fee applied to revenues generated by any launches over nine per year. From 1995–1998, the range fees that Arianespace paid for launching from CSG averaged $32.2M per year, or roughly $3.1M per Ariane 4 launch. In addition, from 1995–2000, Arianespace also paid approximately $110M annually to CSG, which operates the facilities under subcontract, to cover most facility overhead and maintenance costs. Part of the fees were paid directly for the operation of the ELA-2 and ELA-3 launch complexes. Arianespace total reimbursements to CSG covered 48 percent of the total range costs for this period.67 From 1999–2000, Arianespace was given some Ariane 5 launch fee relief while the Ariane 5 was being readied for commercial deployment. Full Ariane 5 launch fees are to be restored in 2001. 7.3.1.1.3 Demand. Arianespace has been selected to support the Galileo project and the ISS. Galileo consists of the development, launch, and operation of a constellation of between 21–33 MEO satellites and three to nine geostationary satellites. Three spacecraft will be launched in 2003; the rest will be launched between 2006–2007. The ISS requires an automated transfer vehicle (ATV) to be launched once every 15 months from 2003 to 2014. Arianespace's 5ESV, a heavy-lift launcher version of the Ariane 5 equipped with the EJPS/V ("Versatile") storable propellant restartable upper stage, has already been contracted to launch nine ATVs. Arianespace has strategic partnerships with Starsem, Eurockot, and FiatAvio, giving it access to a family of LVs suitable for meeting the requirements of all launch market segments. Arianespace has also negotiated with its LV manufacturers to decrease Ariane 5's manufacturing costs. Both strategies will help Arianespace to increase its potential market share and profit margins. During the next couple of years, the Ariane 4 will be phased out. During this period, Arianespace plans to maintain a combined maximum launch rate of 12–15 Ariane 4s and 5s per year until the Ariane 4 inventory is depleted. As of August 2001, only 12 Ariane 4 LVs remain in the production pipeline. However, because of the failure of an Ariane 5 on July 12, 2001, Ariane 4 LVs will probably be used instead of Ariane 5s in 2001. Two of the remaining 12 Ariane 4s have already been assigned to Intelsat and DirecTV launches. Eutelsat has requested an Ariane 4 for its Atlantic Bird 2 satellite that was scheduled for launch on an Ariane 5 in October. Additional Ariane 4 launches may be required to cover the three other Ariane 5 flights scheduled for 2001.68

67 Ariane Operational Activities in French Guyana Organization and Funding, Arianespace Inc.,

November 2000 68 “Mishap Grounds Ariane 5 Rocket,” Peter B. de Selding, Space News, July 16, 2001

38

7.3.1.2 Eurockot Eurockot is a joint venture between Astrium (51 percent) and the Russian manufacturer Khrunichev (49 percent). Its only LV is the Rockot, which can launch satellites weighing up to 1 metric ton into LEO from Plesetsk (and possibly Baikonur). The typical time from contract signing to launch of a Rockot is 18 months, of which 19 days are needed for the launch campaign. If necessary, the launch campaign duration can be shortened. Eurockot initially targeted commercial communication satellites and replenishment satellites for the Iridium satellite phone constellation. Eurockot had to change its marketing strategy after Iridium's business plan failed. Eurockot is now bidding for 10–20 European Earth-observation and science missions involving spacecraft weighing less than 1 metric ton. These launches should occur over the next 10 years, possibly providing Eurockot with up to six commercial flights per year.69 Additional details concerning the Rockot LV can be found in section 7.2 of this report. Eurockot has scheduled its first commercial launch, the U.S.-German Grace scientific satellite, in November 2001 from the Plesetsk Cosmodrome. Its advertised price is about $10,000 per payload kg.70 7.3.1.3 Starsem Starsem is a European-Russian company created in 1996 to provide commercial Soyuz launch services. It employs more than 50 people at its Paris headquarters, assuming the role of a prime contractor for its partner's work. It is 50 percent European-owned and 50 percent Russian-owned. Starsem's shareholders are the European Aeronautic Defense and Space Company (EADS) (35 percent), Arianespace (15 percent), Russian Aviation and Space Agency (25 percent), and the Samara Space Center (25 percent). Additional details are included in section 7.2 of this report.

7.3.2 Management/Partnerships Three major organizations support Europe's space program: the European Space Agency (ESA), the French Space Agency (CNES), and Arianespace. ESA owns the Ariane LV manufacturing and payload processing facilities and is mainly funded through European space programs. ESA contributes funding for the CSG launch facilities. CNES owns CSG land and range facilities, and contributes funding for the launch facilities. CNES operates and coordinates the launch base, and provides technical and logistics support to LV and satellite processing, range facilities, safety, and security under a contract with Arianespace. 69 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001 70 “European Countries Step Up Use of Small Satellites,” Peter B. de Selding, Space News, May 28, 2001

39

Arianespace operates and maintains two CSG launch complexes: ELA 2 and ELA 3. It funds these launch complexes, funds payload processing facilities overhead and management, contributes to range cost, procures LV elements from European industrial partners, and performs the LV preparation campaign and launch operations. To increase its competitiveness, Europe's space industry has partnered with Russian and Ukrainian LSPs. Europe provides marketing and continued investment in the Russian and Ukrainian launch facilities; Russia and Ukraine provide launch services. Arianespace has appealed to ESA-member governments to boost their support for spaceport operations to offset the lower prices that U.S. competitors purportedly pay for U.S. launch operations.71 In addition, Europe has discussed the need to establish a joint Europe-focused military space policy to further consolidate the number of small companies and divisions involved in LV production. Currently, European countries develop many space programs independently without common leadership.

7.3.3 Launch Vehicle Capabilities and Pricing Table 7-9 provides the number of flights, launch capabilities, and FAA price estimates for Arianespace LVs launched from Kourou.

Table 7-9. European Launches, Launch Capabilities, and Pricing72

Launch Vehicle

Flights thru

(12/31/00)Launch

SiteLEO (Lbs)

GTO (Lbs)

LowPrice($M)

HighPrice($M)

Ariane 40 7 Kourou 11,000 4,895 $65 $85Ariane 42P 13 Kourou 14,600 6,370 $70 $90Ariane 44P 15 Kourou 16,800 7,640 $80 $100Ariane 42L 11 Kourou 17,400 7,910 $80 $100Ariane 44LP 25 Kourou 20,000 9,460 $90 $110Ariane 44L 31 Kourou 22,500 10,560 $100 $125Ariane 5 7 Kourou 39,700 15,000 $150 $180Ariane 5G 1 Kourou N/A N/A N/A N/A

Launch Vehicle

Flights thru

(12/31/00)Launch

SiteLEO (Lbs)

GTO (Lbs)

LowPrice($M)

HighPrice($M)

Ariane 40 7 Kourou 11,000 4,895 $65 $85Ariane 42P 13 Kourou 14,600 6,370 $70 $90Ariane 44P 15 Kourou 16,800 7,640 $80 $100Ariane 42L 11 Kourou 17,400 7,910 $80 $100Ariane 44LP 25 Kourou 20,000 9,460 $90 $110Ariane 44L 31 Kourou 22,500 10,560 $100 $125Ariane 5 7 Kourou 39,700 15,000 $150 $180Ariane 5G 1 Kourou N/A N/A N/A N/A

71 “European Manufacturers of Rocket Components Seek Government Funds,” Peter B. de Selding,

Space News, February 26, 2001 72 Commercial Space Transportation: 2000 Year in Review, Associate Administrator for Commercial

Space Transportation (AST), January 2001; International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA, January 2001

40

7.3.4 Launch Site Table 7-10 provides details of the Kourou launch site. The estimated yearly launch capacity is for 2000–2001. The maximum launch capacity of the Ariane 4 will drop as its inventory, which will not be replenished, is consumed. The launch capacity of the Ariane 5 is expected to gradually increase to eight launches per year.

Table 7-10. European Launch Site Capabilities73




Launch Vehicles


First Launch

Kourou 5.2° N 52.73° W

5°/100°2 1 10 Ariane 4 G,C 19882 1 6 Ariane 5 G,C 1996

Recent CSG facility modernization efforts have increased on-site storage of extra LV components and improved schedule flexibility through increased processing capacity. The propellant plant is capable of storing up to eight solid-rocket-motor segments, while the stage storage building can store up to four solid-propellant boosters. The Launch Center control room was enlarged and two launch tables were built to enable the monitoring and launch of two Ariane 5s in parallel. These facilities will allow Arianespace to support three Ariane 5 launches in 3 months, with each campaign spanning about 33 days.74 Furthermore, their new S5 facility will allow Arianespace to run two Ariane 4 and two Ariane 5 launch campaigns simultaneously. CSG has faced several periods of delayed satellite deliveries that have resulted in idling of its launch facilities. In order to reduce the impact of these delays, CSG has looked for ways to expand its services and launches. Negotiations are ongoing to determine whether launching Russian Soyuz LVs from Kourou is commercially viable. This option would require a $250–$300M investment.75

7.3.5 Historical Performance Table 7-11 lists the number of Ariane launches and provides estimates of Ariane launch revenues from 1995 to 2000. Revenues are based on FAA launch price estimates.


January 2001 74 e.space, Arianespace newsletter, October 2000 75 “ESA Considers Opening Kourou To Russian Launchers,” Spacedaily, January 20, 2001

41

Table 7-11. Ariane Revenues and Launches76

1995 1996 1997 1998 1999 2000


$652 $815 $940 $763 $750 $1,433

CommercialLaunches

8 10 11 9 8 12

Est. NoncommercialRevenue/Invest. ($M)

$150 $165 $165 $240 $240 $0

NoncommercialLaunches

2 1 1 2 2 0

1995 1996 1997 1998 1999 2000


$652 $815 $940 $763 $750 $1,433

CommercialLaunches

8 10 11 9 8 12


$150 $165 $165 $240 $240 $0

1995 1996 1997 1998 1999 2000


$652 $815 $940 $763 $750 $1,433

CommercialLaunches

8 10 11 9 8 12


$150 $165 $165 $240 $240 $0

NoncommercialLaunches

2 1 1 2 2 0

7.3.6 Launch Vehicles 7.3.6.1 Ariane 4 and Ariane 5 In 1998, 10 Ariane 4 LVs were produced with the intent to continue this production rate through 1999.77 However, Arianespace has since decided to discontinue the Ariane 4 after its remaining 17 LVs are used, since it is becoming increasingly difficult for the Ariane 4 to meet changing customer performance and cost needs. The Ariane 4 is used less frequently for dual launches because of the increasing weight of satellite payloads. As a result, its operation has become less profitable. The Ariane 4 was designed to allow configuration changes during launch campaigns to accommodate new payloads. All Ariane 4 LVs are now shipped in the Ariane 44LP configuration (with two solid and two liquid strap-on boosters). Likewise, the Ariane 5 can be reconfigured during launch campaigns. It is shipped with the lower composite (main stage plus solid boosters) in the same configuration for every mission. The payload, fairing, and adapters, however, can be modified relatively late in the campaign to meet payload changes. Mission flight software can also be developed quickly to support early launches. The first 14-vehicle Ariane 5 production batch, ordered in June 1995, will be used from 1999–2001. A second batch of Ariane 5s was ordered in July 1999 and will consist of two successive groups of 10 LVs each. Thirty more Ariane 5 launch LVs are to be ordered at a later date. Efforts are being made to reduce the production cycle time; Arianespace plans to launch eight Ariane 5s per year while reducing production costs and maintaining quality. Arianespace's contractors have committed to a 35 percent price reduction for its second

76 Commercial Space Transportation: Year in Review (1997-2000), Associate Administrator for

Commercial Space Transportation (AST) 77 e.space, Arianespace newsletter, January 1999, p. 3

42

batch of Ariane 5 LVs. Arianespace plans to achieve an additional 15 percent price cut on its third batch, for a total reduction of 50 percent compared to the first 14-LV order.78 Until Ariane 5's recent July 2001 failure, Arianespace had been successful in maintaining quality control. From Ariane 5's first commercial mission, Flight 119 in December 1999, to Flight 138 in December 2000, Arianespace accomplished five fully successful commercial launches in 12 months. Meanwhile, the Ariane 5 continues to be modified to meet future demands. By early 2003, the Ariane 5 ECA will be capable of orbiting two 5-ton-class satellites, and the Ariane 5ESV will be available for complex deployments into low, intermediate, geostationary, or interplanetary orbits, and for ATV missions. The ESA's unmanned ATV cargo spacecraft will be used to deliver fuel and supplies to the ISS over a period of more than 10 years and is expected to be a $1.5B/year business for at least 10 or 15 years. Although Arianespace is currently facing financial challenges, its future is bright. It has a 2-year lead over competitive next-generation heavy-lift launchers. It is also well-designed to meet current and future launch needs for the ISS and the Galileo constellation.

7.3.6.2 Vega Vega's $375M development cost will be financed primarily by Italy but managed by ESA. It is being developed and built by FiatAvio, and will be first launched from Kourou in 2005. It is designed to carry payloads of up to 1,500 kg into 700 km low Earth orbit for a maximum retail price of $20M, or about $13,330/kg.79 This price includes $3M for Arianespace commercial and ground-segment activities.80 It is expected that the Vega will be launched between two to four times per year. One of these launches will be reserved for small Italian science satellites.81 The main market for the Vega consists of European Earth observation and other European government-purchased satellites.

7.3.6.3 Arianespace LV Demand Forecast Arianespace expects the commercial satellite market to stabilize, with 25 to 30 industry-wide launch service contracts signed annually. Arianespace's goal is to win approximately half this market. Table 7-12 assumes that a combination of Ariane 4s and Ariane 5s will be used during the next couple of years. Seven Ariane 4s will be used in 2001, leaving 10 Ariane 4s for future years. Ariane 5 LVs may be used for dual-spacecraft launches. Ariane plans to conduct 11 launch campaigns in 2001, of which four

78 “Ariaespace's Fortunes Hang on Success of Ariane 5,” Peter B. de Selding, Space News, January 15,

2001 79 “European Countries Step Up Use of Small Satellites,” Peter B. de Selding, Space News, May 28, 2001 80 “Alenia Spacio and FiatAvio Spurn Consolidation,” Peter B. de Selding, Space News, February 12,

2001 81 “Vega Launcher Moves Toward Final Design,” Space News, June 25, 2001, p. 10

43

will be Ariane 5 launches.82 The number of Ariane 5 launches is limited by production capacity. Ariane 4 launches will be used to make up Ariane 5 shortages each year until all 17 remaining Ariane 4 launchers are depleted. Four Ariane 5 LVs were launched in 2000. Five Ariane 5 launches were scheduled in 2001, six in 2002 and six in 2003 before reaching the production "cruising speed" of eight per year in 2004. However, a July 12, 2001 Ariane 5 launch failure will most likely change the Ariane 5 forecast provided in Table 7-12. Three of the 2001 Ariane 5 launches shown in Table 7-12 will probably be delayed or replaced by Ariane 4 launches. It is expected that the Ariane 5 LV will be grounded for several months as an independent board of inquiry seeks the causes of the LV's third malfunction in 10 launches.83 Starting in 2002, Arianespace plans to roll out its upgraded Ariane 5, which will be able to lift a 10,000 kg spacecraft to geostationary transfer orbit. This capability will allow the launch of two satellites weighing a combined 12,000 kg in mid-2006 through the addition of a restartable Vinci cryogenic upper-stage engine.84 As of March 2001, Arianespace's total backlog stands at 37 satellites, plus nine ATVs for the ISS.85 The Galileo constellation will result in additional orders to launch Galileo's 30 satellites.

Table 7-12. Ariane Launch Forecast86

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Ariane 4 8 7 5 3 2 0 0 0 0

Ariane 5 4 5 6 6 8 8 8 8 8

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Ariane 4 8 7 5 3 2 0 0 0 0

Ariane 5 4 5 6 6 8 8 8 8 8

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Ariane 4 8 7 5 3 2 0 0 0 0

Ariane 5 4 5 6 6 8 8 8 8 8

A = actual E = estimate

7.3.7 Evaluation of European Space Industry The two biggest challenges that the European space industry faces are reducing the production cost of the Ariane 5 and guaranteeing a smooth transition from the Ariane 4. If the Ariane 5 is unable to increase its production rates and maintain high reliability standards, Arianespace will lose market share.

82 e.space, Arianespace newsletter, February 2001 83 “Mishap Grounds Ariane 5 Rocket,” Peter B. de Selding, Space News, July 16, 2001 84 “Withheld Funding Delays Vinci Cryogenic Engine,” Space News, March 19, 2001 85 “Arianespace Nabs e-Bird Launch Bid,” Space News, March 19, 2001 86 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001; Forecast International; e.space, Arianespace newsletter

44

The European space industry must be able to launch more types of LVs from Kourou in order to spread its operational costs over a greater revenue base. Several analyses have been performed regarding the amount Arianespace pays for using Kourou's facilities compared to the amount U.S. LSPs pay for using U.S. launch sites. These studies estimate that Arianespace pays about $10M more per launch for its launch-base activities than its U.S. counterparts do.87 ESA is in the process of developing the Vega LV and is also evaluating the feasibility of launching the Russian Soyuz LV from Kourou. These two initiatives are crucial to the long-term profitability of Arianespace. 7.4 Multinational LSPs Sea Launch, a multinational LSP, was started in April 1995. It was designed to compete against the Ariane 4, Ariane 5, Proton M, and the heaviest version of the Delta IV. By early 2002, the Sea Launch LV is expected to carry 5,700 kg payloads to GTO.

7.4.1 Launch Service Providers Sea Launch consists of two ocean-going vessels—the Odyssey, a modified self-propelled semisubmersible oil drilling platform, and the Sea Launch Commander, a 198 m, 30,844 kg Assembly and Command ship built by the Anglo-Norwegian Kvaerner Group. Construction of the vessels, which began in December 1995, was completed in May 1998. These two vessels travel between their 15-acre homeport facility in Long Beach, California and the main launch site at the equator, 154° west longitude near Christmas Island, about 2,260 km off Hawaii. Payload processing and integration, and movement of the fully-integrated LV from the Sea Launch Commander to the Odyssey currently occur at the homeport, but this may change should Sea Launch wish to increase its launch capability. Sea Launch was first demonstrated in March 1999; the commercial launch of a DirecTV satellite followed in October 1999. Since its first launch, Sea Launch has successfully launched three of its first four commercial payloads.

7.4.2 Management/Partnerships Although U.S.-based Boeing is Sea Launch's largest partner, most of Sea Launch's components come from Russia and Ukraine, making it difficult to attribute launch revenues to any particular country. The involvement of foreign nationals requires that an FAA monitor and a Defense Threat Reduction Agency (DTRA) monitor be on board the ship in the Launch Control Center in order to verify that export compliance regulations are followed during the launch processes. Sea Launch is an international partnership consisting of the companies listed in Table 7-13.

87 Interview with Pierre Moskwa, Director of Guiana Space Center, Peter B. de Selding, Space News,

July 23, 2001

45

Table 7-13. Sea Launch Partnerships

Company CountryFunding /

OwnershipInvestment

($M) Responsibility

Boeing U.S. 40% $500

Payload fairing, Mission Ops., S/C Integration

RSC Energia Russian 25% $100Upper Stage Block DM-SL

Anglo-Norwegian Russian 20% -

Odyssey Commander

SDO Yuzhnoye / Ukraine 15% $90 Zenit 3SL

7.4.3 Launch Vehicle Capabilities and Pricing Sea Launch is increasing its launch capacity incrementally. In 2001, Sea Launch will fly a payload weighing 5,700 kg. By 2002, Sea Launch hopes to lift 6,000 kg by lightening its Zenit LV.88 In fall 2001, technicians will use a dummy LV to demonstrate launching multiple satellites. The 2001 Sea Launch manifest calls for four launches. Table 7-14 lists Sea Launch's lift capabilities and price range.

Table 7-14. Sea Launch Launches, Launch Capabilities, and Pricing89

Launch Vehicle

Flights thru

(12/31/00)Launch

SiteLEO (Lbs)

GTO (Lbs)

Price Low ($M)

Price High ($M)

Zenit-3SL 5 Sea Launch 35,000 11,050 75 95

7.4.4 Launch Site By launching at the equator, Sea Launch has direct access to equatorial trajectory and placement, allowing heavier payload masses to be lifted or increasing satellite life through fuel conservation. Sea Launch chose the mobile platform option over launching from CCAFS, which would not have allowed them to differentiate their service over that of other LSPs. Table 7-15 provides details regarding the location of the sea-based launch site, as well as the current launch capacity.

88 Profile of Wilbur C. Trafton, President, Sea Launch, Space News, April 30, 2001 89 Commercial Space Transportation: Year in Review (1997-2000) Reports; conversations with Sea

Launch representatives

46

Table 7-15. Sea Launch Site Capabilities




Launch Vehicles


First Launch

Sea-based (near Christmas Island)

0° N 154° W

N/A 1 NA 5-6 Zenit-3SL C 1999

A new customer/mission typically requires 9–12 months from contract signing to launch, while a repeat mission can be handled in 6–9 months. The three major schedule drivers are delivery schedule of the spacecraft for spacecraft processing, mission planning by Boeing engineers, and FAA flight license filing and approval. Zenit LV inventory is stored at Sea Launch's homeport warehouse, eliminating LV manufacturing cycle times from this process. This inventory is restocked several times each year. The 55-day launch mission cycle time includes payload processing and integration, and 22 days of roundtrip travel time to the launch site from the homeport. Launch processes at the launch site are fully automated, reducing launch preparation times and the number of technicians and engineers needed. The platform is manned by 20 crewmembers, while the combined mobile facilities can carry a crew of 250.90

7.4.5 Historical Performance Sea Launch launched its first satellite in 1999. Sea Launch revenues shown in Table 7-16 are based on FAA price estimates. The first launch deployed a test payload in 1999 and was internally funded.

Table 7-16. Sea Launch Revenues and Launches91

Sea Launch 1999 2000Est. Commercial Revenue ($M) $85 $255Commercial Launches 2 3

7.4.6 Launch Vehicles Stages 1 and 2 of Sea Launch are from the Zenit-3SL LV, while the third stage is from the Energia-produced Block DM-SL.

90 World Space Systems Briefing, Teal Group, December 2000 91 Commercial Space Transportation: Year in Review (1999 & 2000) Reports, Associate Administrator

for Commercial Space Transportation (AST)

47

7.4.7 Sea Launch Forecast Sea Launch has received firm contracts for over 19 launches from companies such as DirecTV, PanAmSat (1 + four options), Spaceways (2) and New Skies Satellites (1 + 2 options). 92 93 Some of the firm contracts include options for additional launches. AssureSat and Sea Launch have purchased each other's services. Sea Launch will launch AssureSat satellites and will buy several AssureSat backup services, in case of launch failures. The first AssureSat satellite, built by Space Systems/Loral (SS/L), should be launched by Sea Launch in 2002 pending AssureSat financing delays. Sea Launch is fairly bullish about their launch system. On September 11, 2000 Sea Launch signed an 80-LV deal with SDO Yuzhnoye/PO Yuzhmash. Four of these 80 LVs have already been delivered.94 Table 7-17 shows the potential demand for Sea Launch missions.

Table 7-17. Sea Launch Launch Forecast95

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Zenit-3SL 3 3 4 4 4 5 5 4 4

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Zenit-3SL 3 3 4 4 4 5 5 4 4

2000A 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Zenit-3SL 3 3 4 4 4 5 5 4 4

A = actual E = estimated

7.4.8 Evaluation of Sea Launch A 55-day launch mission cycle time allows Sea Launch to support about six launches annually. Sea Launch claims this launch rate would easily make them profitable.96 In order to improve this launch rate, Sea Launch must carry multiple LVs per trip. Sea Launch will also have to stabilize the vessels for transfer of boosters from the ship to the platform at sea, or build facilities to allow the transfer of fully integrated LVs between the two vessels in the protected waters of Christmas Island. Such improvements, which Sea Launch plans to demonstrate in the fall of 2001, would allow Sea Launch to increase its capacity to 12–14 launches per year.97 Sea Launch has several competitive strengths; it does not have to stand in queue for a manifest slot at a launch range, has virtually no restrictions on launch azimuth, is not reliant on government-operated launch and range facilities, and does not pay launch fees. Sea Launch launches at a location that has mild weather consistently, with wind and 92 “Boeing to Build Powerful Satellite For New Skies,” Space News, April 2, 2001 p. 8 93 Boeing News Release, September 23, 1999 94 World Space Systems Briefing, Teal Group Corporation, December 2000 95 Forecast International, November 1999; Teal Group Corporation, World Space Systems Briefing,

March 1998 96 Profile of Wilbur C. Trafton, President, Sea Launch, Space News, April 30, 2001 97 “Launch Companies Facing Buyer's Market,” Ben Iannotta, Space News, February 26, 2001

48

wave conditions well within launch parameters. To date, Sea Launch has never had a weather-based delay. In order to maintain its schedule flexibility, Sea Launch has decided to not launch dual payloads but will consider secondary payloads. Secondary payloads are typically not schedule-driven, piggybacking on an LV with excess capacity in order to share launch costs with the primary payload. 7.5 United States The United States' three major LSPs—Boeing Space & Communications Group, Lockheed Martin and Orbital Sciences—support commercial and U.S. government launches. They manufacture satellites and are highly dependent on the U.S. government for investment funding and for satellite and launch service purchases. Most of their LVs are launched from Vandenberg Air Force Base (VAFB) in California and CCAFS in Florida. 7.5.1 Launch Service Providers 7.5.1.1 Orbital Sciences Corporation Orbital Sciences Corporation (OSC) was founded in 1982. It is headquartered in Dulles, Virginia, and has facilities primarily in the United States and Canada. Its 4,500 employees build satellites and LVs, and provide satellite services through its ORBIMAGE and ORBNAV affiliates. In 2000, OSC had $726,000 in revenues and a $4.2B backlog. OSC supplies three LVs: the Pegasus XL, the Taurus, and the Minotaur. However, demand for these LVs has been limited. Peak demand for the Pegasus and Taurus occurred in 1998 when six Pegasus and two Taurus LVs were successfully launched. The relatively short preparation time required for OSC LVs and its independence from CCAFS and VAFB launch slots or launch site facilities gives it considerable schedule flexibility. Pegasus launch preparation includes LV setup and payload installation at VAFB where OSC has 50 employees to help with launch preparation and hazardous processing. After the LV is processed and the satellite integrated onto the LV, the LV, launch team, and staff is ferried to the launch site. In the future, OSC may consider moving its permanent staff to Florida, where most of their launches take place. While at CCAFS the integrated LV goes through a quick test and checkout process. The Pegasus can be launched within 3 days of arrival at the launch site. OSC usually schedules its launches 18–24 months before a mission. Scheduling conflicts are often solved informally, since U.S. LSPs work together to accommodate each other's launches. OSC primarily uses solid fuel rockets, reducing launch site fueling requirements. As a result OSC's launch site fees are fairly small. Because the FAA is responsible for U.S. LV safety, OSC is required to launch from federal sites.

49

7.5.1.2 Lockheed Martin Lockheed Martin employs more than 140,000 people worldwide and had sales surpassing $25B in 2000. Lockheed Martin's space-related sales were approximately $9B, which includes revenues from ILS and Lockheed Martin's Space Systems group, which accounted for approximately $7.3B.98 The Space Systems group designs, develops, and produces spacecraft, LVs, and space systems for civil, commercial, and military customers. It also invests into strategic joint ventures related to its core businesses. All of Lockheed Martin's commercial and U.S. government launches are supported by ILS. Lockheed Martin's Littleton, Colorado-based Astronautics Operations builds the Titan II and Titan IV, the Atlas and Centaur, the Athena I and II, and the Atlas V. This concentration of launch capabilities is the result of defense industry consolidation. Martin Marietta acquired the Space Systems Division of General Dynamics in May 1994, and Martin Marietta later merged with Lockheed. 7.5.1.3 Boeing Space and Communications (BSC) BSC, which is part of The Boeing Company, had $8B in revenues and more than 43,000 employees in 2000.99 This included revenues from Hughes Electronics Corporation's satellite manufacturing businesses and from Sea Launch. BSC built part of the ISS, oversees U.S. missile defense and reconnaissance systems, builds Delta LVs, and creates new satellite-based information and communications services. BSC has helped to consolidate the space industry through a string of strategic acquisitions including Rockwell Sciences, McDonnell Douglas, and, more recently, Hughes Space and Communications. Boeing Launch Services (BLS) is the sales and marketing organization for the Sea Launch and Delta family of expendable LVs.

7.5.2 Management/Partnerships U.S. government launches provide a large captive market for U.S. LSPs. The U.S. government's decision to launch on only U.S. LVs eliminates its dependency on foreign entities for this strategic capability. In addition, U.S. government missions help U.S. LSPs spread nonrecurring expense (NRE) costs over more launches, ensuring some demand for U.S.-built LVs regardless of commercial market conditions. The U.S government also protects U.S. market share through export regulations, price floors, and launch quotas. However, in December 2000, the U.S.-imposed price floors and quota restrictions were eliminated. Congress's decision to move satellite export control responsibility from the Commerce Department to the State Department in March 1999 hurt U.S. satellite manufacturers since their spacecraft could not be exported to fly on foreign rockets. Slow export license approval and restrictions imposed on sharing technical data with non-U.S. companies have not been received favorably by foreign customers and insurance companies. These 98 “Lockheed Martin Snares Top Spot in Space,” Sam Silverstein, Space News, July 30, 2001 99 See note 98 above; Boeing 2001 10-K filing with SEC; www.boeing.com.

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restrictions have reduced demand for launching U.S.-built satellites on Chinese LVs during the last few years, and have reduced demand for U.S.-built satellites by Chinese customers. For example, Asia Satellite Telecommunications Co. (AsiaSat) recently decided not to purchase a U.S.-manufactured satellite because of the U.S. government's restrictions on satellite exports.100 AsiaSat had previously been a long-term exclusive customer of U.S. satellite manufacturers. Restrictions on information-sharing also make joint ventures with international partners difficult.

7.5.3 Launch Vehicle Capabilities and Pricing Table 7-18 lists U.S. LVs, launch site locations, lifting capabilities, and pricing. Lift capabilities and pricing information were obtained from FAA yearly reports since actual pricing information tends to be company proprietary and difficult to obtain.

Table 7-18. U.S. Launches, Launch Capabilities, and Pricing101,102

Launch Vehicle

Flights thru

(12/31/00) Launch SiteLEO (Lbs)

GTO (Lbs)

LowPrice($M)

HighPrice($M)

Athena I 3 Kodiak, CCAFS 1,805 - $16 $17Athena II 3 Kodiak, CCAFS 4,520 1,290 $22 $26Delta II 93 VAFB, CCAFS 11,330 4,120 $45 $60Delta III 3 CCAFS 18,280 8,400 $75 $90Atlas II 10 VAFB, CCAFS 19,050 8,200 $90 $105

Atlas IIA 20 VAFB, CCAFS 16,130 6,760 $75 $85Atlas IIAS 21 VAFB, CCAFS 19,000 8,200 $90 $105Atlas IIIA 1 CCAFS 23,580 9,850 $90 $105

Pegasus XL 30

VAFB, Wallops, CCAFS,

Kwajalein 977 - $12 $15Taurus 5 VAFB, others 2,910 980 $18 $20

Minotaur 2VAFB, Wallops, CCAFS, Kodiak 1,470 - $11 $13

Titan II 87 VAFB 4,200 - $30 $40Titan IV B 8 VAFB, CCAFS 47,800 11,500 (GSO) $350 $450

Launch Vehicle

Flights thru

(12/31/00) Launch SiteLEO (Lbs)

GTO (Lbs)

LowPrice($M)

HighPrice($M)

Athena I 3 Kodiak, CCAFS 1,805 - $16 $17Athena II 3 Kodiak, CCAFS 4,520 1,290 $22 $26Delta II 93 VAFB, CCAFS 11,330 4,120 $45 $60Delta III 3 CCAFS 18,280 8,400 $75 $90Atlas II 10 VAFB, CCAFS 19,050 8,200 $90 $105

Atlas IIA 20 VAFB, CCAFS 16,130 6,760 $75 $85Atlas IIAS 21 VAFB, CCAFS 19,000 8,200 $90 $105Atlas IIIA 1 CCAFS 23,580 9,850 $90 $105

Pegasus XL 30

VAFB, Wallops, CCAFS,

Kwajalein 977 - $12 $15Taurus 5 VAFB, others 2,910 980 $18 $20

Minotaur 2VAFB, Wallops, CCAFS, Kodiak 1,470 - $11 $13

Titan II 87 VAFB 4,200 - $30 $40Titan IV B 8 VAFB, CCAFS 47,800 11,500 (GSO) $350 $450

100 “AsiaSat Cites Export Rules in Not Buying U.S. Satellite,” Space News, June 25, 2001, p. 6 101 Commercial Space Transportation: Year in Review (1997-2000) Reports, Associate Administrator for

Commercial Space Transportation (AST); International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA, January 2001

102 Titan II and Titan IV pricing information was extracted from International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA, January 2001

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7.5.4 Launch Sites

7.5.4.1 Cape Canaveral Air Force Station (CCAFS) and NASA Kennedy Space Center (KSC) CCAFS and KSC are colocated on the Atlantic coast of Florida. CCAFS is operated by the U.S. Air Force 45th Space Wing, while NASA operates KSC. CCAFS and KSC share many facilities in common, including industrial and test facilities, radars, and telemetry stations. These launch sites are able to support 19 types of LVs—from the suborbital Terrier/Orion to the Delta IV and Atlas V LVs (in 2002). Occasional hurricanes and thunderstorms between the months of June and November affect the scheduling of launches. Some of the CCAFS space launch complexes (SLCs) used for commercial U.S. launches are SLC-46, SLC-36, and SLC-17. SLC-46 is used for small LVs such as the Athena. This launch complex has a mobile access structure (MAS) and adjustable work platforms to access the LV. Spacecraft processing is conducted at Astrotech's commercial payload processing facilities. SLC-36's two pads are used to launch the Atlas II and Atlas III. These pads share a blockhouse but have their own mobile service tower (MST) and a fixed umbilical tower (UT). CCAFS' SLC-41, which was originally used to launch the Titan IV LVs, will be used to launch the Atlas V. The Atlas V will be assembled vertically offline, then rolled out to the launch pad for launch. Commercial spacecraft processing for commercial Atlas launches at CCAFS can be conducted at Astrotech facilities near Titusville, Florida. SLC-17 has two active pads for launching Delta II and III LVs. These pads allow simultaneous buildup of two LVs. SLC-37 is under construction at CCAFS to support the Delta IV family of LVs. 7.5.4.2 Kodiak The Kodiak launch site is located 250 miles south of Anchorage and can launch satellites into polar, LEO and Molniya orbits. It includes a launch control and management center, a payload processing facility, an integration and processing facility, spacecraft assemblies transfer facility, and a launch pad and service structure, LP1. LP1 has a flat concrete apron, a built-in flame duct, and a rotating service structure capable of accommodating Castor 12-size LVs, such as the Athena. The service structure is a clamshell design that rotates around a fixed tower and encloses the LV as it is assembled on the launch pad. Kodiak's yearly mean temperature is 40°F; the normal temperature falls below 32°F only 3 months of the year. Visibility and prevailing winds compare favorably with those at VAFB.103

103 Web site: http://www.akaerospace.com/frames1.html

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7.5.4.3 Vandenberg Air Force Base VAFB is located on the central coast of California. It is operated by the U.S. Air Force 30th Space Wing and used for high-inclination launch azimuths, including true polar and SSOs. VAFB weather is generally mild year-round. The VAFB launch complexes supporting U.S. commercial launches are SLC-3E, SLC-2, SLC-6, and SLC-576E. SLC-3E currently supports Atlas IIA and Atlas IIAS launches. The deactivated SLC-3W, which was used to launch small weather satellites, was to be refurbished for launching the Atlas V. However, due to a contract restructuring, SLC-3W will not be refurbished.104 SLC-3E facilities include an MST, a UT, and the launch and services building. Payload processing is conducted at an Astrotech facility near VAFB. Delta LVs are launched from SLC-2's only operational pad, SLC-2W. Delta IV launch operations will be conducted from SLC-6, which was the West Coast launch site for the Athena LV from 1995 until December 1999 and is approximately 15 years old. The SLC-6 has an enhanced MST and a large new movable shelter called the Shuttle Assembly Building. Other launch capabilities include SLC-576E used to launch Taurus LVs and launch facilities at Spaceport Systems International (SSI). SSI provides launch and range services throughout prelaunch operations, liftoff, and satellite insertion. The first Minotaur mission was successfully launched from SSI's launch facility on January 26, 2000. Table 7-19 provides additional information about the major U.S. launch sites and their respective launch capacities. The annual estimated launch capacity for each LV is the maximum launch capacity independent of other LV launches. In actuality the total launch capacity for a given launch site is much lower than the sum of the individual launch capacities for each LV at this site. Capacity estimates shown with an asterisk in Table 7-19, such as for the Pegasus LV, represent the total launch capacity of the combined launch sites.

104 Edmardo J. Tomei, Space Launch Operations, The Aerospace Corporation

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Table 7-19. United States Launch Site Capabilities105




Launch Vehicles


First Launch

CCAFS 28.5° N 80.5° W

28°/57° 2 2 12 Atlas IIA & III G,C 1992 / 2000

1 1 10* Athena I & II G,C 1995 / 19982 2 14-17 Delta II & III G,C 1990 / 19981 1 17 Delta IV G,C 20020 0 12* Pegasus G,C 19902 0 5-8 Shuttle G 19811 1 1-2 Titan IV G 19891 1 TBD Atlas V G,C 2002

Kodiak 57.6° N 152.2° W

63°/116° 1 1 10* Athena I & II G,C 1995 / 1998

- 0 - Minotaur G 2000Vandenberg 34.6° N

12.1° W51°/145° 1 1 4 AtlasIIA G,C 1992

1 1 6 Delta II G,C 1989 / 19981 1 17 Delta IV G,C 20021 0 6 Minotaur G 20001 0 2 Minuteman III G 19831 0 12* Pegasus G,C 19901 0 12* Taurus G,C 19941 1 12 Titan II G 19621 1 1-2 Titan IV G 1989

*Total launch capacity of combined launch sites

7.5.5 Launch Vehicles 7.5.5.1 Pegasus The Pegasus is a three-stage LV capable of carrying satellites weighing up to 1,000 lb to LEO. It is launched from the Stargazer L-1011 aircraft, which allows the Pegasus to reach a wide range of orbits and to operate from any location with a suitable airfield. The Pegasus had a flawless record from late 1996, launching 17 times from 1997 through 2000. However, the Pegasus was involved in the June 2, 2001 failure of the X-43A/Hyper-X launch.106 The Pegasus primary mission is to launch small commercial and government LEO payloads. Six Pegasus flights were launched in 1998. Pegasus launches originate from California, Virginia, Florida, the Canary Islands in Spain, and the Kwajalein Atoll in the Marshall Islands. The Pegasus may eventually be launched from Alcantra, Brazil upon U.S. government approval. OSC tries to have two launch sites available for each launch inclination or type of orbit. This encourages the launch sites to reduce their costs.


January 2001; Teal Group Corporation, World Space Systems Briefing; Forecast International 106 “HESSI Solar Explorer Delayed In Wake Of Pegasus Failure, Space Daily,” June 5, 2001

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7.5.5.2 Taurus The Taurus is a four-stage, ground-launched LV derived from the Pegasus program. The Taurus can be launched from California, Virginia, and Florida and can be launched from a dry concrete pad. It has a launch system setup time of 5 days or less and a launch cycle of 3 days.107 Although launch site setup time is minimal, typical total turnaround time for a Taurus—from receipt of order to launch—is approximately 18 months.108 OSC recently eliminated the noncommercial Taurus configuration, which used a government-furnished first-stage Peacekeeper motor. The commercially available Taurus uses the Castor 120 engine and is believed to cost between $18–$20M. The Taurus is marketed as an alternative to the Pegasus XL because of its transportability, low launch support costs, and greater payload carrying capabilities. The Taurus fills the cost and performance gap between Pegasus and the industry's much larger, more expensive LVs, delivering satellites weighing up to 3,000 lb into LEO, or up to 800 lb into GTO. The first Taurus launch was in late 1994, while its first commercial launch was in 1998. The Taurus has been successfully launched five times. In June 1996, OSC applied for a Technical Assistance Agreement with the U.S. Department of State to permit it to launch the Taurus outside the United States at launch sites such as Alcantara in northeastern Brazil. It is believed that the next generation Taurus 2 will cost between $20–$25M to develop.109 However, development of the Taurus 2 will depend on market demand for the current version. 7.5.5.3 Minotaur The Air Force Orbital Suborbital Program Space Launch Vehicle (OSPSLV), also known as the Minotaur, consists of Minuteman II and Pegasus rocket components. Surplus Minuteman II rocket motors serve as the LV's first and second stages. These motors are part of a $206.4M contract awarded OSC by the Air Force to convert as many as 24 excess Minuteman IIs into small orbital and suborbital LVs for launch between 1999 and 2004.110 The Minotaur's third and fourth stages, as well as its guidance and control system, use technology from the Pegasus XL. The Minotaur is capable of launching several payloads of up to 750 lb to a 400 nmi. SSO. The conversion time for each LV is between 12–18 months. The typical time from

107 Airclaims, February 26, 1997 108 World Space Systems Briefing, Teal Group Corporation, June 2000 109 See note 107 above 110 World Space Systems Briefing, Teal Group Corporation, March 2000

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contract to launch is 18 months with a minimum of 60 days between launches. The estimated price for the baseline configuration is approximately $12.5M.111 The first Minotaur was successfully launched from the commercial spaceport at VAFB on January 26, 2000. As of December 2000, there have been two successful launches, which carried 12 small satellites into orbit. This LV is capable of launching from a government pad at VAFB, CA, as well as from commercial spaceports at VAFB, Wallops Island, Virginia, Cape Canaveral, Florida, and Kodiak Island, Alaska. The Space and Missile Systems Center has more than 350 Minuteman II ICBMs in storage that could be converted into LVs. 7.5.5.4 Athena The Athena family includes two small LVs: the three-stage Athena I and the four-stage Athena II. The LVs are modular and, with the exception of the extra Castor 120 solid motor on the Athena II, share common components. The Athena I can loft payloads weighing up to 1,800 lb while the Athena II can handle spacecraft up to 4,500 lb. An improved Athena II is being developed to fill the gap between the Athena II and the larger Atlas III LV to compete with Boeing's Delta II. The improved Athena II will have a LEO payload capacity of 8,800 lb. The first Athena I launch in 1995 failed. The first Athena II launched was in 1998. Early Athena polar launches were made from VAFB, while launches for satellites to be placed in equatorial orbits were made from CCAFS. However, since 1999, Athena West Coast launches have been moved to the Kodiak Launch Complex, freeing the VAFB launch complex for the Boeing Delta IV. At each location, Athena launch preparations use a stack-and-shoot approach in which the LV is vertically assembled on the pad. An Athena I launch requires a 30-person, 8 hours/day, 15-day schedule, while an Athena II requires 18 days.112 The FAA estimates that commercial Athena I launches costs $16–$17M, Athena II launches costs $22–26M, and the improved Athena II will cost $30M.113 7.5.5.5 Atlas The Atlas IIA, Atlas IIAS, and Atlas III LVs are the only Atlas LVs being used today. The Atlas IIA and IIAS are used to carry medium-sized commercial or government satellites to GTO and are similar in design. Both use the RL10 engines with optional nozzle extensions for the Centaur stage. However, the Atlas IIAS also has additional solid strap-on boosters.


January 2001 112 Forecast International, Athena, September 2000. 113 See note 110 above

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The first Atlas IIA launch was in 1992; the first Atlas IIAS launch was 1 year later. Lockheed Martin's newest LV, the Atlas IIIA, launched the Eutelsat W4 satellite for Alcatel Espace on May 24, 2000. In addition, three versions of the Atlas V LV are being developed, the first of which should be available for launch in 2002. The Atlas III uses the Russian-made RD 180 engine, capable of providing more thrust than two NASA space shuttle main engines combined. The Atlas III uses two engines, compared to the Atlas IIAS' nine. The Atlas III requires two, rather than the Atlas IIAS' five, in-flight stage separations. Furthermore, engineers eliminated 15,000 parts when designing the Atlas III, resulting in an LV that can be factory-assembled in a day, rather than the weeks required for the Atlas II LV.114 Plans to increase the Atlas III's launch capability focus on increasing the size of the Centaur's dual engine. The Atlas III can lift 9,920 lb to GTO.115 The Atlas V will be able to extend this lift capability to between 11,000–19,114 lb by using a new first-stage design called the common core booster (CCB).116 The maximum annual flight rate capability for the Atlas family is about 12 missions per year from CCAFS and four from VAFB.117 However, ILS has demonstrated only one launch per year from VAFB, due to low LV demand. The CCAFS rate is determined by the Air Force, which sets the duration between Atlas launch slot centers.118 All Atlas II launches have been successful to date, including eight Air Force missions. During the last 6 years Atlas has had a perfect record, with over 50 launches. The typical time from contract signing to launch is about 18 months.119 Although the Atlas V is expected to meet its scheduled 2002 launch, domestic production of the Russian-designed main engine for Lockheed Martin's Atlas V LV is at least 3 years behind schedule. The first U.S.-built RD-180, which is a half-sized version of the RD-170 engine, will not be available until 2008 at the earliest. Lockheed Martin is required to build the RD-180 domestically in order to avoid dependence on Russia for launching U.S. national security payloads. Lockheed Martin will use Russian-built engines until domestically built ones are available.120 7.5.5.6 Delta BLS’s Delta II, Delta III, and Delta IV LV programs have been merged into a single production line. This will flatten its organizational structure, centralizing supplier interfaces and providing customers with a single point of contact. 114 “Atlas 3 Poised for Flight; Space.com Live Coverage,” Todd Halvorson, Space.com, May 16, 2000 115 ILS Corporate Communications Department

116 ILS Corporate Communications Department 117 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001 118 Discussion with Orbital Sciences Corp. personnel 119 ILS Corporate Communications Department 120 “RD-180 Domestic Production Delayed Until 2008,” Jason Bates, Space News, May 28, 2001

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The Delta II program was started in 1986. It is used for DoD, NASA, and commercial launches. The Delta III consists of two stages and nine first-stage strap-on boosters and was developed to meet the growing weight of GTO payloads that were too heavy for the Delta II. Delta III cost-cutting initiatives resulted in an LV that was built almost entirely of composite materials, has significantly fewer parts than the Delta II, and incorporates a substantial amount of French and Japanese-produced hardware. The Delta III competes with the Atlas IIAS, Atlas III, and Ariane 4. The combined flight rate for Delta II and Delta III launches is 10–12 per year. The Delta II has demonstrated a peak flight rate of 12 per year, although its maximum surge capability is about 15 per year.121 The Delta IV Medium and Delta IV Heavy were designed for the U.S. Air Force's EELV program. The Delta IV Medium and Medium Plus LVs are to be launched in 2002, while the Delta IV Heavy is to be launched in 2003. The Delta IV is expected to launch the majority of the U.S. military's satellites. The fully integrated Delta IV first stage has successfully completed a static fire test and is on target for an early 2002 delivery. Up to 17 Delta IV Medium or Medium Plus and up to 13 Delta IV Heavy launches are planned per year. But the combined flight rate of all Delta IV configurations will not exceed 24 per year—17 from CCAFS and seven from VAFB. BLS is able to manufacture up to 40 Delta IVs per year.122 BLS has booked an unidentified commercial customer for the spring 2002 maiden flight of the Delta IV LV.123 BLS sold its first Delta IV for the mid-2003 launch of PT Pasifik Satelit Nusantara's M2A satellite, which was built by SS/L.124 BLS's second commercial booking, the Estrela do Sul spacecraft, was also built by SS/L. This launch is scheduled for the third quarter of 2002. The first U.S. Air Force Defense Satellite Communications System (DSCS) spacecraft to be launched on the Delta IV is scheduled for the second quarter of 2002.125 Eventually Delta IV LVs will launch SBIRS early-warning satellites, spy satellites, NAVSTAR GPS navigation satellites, and advanced communications satellites for the Air Force and the National Reconnaissance Office.126


January 2001 122 World Space Systems Briefing, Teal Group Corporation, September 2000 123 “Commercial Client Books 1st Launch on Boeing's Delta 4,” Space News, July 2, 2001, p. 8 124 “Boeing Names PSN First Delta 4 Passenger,” Space News, April 2, 2001, p. 18 125 “Loral Contracts for Boeing Delta 4 Launch,” Space News, April 30, 2001 126 World Space Systems Briefing, Teal Group Corporation, September 2000

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7.5.5.7 Space Shuttle The proposed U.S. 2002 budget can support six shuttle flights for the fiscal year. NASA's most recent timetable for the ISS—still not officially updated to reflect changes ordered by the White House—requires between four to six shuttle flights per year through 2005. The constrained shuttle flight rate requires that NASA give priority to the ISS, Hubble Space Telescope reboost, and microgravity payloads.127 President Bush requested that NASA aggressively pursue space shuttle privatization opportunities and cut operating costs by relying more heavily on private industry.128 Shuttle flights cost approximately $500M on average, nine times higher than original projections. In addition, the shuttle is only flying 13 percent of the flights initially proposed for this program.129 Space shuttle fuel cell electrical energy production limits mission duration. The longest shuttle mission to date has been 18 days, while docking duration to the ISS has only been a few days.130

7.5.6 U.S. Launches and Revenues Table 7-20 shows past U.S. commercial and government launch rates and estimated launch revenues. Estimates for 1995 and 1996 noncommercial launches were not available. Launch revenues assume commercial and government launches are charged at a rate consistent with FAA price estimates.

Table 7-20. U.S. Launch Industry Revenues and Launches131

1995 1996 1997 1998 1999 2000

Est. Commercial Revenue ($M)

$481 $673 $974 $1,120 $766 $370

Commercial Launches

11 11 14 17 13 7

Est. Noncommercial Revenue ($M)

- - $2,795 $1,834 $2,107 $2,667

Noncommercial Launches

- - 24 19 18 21

127 “White House Budget Plan Puts Triana Mission on Hold,” Brian Berger, Space News, March 26, 2001 128 “NASA Cuts Earth Science Funds in Budget Proposal,” Stew Magnuson and Brian Berger, Space

News, April 16, 2001 129 “The Need to Persist,” Bob Haltermann, Space News, April 16, 2001 130 “Long Shuttle Missions Are Possible,” Owen K. Garriott, Space News, April 9, 2001 131 Commercial Space Transportation: Year in Review (1997-2000) Reports, Associate Administrator for

Commercial Space Transportation (AST)

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7.5.7 U.S. LV Demand Forecast 7.5.7.1 Orbital Sciences Launch Vehicles Although no failures of OSC LVs occurred from November 1996 through December 2000, demand for the LVs continues to decline because the demand for small LVs has been flat and the number of competitors has increased. The failure of Iridium and other LEO ventures has also decreased demand for small LEO launches. Demand for OSC LVs will continue to depend on U.S. civil and government needs. NASA will probably require two to three Pegasus-type launches per year for scientific payloads in the near-term and may involve OSC in NASA's manned space flight efforts.132 Although the Pegasus' current flight rate is 2–3 per year, it could be raised to as many as 8–12 per year with sufficient market demand. Demand for Taurus launches could be as high as four per year, significantly below OSC's 12 launch/year capability.133 Demand for Minotaur LVs is limited to launching scientific and research satellites sponsored by NASA and Department of Defense. U.S. policy prevents LVs built from surplus missile components from launching commercial payloads. Although these LVs are not commercially available, they impact the commercial launch industry by shifting some of the government's demand from commercial LVs to the Minotaur. NASA's annual demand for launches has decreased, causing cash-flow problems for OSC. OSC prepurchased materials for some of NASA's 16 future small payload launches under NASA's Small Expendable Launch Vehicle Services (SELVS 2) program, scheduled to begin in mid-2000.134 Since OSC receives milestone-driven payments, NASA schedule slips translate into OSC revenue delays. 7.5.7.2 Lockheed Martin Launch Vehicles Lockheed initially anticipated launching and supporting 10–12 Athenas per year. However, actual launch rates are closer to two per year because of low demand. Although NASA recently added the Athena 2 to its NASA Launch Services Program, there is no guarantee that NASA will choose the Athena LV over OSC's Pegasus XL or Taurus for its launches. Within the last year, senior Lockheed Martin officials have openly discussed the possibility of closing down the Athena production line since there is only one firm launch on the Athena manifest. There are two U.S. vendors competing for this niche market and clearly not enough launches to keep them both in business.135 Forecast International predicts that the low number of sales will most likely result in the

132 “Orbital Sciences to Emphasize Core Aerospace Enterprises,” Sam Silverstein, Space News, February

26, 2001 133 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA 134 World Space Systems Briefing, Teal Group Corporation, March 2000 135 “Athena Rocket's Future Remains Uncertain,” Jason Bates, Space News, March 26, 2001

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Athena program's cancellation within several years, since Lockheed Martin cannot keep the Athena production line open to build fewer than five or six units per year.136 In the past, the CCAFS Atlas II flight rate has ranged between six and eight per year. Although annual demand for the Atlas II and Atlas III is projected to stay steady at six to eight launches per LV type, only one Atlas III has been launched to date. The Atlas V will compete against BLS' Delta IV LV for launching the U.S. government's heaviest satellites during the life of the EELV program. So far, the Air Force is slated to procure only nine Lockheed Martin EELV launches between 2002 and 2006.137 However, ILS has received a small amount of U.S. Air Force funding to prepare to launch a defense satellite currently slated to fly in October 2002 aboard a BLS Delta IV LV. The Delta IV and the Atlas V are backups for each other. The Atlas V will be used if the Delta IV is not ready in time.138 ILS is expected to announce the first customer for the new Atlas V in 2001. Inmarsat is in final negotiations with ILS to purchase Atlas V LVs to launch a pair of 6,000 kg Inmarsat 4 satellites starting in late 2003. The satellites are too large for launch aboard Sea Launch Zenit LVs.139Ariane 5 will be a backup choice for both launches.140 7.5.7.3 Boeing Launch Vehicles Launches of the Delta II are planned through 2004, after which time the Delta II could be phased out as BLS transitions to the Delta IV Medium LV.141 The Delta III has a poor launch record; its only three launches, two with commercial payloads and the third with a dummy payload, were failures. The existing Delta III inventory will make it possible for Boeing to offer 6- to 9-month delivery times until its inventory is consumed, at which time the Delta III LV may be discontinued. No Delta III launches are scheduled in 2001; the next launch of the Delta III is scheduled for the first quarter of 2003 for New ICO Global Communications Ltd of London. Boeing currently has nine satellites assigned to the Delta III LV—five for ICO, two for SkyBridge LP, and two for NASA. In addition, Boeing has reserved eight Delta IIIs for undefined payloads. Customers with contracts to launch their spacecraft on Delta IIIs have the option of moving that launch to the smallest version of the Delta IV, which has similar characteristics to the Delta III.142 The Delta IV reportedly has 50 launch orders, of which 19 are for the U.S. Air Force. BLS plans to launch one Delta IV mission per quarter in 2002, demonstrating the Delta 136 Forecast International, Athena, September 2000 137 Forecast International, Atlas Launch Vehicle, January 2000 138 “ILS Chief Expects New Proton Rocket Orders,” Space News, April 2, 2001, p. 18 139 Florida Spacegram e-mail from Edward L. Ellegood, Spaceport Florida Authority 140 “Inmarsat Picks Atlas 5 For Satellite Launches,” Space News, April 30, 2001 141 World Space Systems Briefing, Teal Group Corporation, September 2000 142 “Delta 4 Sales Eclipse Delta 3, But Boeing Still Sees Market for Troubled Launch Vehicle,” Jason

Bates, Space News, July 23, 2001

61

IV Heavy on its fourth mission.143 BLS has sold out all four Delta IV 2002 launches and has sold out half of its expected 2003 launches.144With its current backlog, the Delta IV should stay active through 2005–2006. SkyBridge will be another major Delta IV customer; it has contracted BLS to launch SkyBridge's 40 satellites on Delta IIIs and Delta IVs starting in 2002 and 2003. However, the SkyBridge in-service date, which slipped from 2001 to 2003, is expected to slip again, resulting in delayed Delta launches.145 Mitsubishi has booked one firm Delta IV launch and has options for five others between 2004 and 2008.146 Table 7-21 shows U.S. launches in 2000 and forecasted U.S. launches by LV. These numbers come from a variety of sources.

Table 7-21. U.S. Launch Forecast 2000–2008147

2000E 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Pegasus 2 2 3 3 3 3 3 3 3

Taurus 1 1 - 1 - 1 - 1 -

Minotaur 2 - 1 2 1 2 1 1 2

Athena 1& 2

- 1 1 1 - - - - -

Atlas IIA/IIAS

7 5 2 1 - - - - -

Atlas III 1 3 3 3 3 2 - - -

Atlas V - - 2 2 3 3 4 4 4

Titan IV 2 4 4 2 - - - - -

Delta II 6 16 11 8 8 6 6 6 -

Delta III 1 - - 1 1 - - - -

Delta IV - 1 4 6 10 14 14 13 13

Shuttle 5 7 6 6 6 6 6 6 6

E = estimated

2000E 2001E 2002E 2003E 2004E 2005E 2006E 2007E 2008E

Pegasus 2 2 3 3 3 3 3 3 3

Taurus 1 1 - 1 - 1 - 1 -

Minotaur 2 - 1 2 1 2 1 1 2

Athena 1& 2

- 1 1 1 - - - - -

Atlas IIA/IIAS

7 5 2 1 - - - - -

Atlas III 1 3 3 3 3 2 - - -

Atlas V - - 2 2 3 3 4 4 4

Titan IV 2 4 4 2 - - - - -

Delta II 6 16 11 8 8 6 6 6 -

Delta III 1 - - 1 1 - - - -

Delta IV - 1 4 6 10 14 14 13 13

Shuttle 5 7 6 6 6 6 6 6 6

E = estimated 143 “Boeing Looking for Launch Customer,” Space News, January 22, 2001 144 “Delta 4 to Launch Air Force Satellite,” Space News, July 2, 2001, p. 9 145 “SkyBridge Plans Early Broadband Foray,” Peter B. de Selding, Space News, March 19, 2001 146 “Boeing, Mitsubishi Enter Partnership Agreement,” Space News, June 25, 2001 147 Forecast International; Teal Group Corporation, World Space Systems Briefing; International

Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA, January 2001

62

7.5.8 Evaluation of U.S. Launch Vehicles Demand for commercial missions on U.S. LVs has weakened. During the last 3 years, the U.S. launch industry has lost a significant portion of its commercial launch market share, dropping from 54 percent in 1998, to 38 percent in 1999, and to 20 percent in 2000.148 American-made LVs have lost market share to European and Russian LVs. The Ariane 4 and Ariane 5 LVs offer high reliability, schedule flexibility and customer service. The Russian LVs offer competitively priced launches and a long history of reliability. Similarly, U.S. satellite manufacturing market share dropped from a 10-year average of 75 percent down to 45 percent in 2000. Foreign satellite manufacturers acquired customers previously loyal to U.S. manufacturers, directing business to foreign LSPs.149 Furthermore, the launch capability and reliability of foreign LVs continued to improve, making them more competitive. Table 7-22 summarizes the strengths, weaknesses, opportunities and threats (SWOT) of major launch-capable countries covered in this section.

Table 7-22. Launch Industry SWOT Analysis by Country

Overview China Russia Europe United StatesStrength Strategic industry; no current

substitute State owned Chinese satellite purchaser able to request Long March launch

Existing launch Infrastructure and experience; ability to quickly increase production

Market leader and strategic partnerships

Government continued NRE investment and captive government market

Complementary to satellite building industry

Growing manned space effort Low labor and material cost High reliability and low insurance rates; in house financing and insurance

Long history of launches

Satellites need replacements and ISS need regular supply deliveries

Family of Long March launch vehicles supporting all weight classes

Strategic international partnerships

Schedule flexibility and well-maintained facilities

US companies are market leaders and vertically integrated

Government will always be significant customer and provider of NRE funding

Inexpensive labor costs Simple launch process allows short mission cycle times

First to market next generation heavy commercial launcher

Two major launch sites capable of launching wide variety of launch vehicles

Weakness Increasing overcapacity and flat launch demand

Technologically behind; limited satellite manufacturing capability

Cash shortage; number of competing strategic initiatives

Decisions by multiple country consensus; no single controlling body or vision

Export compliance issues

50% to 60% maiden voyage failure rate; increasing insurance rates

US export restrictions limiting commercial opportunities

Key launch site in another country

Only Ariane 4 and Ariane 5 currently being launched from Kourou.

Aging launch facilities

Difficulty in obtaining satellite financing

Low market share Aging work force and aging facilities

Satellite delivery delays result in launch site down time.

Inadequate budget for modernizing launch site and ranges

Aging launch infrastructure No international strategic partnerships

Environmental issues caused by toxic propellant boosters

Need to reduce Ariane 5 manufacturing cost; 2000 Arianespace was unprofitable

Opportunity Many space based applications developing including imaging, broadband, navigation

Pending acceptance into WTO 3rd seat on the ISS Soyuz replacement missions can create barter opportunities

Strategic Russian partnerships Delta IV and Atlas V have potential to reclaim market share

ISS will require steady number of replenishment flights

Increasing domestic satellite manufacturing capability and demand

Continued joint partnerships Ariane 5 cost reduction through learning curve

Continually creating joint partnerships

Angara launch vehicle will be cheaper and quicker to build, launched from Plesetsk

Potential launch of Vega and Soyuz from Kourou

U.S. leader in creating new space-based applications

Threat Stiff competition for government budgets

US export licensing could be tied to Chinese military sales and technology transfer issues.

Limited government budget to fund strategic initiatives

Transition from Ariane 4 to Ariane 5 will reduce maximum number of European launches

Satellite and launch vehicle reliability issues

Tight satellite financing market; unhealthy space insurance industry

China's lowest-price strategy will continue to reduce its profitability

Potential need to shift heavy launches from Baikonur to Plesetsk

Discontinuing Ariane 4 will leave Ariane 5 without a back-up launch vehicle

Declining market share

Continued overcapacity could weaken industry through reduced profitability

ISS commitments competing for launch vehicle/launch site development funding

Financial health of some U.S. launch service providers

148 “Launch Companies Facing Buyer's Market,” Ben Iannotta, Space News, February 26, 2001 149 “Some Fear Bite of U.S. Export Rules on Industry,” Jason Bates, Space News, February 26, 2001

63

8. Launch Vehicle Capabilities This section compares the launch capabilities of various heavy and intermediate-class commercial LVs. Figure 8-1 shows their LEO capabilities, while Figure 8-2 shows their GTO launch capabilities.

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

Soyuz U

Ariane 42L

Delta III

Long March-2F

Atlas IIAS

Ariane 44L

Atlas IIIA

Long March-3B

Zenit-3SL

Ariane 5

Proton

Payload Weights (Lbs)

Figure 8-1. Heavy and Intermediate LV LEO Capability150 Figure 8-2 shows the relative lifting ability to GTO of several commercial LVs. The Atlas IIIA, which is currently the most powerful U.S. commercial LV being used, is less powerful than the Ariane 5, Long March 3B, Zenit 3SL, Ariane 44L, and Proton. Table 8-1 shows the expected LEO and GTO capabilities of the Delta IV and Atlas V LVs. The first Delta IV and Atlas V are not expected to launch until 2002. The heavy versions of both of these LVs have greater launch capacity than the current Ariane 5 or Proton LVs. LV performance in terms of lifting capabilities has reduced U.S. market involvement in the growing heavy-lift LV market segment. Ariane 5 has significantly more lift capability than all other existing LVs and will have had several years of service before the next comparable LVs—the Delta IV and Atlas V—come to market. Once BLS' first Delta IV and Lockheed Martins' first Atlas V successfully launch, the U.S. market share could increase.


January 2001

65

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

Atlas IIA

Ariane 44P

Long March-2E

Ariane 42L

Atlas II /IIAS

Delta III

Atlas IIIA

Proton

Ariane 44L

Zenit-3SL

Long March-3B

Ariane 5

Payload Weights (Lbs)

Figure 8-2. Heavy and Intermediate LV GTO Capability151

Table 8-1. Expected Delta IV and Atlas V LEO & GTO Capabilities 152

Launch Vehicle LEO (Lbs) GTO (Lbs)

Price* Low ($M)

Price* High ($M)

Atlas V 400 27,550 10,900-16,800 $75 $90Atlas V 500 22,700-45,200 8,800-19,100 $85 $110

Atlas V Heavy - - $140 $170Delta IV M 17,900 9,285 $75 $90

Delta IV M+ (4,2) 23,000 12,900 $85 $100

Delta IV M+ (5,2) 17,500 10,200 $85 $100

Delta IV M+ (5,4) 25,300 14,500 $95 $110

Delta IV H 50,800 29,000 $140 $170

Launch Vehicle LEO (Lbs) GTO (Lbs)

Price* Low ($M)

Price* High ($M)

Atlas V 400 27,550 10,900-16,800 $75 $90Atlas V 500 22,700-45,200 8,800-19,100 $85 $110

Atlas V Heavy - - $140 $170Delta IV M 17,900 9,285 $75 $90

Delta IV M+ (4,2) 23,000 12,900 $85 $100

Delta IV M+ (5,2) 17,500 10,200 $85 $100

Delta IV M+ (5,4) 25,300 14,500 $95 $110

Delta IV H 50,800 29,000 $140 $170 *Prices are estimates.


January 2001 152 See note 147 above; http://www.boeing.com/defense-space/space/delta/launchservices.htm; and

http://www.ilslaunch.com

66

9. Price LV prices are influenced by market demand, which in turn is influenced by reliability, launch schedule flexibility, customer service, insurance premiums, range fees, and LV manufacturing costs. This section focuses on a price performance metric used by satellite manufacturers and SSPs to determine LV competitiveness. The metric is measured in $K/payload pound, which reflects the approximate price customers paid for launching commercial satellites to GTO in 2000. For example, Surrey Satellite Technology, a small-satellite manufacturer, seeks launch prices of between $3,700 and $4,500 per pound. Surrey has launched 19 satellites on most types of LVs, sometimes as a secondary payload, and plans on maintaining a launch cost average of $3,640 per pound.153 Throughout this section FAA LV price estimates were used in lieu of actual launch prices, since company-proprietary pricing information was unavailable. Payload launch masses were obtained from The Aerospace Corporation's SSED database. The metrics shown in Table 9-1 were calculated by dividing FAA LV price estimates by payload launch masses. LVs are listed by their GTO lift capabilities. These price estimates include range fees but not insurance premiums. Price metrics for LVs that were not commercially launched in 2000 are not provided. For comparison purposes only, the estimated cost per pound for launching a noncommercial Long March 3B payload was included in this table. Table 9-1 shows (1) that some of the smaller LVs are relatively more expensive because of their low production rates, and (2) the lowest-priced launch option is not always chosen.

153 “European Countries Step Up Use of Small Satellites,” Peter B. de Selding, Space News, May 28, 2001

67

Table 9-1. Winning Launch Cost/Pound Metric (2000 Data)

# of

Commercial LV wins

Price Low ($M)

Price High ($M)

Avg winning $K/Lb

Lowest winning $K/Lb

Highest winning $K/Lb

Ariane 5 4 150 180 15.5 13.5 20.7Proton K 6 75 95 11.9 9.7 13.4Zenit 3 SL 3 75 95 9.9 7.3 14.0Long March 3B 0 50 70 11.7 - -Ariane 42s,44s 8 70 125 11.6 10.9 12.9Long March 2E/2F 0 45 55 - - -Atlas IIIA 1 90 105 13.7 13.7 13.7Atlas IIs 2 75 105 15.6 12.4 21.0Delta III 0 75 90 8.8 - -Soyuz U 3 30 50 2.5 2.5 2.6Delta II 1 45 60 13.4 13.4 13.4Ariane 40 0 65 85 - - -Long March 2C,2D 0 10 25 - - -Dnepr-1 1 10 20 48.7 48.7 48.7Cyclone 2, 3 0 20 25 7.6 - -PSLV 0 15 25 - - -Athena 0 16 26 - - -M-5 0 55 60 8.5 - -Rockot 0 12 13 4.5 - -Moliyna 0 30 40 - - -Cosmos 2 12 14 8.0 6.3 10.7Taurus 0 18 20 14.2 - -J-1 0 30 45 - - -Start-1 1 5 10 15.2 15.2 15.2Minotaur 0 11 13 36.6 - -Pegasus XL 2 12 15 34.1 25.5 51.5VLS 0 8 8 - - -Shavit 0 10 15 - - -

Inte

r.H

eavy

Med

ium

Smal

l

Table 9-2 forecasts the expected cost/pound for launching satellites to GTO on the Delta IV and Atlas V, both of which should be commercially available in 2002. The availability of these two LV families should add additional price pressures, further reducing the cost of launching satellites.

68

Table 9-2. Forecasted U.S. Heavy-Lift LV Cost/Pound Metric

Launch Vehicle

Low GTOPrice/Lb

($K)

High GTOPrice/Lb

($K)Atlas V 400 $6.8 $8.2Atlas V 500 $6.1 $9.4

Atlas V Heavy - -Delta IV M $8.7 $10.5

Delta IV M+ (4,2) $7.3 $8.5Delta IV M+ (5,2) $8.9 $10.4Delta IV M+ (5,4) $7.0 $8.1

Delta IV H $5.9 $7.1

Launch Vehicle

Low GTOPrice/Lb

($K)

High GTOPrice/Lb

($K)Atlas V 400 $6.8 $8.2Atlas V 500 $6.1 $9.4

Atlas V Heavy - -Delta IV M $8.7 $10.5

Delta IV M+ (4,2) $7.3 $8.5Delta IV M+ (5,2) $8.9 $10.4Delta IV M+ (5,4) $7.0 $8.1

Delta IV H $5.9 $7.1 Table 9-2 shows the importance of the successful launch of the new U.S. heavy-lift LVs to the U.S. launch industry. U.S. intermediate and medium LVs were generally more expensive than those of competing systems. However, as shown in Table 9-2, price per launch has not increased for U.S. heavy-lift LVs as much as their ability to launch heavier payloads, driving down the price/lb metric. This will make U.S. heavy-lift LVs more competitive. Although the Ariane 5 has a relatively high launch cost per pound, these higher costs are partially offset by lower insurance premiums. It is estimated that by 2002, launch insurance premiums for the Delta IV and the Atlas V could reach 12–16 percent of the combined satellite and LV price, compared to the Ariane 5 premium of 6–8 percent. 154 155 156 (Note: the Ariane 5 insurance premium estimate was increased from a previous 5–6 percent to reflect the July 12, 2001 launch failure. Additional insurance premium information is included in Appendix A.) Should Ariane 5 receive the currently projected insurance benefit, their SSP customers would pay $20–$30M less than the Delta IV or Atlas V for launch insurance, assuming the launch of a hypothetical $250M satellite in 2002. The advantage to Arianespace in the competitive LSP market is clear, although overall SSP launch costs may be affected in more complex ways. However, this launch insurance differential should disappear over time as Atlas V and Delta IV build launch histories. The range fees charged LSPs are included in the FAA price estimates. U.S. range fees are estimated to be between 1–3 percent of the LV price. 157 Ariane 4 range fees are estimated to be between 3–5 percent of the LV price. 158 No range fee estimates for

154 International Space Broker slide presentation, Satel Conseil, 7th Symposium Paris -September 2000 155 “Insurance Rates May Rise 50%-70% in 2001,” Interspace, January 3, 2001 156 Arianespace and Insurance Companies, e.space, Arianespace newsletter, June 2000 157 “Air Force May Ask Congress to Amend Range Fee Rules,” Jeremy Singer, Space News, April 16,

2001 158 Ariane Operational Activities in French Guyana Organization and Funding, slide presentation,

November 20, 2000

69

Russian and Chinese launches were available, but one might assume these fees to be similar in proportion to the European and U.S. range fees. The Soyuz LV was the lowest-priced LV per pound of payload weight. Its launch capabilities closely matched the lift requirements for Soyuz payloads and were relatively inexpensive. With the exception of the Delta III, which has a poor reliability record, the Zenit 3SL had the best cost-performance ratio, $7.3K/lb, for heavy and intermediate weight class launches. The average cost for intermediate-heavy payloads was $12.8K/lb. Although the Long March 3B had an average estimated cost of $11.7K/Lb for a noncommercial launch, it could have been an economical alternative for 12 commercial launches in 2000. The estimated cost of these missions using the Long March 3B would have been $5.8K/lb. Likewise, the Long March 2E/2F could have been an economical alternative to 11 missions in 2000. However, neither LV won any commercial launches—due in part to U.S. government export policies, and in part to perceptions of Chinese LV reliability. China could make their LVs more competitive by improving their marketing efforts and maintaining a better relationship with the U.S. government. Managing the $K/lb metric is critical to maintaining market share in this highly price sensitive industry. Not only must prices be kept low, but LVs must also be sized appropriately to their market segments. Deployment of new LVs—such as the Indian Space Research Organization's (ISRO) GSLV—will create additional price pressures. The GSLV launches are expected to start in 2007, launching 5,000 kg commercial satellites for $50M, or roughly $10,000 per kg.159 This is considerably cheaper than current heavy and intermediate launch costs. Likewise, BLS claims that the Delta IV will be able to reduce launch costs of telecommunications satellites by about 25 percent, to approximately $12.5 K/lb.160

159 “India Plans to Upgrade GSLV,” Space News, May 28, 2001, p. 24 160 “Commercial Client Books 1st Launch on Boeing's Delta 4,” Space News, July 2, 2001, p. 8

70

10. Schedule Customers want LSPs to both guarantee launch dates and provide schedule flexibility for supporting variables such as late satellite deliveries.161 Schedule flexibility is especially important to satellite manufacturers facing late-delivery penalties. For example, during the first quarter of 2001, part of Lockheed Martin Space Systems division's $40M revenue loss provision included possible late satellite delivery penalties.162 Customers have requested 3- to 6-month contract-to-launch deliveries even though it takes 12–18 months to build LVs. Sometimes these requests are met by juggling LV delivery dates; a new customer is given another customer's previously ordered LV. This is possible when the original customer's launch schedule has slipped or can accommodate the later delivery of a replacement LV. Otherwise, quicker delivery schedules require LSPs to carry prebuilt LV inventory or reduce LV manufacturing cycle times.

At U.S. sites, commercial customers are concerned that military launches could bump their commercial launch. In 2000, a foreign customer's commercial launch was bumped, causing the customer to absorb additional travel expenses to the United States Although this rarely occurs, it adds perceived risk to launching from U.S. launch sites.

This section covers launch delivery schedules and the factors that drive these schedules—launch site capacity and utilization, LV manufacturing duration, launch team size, and mobility. Table 10-1 estimates 2000 launch capacity (maximum flights/year), LV utilization, and nominal contract-to-launch cycle times. LVs with high launch capacity, low launch utilization, and short contract-to-launch cycle time are well positioned to grow market share. The columns in Table 10-1 refer to the following:

• Column 2: number of commercial launches in 2000 • Column 3: number of noncommercial launches in 2000 • Column 4: yearly launch capacity by LV • Column 5: 2000 launch capacity utilization. • Column 6: nominal contract-to-launch cycle time • Column 7: shortest contract-to-launch time during 1997 to 2000. • Column 8: LV build time or availability of LV inventory • Column 9: launch campaign duration—time spent integrating and testing payload • Column 10: time between two consecutive launches from same launch pad • Column 11: nominal time between consecutive LV launches.

(launch campaign duration and pad relaunch duration are launch site process times)

161 “Launch Industry Officials Expect Increased Competition In Next year Amid Fewer Deals,” Satellite

News, November 20, 2000 162 “Delays, Weak Market Hurt Lockheed Space Revenues,” Peter B. de Selding, Space News, April 30,

2001

71

Tabl

e 10

-1.

Laun

ch V

ehic

le C

ycle

Tim

es (2

000)

163

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Laun

ch V

ehic

le

# of

co

mm

erci

al

win

s

# of

non

-co

mm

erci

al

win

s

Estim

ated

la

unch

ca

paci

ty

(flt/Y

r)

% A

nnua

l la

unch

ca

paci

ty

utiliz

atio

n

Nom

inal

cy

cle

time

(mon

ths)

Best

co

ntra

ct

to la

unch

(m

onth

s)

Laun

ch

vehi

cle

build

tim

e (m

onth

s)

Laun

ch

cam

paig

n (d

ays)

Pad

rela

unch

(d

ays)

Est.

time

betw

een

laun

ches

(d

ays)

Aria

ne5

40

580

%10

-24

inve

ntor

y20

2130

Prot

on K

68

2070

%30

725

Zeni

t3 S

L3

06

50%

9-12

inve

ntor

y55

< 30

60Lo

ng M

arch

3B

04

667

%18

-24

1630

5050

Aria

ne42

s,44

s8

011

73%

10-2

43

inve

ntor

y20

-30

2121

Long

Mar

ch 2

E/2F

00

40%

18-2

416

N/A

N/A

Atla

s III

A1

08

13%

1890

+30

30At

las

IIs2

58

88%

1830

30D

elta

III

01

333

%Sh

ort

inve

ntor

y30

24-2

0So

yuz

U3

1030

43%

18-2

412

12-1

530

33

Del

ta II

1

512

50%

3024

-30

Aria

ne40

00

N/A

24in

vent

ory

20-3

021

21So

yuz

U /F

rega

t0

0N

/A18

-24

1212

-15

303

3Lo

ng M

arch

2C

,2D

,30

08

0%18

-24

1630

30D

nepr

-11

025

4%12

12in

vent

ory

15N

/AN

/AC

yclo

ne 2

, 30

14

25%

141

7PS

LV0

02

0%6

N/A

N/A

Athe

na0

012

0%15

-18

30M

-50

11

100%

4918

0R

ocko

t0

16

17%

18in

vent

ory

14-2

310

Mol

iyna

00

N/A

18-2

412

1530

360

Cos

mos

21

3010

%in

vent

ory

312

Taur

us0

112

8%18

53

46J-

10

01

0%95

95St

art-1

10

250

%in

vent

ory

Min

otau

r0

22

100%

1812

-18

60Pe

gasu

s XL

20

1217

%18

-24

33

30VL

S0

01

0%12

6N

/AN

/ASh

avit

00

10%

N/A

N/A

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Laun

ch V

ehic

le

# of

co

mm

erci

al

win

sco

mm

erci

al

win

s

Estim

ated

la

unch

ca

paci

ty

(flt/Y

r)

% A

nnua

l la

unch

ca

paci

ty

utiliz

atio

n

Nom

inal

cy

cle

time

(mon

ths)

Best

co

ntra

ct

to la

unch

(m

onth

s)

Laun

ch

vehi

cle

build

tim

e (m

onth

s)

Laun

ch

cam

paig

n (d

ays)

Pad

rela

unch

(d

ays)

Est.

time

betw

een

laun

ches

(d

ays)

Aria

ne5

40

580

%10

-24

inve

ntor

y20

2130

Prot

on K

68

2070

%30

725

Zeni

t3 S

L3

06

50%

9-12

inve

ntor

y55

< 30

60Lo

ng M

arch

3B

04

667

%18

-24

1630

5050

Aria

ne42

s,44

s8

011

73%

10-2

43

inve

ntor

y20

-30

2121

Long

Mar

ch 2

E/2F

00

40%

18-2

416

N/A

N/A

Atla

s III

A1

08

13%

1890

+30

30At

las

IIs2

58

88%

1830

30D

elta

III

01

333

%Sh

ort

inve

ntor

y30

24-2

0So

yuz

U3

1030

43%

18-2

412

12-1

530

33

Del

ta II

1

512

50%

3024

-30

Aria

ne40

00

N/A

24in

vent

ory

20-3

021

21So

yuz

U /F

rega

t0

0N

/A18

-24

1212

-15

303

3Lo

ng M

arch

2C

,2D

,30

08

0%18

-24

1630

30D

nepr

-11

025

4%12

12in

vent

ory

15N

/AN

/AC

yclo

ne 2

, 30

14

25%

141

7PS

LV0

02

0%6

N/A

N/A

Athe

na0

012

0%15

-18

30M

-50

11

100%

4918

0R

ocko

t0

16

17%

18in

vent

ory

14-2

310

Mol

iyna

00

N/A

18-2

412

1530

360

Cos

mos

21

3010

%in

vent

ory

312

Taur

us0

112

8%18

53

46J-

10

01

0%95

95St

art-1

10

250

%in

vent

ory

Min

otau

r0

22

100%

1812

-18

60Pe

gasu

s XL

20

1217

%18

-24

33

30VL

S0

01

0%12

6N

/AN

/ASh

avit

00

10%

N/A

N/A

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Laun

ch V

ehic

le

# of

co

mm

erci

al

win

s

# of

non

-co

mm

erci

al

win

s

Estim

ated

la

unch

ca

paci

ty

(flt/Y

r)

% A

nnua

l la

unch

ca

paci

ty

utiliz

atio

n

Nom

inal

cy

cle

time

(mon

ths)

Best

co

ntra

ct

to la

unch

(m

onth

s)

Laun

ch

vehi

cle

build

tim

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163

Inte

rnat

iona

l Ref

eren

ce G

uide

to S

pace

Lau

nch

Syst

ems,

Third

Edi

tion,

Ste

ven

J. Is

akow

itz, A

IAA

, Jan

uary

200

1.

72

10.1 Capacity Utilization Highly utilized launch facilities would normally be expected to have low schedule flexibility. However, Arianespace has demonstrated a 3-month contract-to-launch delivery even with a full launch manifest. Arianespace has streamlined its launch processes, has highly dedicated and trained launch teams, and continually upgrades its facilities. Arianespace's schedule flexibility and high reliability has helped it to capture market share and charge higher launch premiums for its services. Figure 10-1 shows heavy to medium LV capacity utilization for all commercial LVs in 2000. Maximum capacity for each LV, which is impacted by other LVs launched from the launch site, is assumed to be independent of the other LVs for this analysis. Figure 10-2 forecasts medium to heavy LV utilization in 2008, based on expected availability of new LVs and projected LV demand.

0

5

10

15

20

25

30

35

Lon

g

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3B

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Cap

acity

Non-Commercial Commercial Unused Capacity

67% 0%

70%

43%

80%

80% 50% 50%

50%38%

0

5

10

15

20

25

30

35

Lon

g

Mar

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Cap

acity

Non-Commercial Commercial Unused CapacityNon-Commercial Commercial Unused Capacity

67% 0%

70%

43%

80%

80% 50% 50%

50%38%

0

5

10

15

20

25

30

35

Lon

g

Mar

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Cap

acity


67% 0%

70%

43%

80%

80% 50% 50%

50%38%

0

5

10

15

20

25

30

35

Lon

g

Mar

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Prot

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L

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Cap

acity


67% 0%

70%

43%

80%

80% 50% 50%

50%38%


67% 0%

70%

43%

80%

80% 50% 50%

50%38%

Figure 10-1. Medium-Heavy LV Capacity Utilization (2000)

50%

67% 67%57%

54%

33%80%

33%

47%

57%

0

5

10

15

20

25

30

35

Lon

g

Mar

ch

H2

Prot

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Soyu

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Ang

ara

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ane

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L

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Del

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Cap

acity

Non-Commercial Commercial Unused Capacity

50%

67% 67%57%

54%

33%80%

33%

47%

57%

0

5

10

15

20

25

30

35

Lon

g

Mar

ch

H2

Prot

on

Soyu

z

Ang

ara

Ari

ane

5 Sea

L

aunc

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V

Atla

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Del

ta IV

Lau

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Cap

acity


50%

67% 67%57%

54%

33%80%

33%

47%

57%

0

5

10

15

20

25

30

35

Lon

g

Mar

ch

H2

Prot

on

Soyu

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Ang

ara

Ari

ane

5 Sea

L

aunc

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V

Atla

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Del

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Lau

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Cap

acity


50%

67% 67%57%

54%

33%80%

33%

47%

57%

0

5

10

15

20

25

30

35

Lon

g

Mar

ch

H2

Prot

on

Soyu

z

Ang

ara

Ari

ane

5 Sea

L

aunc

h

GSL

V

Atla

s V

Del

ta IV

Lau

nch

Cap

acity

Non-Commercial Commercial Unused CapacityNon-Commercial Commercial Unused CapacityNon-Commercial Commercial Unused CapacityNon-Commercial Commercial Unused Capacity

Figure 10-2. Medium-Heavy LV Capacity Utilization Forecast (2008)

73

Figure 10-3 shows capacity utilization for small to medium LVs in 2000. Capacity utilization for these LVs is low, which should translate into high schedule flexibility and relatively low prices as LSPs aggressively compete for business. Maximum launch capacity for these LVs is often constrained by each LV’s launch complex capacity or LV manufacturing limitations. Continued limited demand for small to medium LVs and low profit margins will probably result in some industry consolidation.

0

5

10

15

20

25

30

35

Lon

g

Mar

ch

2 /

4

J-1

Roc

kot

Cos

mos

Cyc

lone

Dne

pr

STA

RT

Zeni

t 2

Lau

nch

Cap

acit

y

Non-Comme rcial Comme rcial Unus e d Capacity2000 Launch Capacity Utilization

10%4%

50%25%

13%

0%

17%20%

0

2

4

6

8

10

12

14

16

18

PSL

V

VL

S

Tita

n II

Ath

ena

Tau

rus

Min

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r

Pega

sus

X

L

Lau

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Cap

acit

y

Non-Comme rcial Comme rcial Unus e d Capacity 2000 Launch Capacity Utilization

8%

100%

17%0%

50%0% 0%

Figure 10-3. Small-Medium LV Capacity Utilization (2000) 10.2 Cycle Times In order to compare schedule performance metrics of different launch sites, launch complexes, and LSPs, the shortest time between consecutive launches for each of these was calculated from 1997–2000. (A launch site includes launch complexes, fueling facilities, tracking stations, ranges, and anything else necessary for launching LVs. A launch complex typically supports a specific LV family or weight class of LVs and consists of the launch pads, assembly and integration facilities, and other LSP-specific facilities.) The launch site launch interval metric, shown in Table 10-2, indicates the flexibility and usage characteristics of these sites. These rates represent peak rather than average launch capability, and as such are not maintainable over long periods of time. Table 10-2 shows that from 1997–2000 two consecutive LVs were launched within 2 days of each other from Baikonur, Plesetsk, CCAFS and VAFB. There was a slightly longer duration between launches from Kourou, probably caused by its lower launch rate

74

rather than by prolonged LV processing times. Long launch intervals at ranges such as Svobodny are often caused by low-capacity utilization rather than long launch processes. Table 10-2 shows that U.S. ranges are competitive with respect to overall range cycle times. For instance, it takes only 24 hours to reset equipment on the Air Force’s Eastern Range, which provides tracking, range safety, scheduling, and weather forecasting services for all launches from Florida’s Space Coast.164 Additional launch metrics—such as the number of monthly launches by launch site or by country, average and peak monthly launches by launch site, and average and peak monthly launches by country—are included in Appendix D. Most launch sites operated at peak capacity for only a few months from 1997–2000. Additional launch coordination may improve launch site schedule flexibility without requiring additional infrastructure investments. Smoothing out launch site loading and encouraging customers to launch during months that have historically lower launch rates, weather permitting, could reduce costs associated with operating the launch sites above nominal capacity.

Table 10-2. 1997–2000 Launch Intervals by Launch Site

Best Launch Interval

Launch Site (days)Wallops Flight Facility 52Vandenberg/ CA spaceport 3CCAFS/KSC/Spaceport Florida 2Kourou 6Baikonur 1Pletsetsk 2Svobodny 295Kapustin Yar N/ASea Launch 85Xichang 30Taiyuan 32Jiuquan N/A

Launch complex intervals might be used to benchmark assembly and integration facilities and processes. Although long intervals (such as for the Titan II) are caused by low LV demand, short intervals (such as for the Delta, Atlas, Soyuz, and Proton LVs) may indicate the availability of adequate launch facilities or streamlined processes. Improving launch complex intervals is one way for LSPs to add value for their customers, possibly allowing the LSP to charge higher prices and support higher range-user fees. The launch intervals listed in Table 10-3 are based on 1997–2000 launches.

164 “Busy Week Ahead for Space Launches,” Todd Halvorson, Space.com, May 14, 2000

75

Table 10-3. Launch Intervals by Launch Complex (1997–2000)

Best Launch Complex

Launch Vehicle Launch Interval (days)Titan IVB 21Titan II 176Delta II,III 14Atlas II, III 11Pegaus XL, Minotaur 28Ariane 4 18Ariane 5 34Soyuz 3Zenit 18Proton 6Cosmos 3M, Rockot 14Sea Launch 85Long March 2E, 2, 3A, 3B, 3C 49Long March 2C, 2D, 4, 4B 32

Table 10-4 shows the shortest launch by LSP from 1997–2000. This interval might measure the LSP’s ability to support multiple concurrent launches or meet customers’ scheduling changes. Factors affecting this interval include colocation and capacity of launch facilities, size and mobility of the company's launch crew, and payload integration and testing requirements.

Table 10-4. 1997–2000 Launch Intervals by LSP

Company

Minimum Launch Interval (Days)

Orbital Sciences 10Boeing 2Lockheed Martin 5Arianespace 6Soyuz/Molniya 1Proton 5Zenit 18Cosmos 14Long March 13

Large LSPs, such as BLS and Lockheed Martin, have dedicated launch crews stationed at the launch sites. This allows them to save on transportation costs, improve their schedule flexibility, and increase their team's ability to support long periods of high launch demand. However, this strategy increases their launch site facility costs.

76

Small LSPs, such as OSC, fly in launch crews as needed. This strategy allows them to reduce their launch facility costs but increases their transportation costs. This strategy may not work well during long periods of high launch demand, since it requires launch crews to spend long periods of time away from home. However, since OSC’s LVs have not been in great demand, this strategy seems to support their current business model. Chinese and Russian launch intervals were calculated for LVs rather than for individual companies, since these LVs are supported by government-owned or government-managed companies. Guaranteed launch schedules and launch schedule flexibility is crucial to satellite service providers. Although increasing launch site capacity can improve launch schedules, it is not the only way, the cheapest way, or necessarily the best way to do this. At many sites, excess annual launch capacity already exists. However, launch demand alternates between periods of high and low demand, creating an opportunity to improve launch facility utilization through better scheduling. By shifting launches to months of historically lower launch rates (those in which launches are more susceptible to inclement weather), launch site demand can be leveled out. To help achieve more level usage, improvements in forecasting launch need dates are necessary. Any potential launch schedule slips must also be taken into consideration at an early stage. In general, U.S. ranges can match world-class standards in handling peak demand. This implies an ability to support required schedule flexibility. However, the Soyuz and Proton LVs can be launched at shorter intervals, setting the benchmark that U.S. LSPs might need to achieve in order to improve their competitiveness.

77

11. Reliability LV reliability is another major factor to consider when selecting LSPs. Reliability influences space insurance premiums and limits LV usage by risk-averse customers. In general, customers are willing to pay more for increased reliability, since an LV failure will result in costly delays to their business plans.165 The impact of space insurance on the cost of launching a satellite is included in Appendix A. Some commercial customers will not select an LV unless it has established a record for high reliability. For example, in the past Eutelsat, SES, and Telesat have each required launcher reliability to be 95 percent or higher.166 Similarly, Intelsat has, in some cases, required an LV to demonstrate a record of at least four straight successes before they will consider using it.167 Recently, Eutelsat has decided to select new LVs from the set of LSPs whose vehicles have historically been very reliable. Eutelsat will be the first commercial customer for the Atlas V and the modified Ariane 5. Eutelsat's Hot Bird 6 will be launched on an Atlas V in May 2002, while the Hot Bird 7 satellite will be launched in June 2002 aboard the first Ariane 5 equipped with a cryogenic upper stage.168 NASA is another risk-averse customer. NASA divides its missions into three categories, each having different LV reliability requirements. New LVs can be used to launch noncritical (Risk Category 1) missions. Risk Category 2 missions require LVs that have been launched successfully between one and 13 times. Risk Category 3 missions require LVs with 14 or more consecutive successful launches to their credit.169 Some customers reduce risk by obtaining launch services on a variety of LVs, thus providing themselves with LV alternatives in case of a launch failure. Iridium used this strategy for deploying its constellation, using a mix of Delta, Proton and Long March LVs. This strategy is also used by satellite operators who purchase their satellites from multiple satellite manufacturers. LSPs can charge higher launch premiums for LVs with higher reliabilities, and are better able to absorb increases to range user fees, while LSPs having LVs with poor reliability must be able to offer schedule flexibility or cost savings and are less able to absorb range fee increases. As a result, if the U.S. government can help U.S. LSPs improve their reliability, these LSPs would be better able to support higher range fees. The U.S. government might maintain a reliability lessons-learned database that can be shared 165 “Launch Industry Officials Expect Increased Competition In Next Year Amid Fewer Deals,” Satellite

News, November 20, 2000 166 “Reliable, Flexible, Low-Cost Launch Services: The Key to Successful Space Business,” Theo Pirard,

Earth Space Review, Vol. 9 No.3, 2000 167 “Intelsat Deal Gives China Great Wall 2nd Win in Month,” Sam Silverstein, Space News, February 12,

2001 168 “Atlas 5 and Ariane 5 To Launch Hot Birds,” Space News, May 28, 2001, p. 24 169 “Sea Launch Goes After NASA Launch Work,” Jason Bates and Stew Magnuson, Space News, June

11, 2001

79

among U.S. LSPs or invest in automated tools for validating LV health prior to launch. The U.S. government could also encourage LSPs to improve their LVs reliability standards as criteria for continued launching from U.S. launch sites. Table 11-1 includes reliability data for launches through December 2000. LV reliability directly impacts insurance rates and financing availability, which in turn influences market demand for individual LVs. As a result, an LV that is unable to maintain high reliability standards can be expected to quickly lose its marketability. LVs with historically high reliability records—such as the Proton, Ariane 4, Soyuz, and Delta 2—are able to recover from a launch failure quickly, launching another satellite less than 4 months after a failure. It may take considerably longer before commercial customers choose to use LVs lacking a good reliability history. Launch failures of government satellites do not impact the cost of government insurance rates since the government typically does not insure its satellites. However, these failures may impact commercial launch insurance rates if the failed LV is also used commercially. Although U.S. ranges cannot directly impact the reliability of LVs, they may be able to help U.S. LSPs offset any LV reliability issues by improving their scheduling flexibility, enhancing customer service by, for example, expediting the launch approval process, or by lowering range fees.

80

Tabl

e 11

-1.

Laun

ch V

ehic

le R

elia

bilit

y

Laun

ch V

ehic

leLa

st fa

ilure

(d

ate)

LV fa

ilure

to

next

LV

laun

ch

(mo)

LV fa

ilure

to

next

co

mm

erci

al

laun

ch (m

o)

# of

laun

ches

si

nce

last

fa

ilure

(thr

ough

12

/31/

00)

# of

la

unch

es

97-0

0

# of

su

cces

s 97

-00

Succ

ess

rate

97-

00

Succ

ess

rate

th

roug

h 12

/31/

00

Succ

ess

rate

la

st 4

laun

ches

(th

roug

h 12

/31/

00)

1998

La

unch

in

sura

nce

rate

(est

.)

2000

La

unch

in

sura

nce

rate

(est

.)Ar

iane

510

/30/

9712

266

76

86%

75%

100%

N/A

< 5%

Prot

on K

10/2

7/99

3.5

3.5

1439

3692

%89

%10

0%20

%Ze

nit3

SL

3/12

/00

4.5

4.5

25

480

%80

%75

%N

/A8~

12%

Long

Mar

ch 3

B2/

14/9

612

.512

.54

44

100%

80%

100%

25%

Aria

ne42

s,44

s12

/1/9

44

455

3636

100%

97%

100%

15%

-17%

< 4%

Long

Mar

ch 2

E/2F

1/26

/95

1010

31

110

0%78

%75

%N

/AN

/AAt

las

IIIA

N/A

N/A

N/A

N/A

11

100%

100%

N/A

N/A

8~12

%At

las

IIsN

/AN

/AN

/AN

/A25

2510

0%10

0%10

0%15

%-1

7%8~

12%

Del

ta II

I5/

4/99

16N

/A1

31

33%

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N/A

N/A

8~12

%So

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U6/

20/9

61

2047

4343

100%

97%

100%

N/A

N/A

Del

ta II

1/

17/9

74

438

3938

97%

99%

100%

15%

-17%

N/A

Aria

ne40

N/A

N/A

N/A

N/A

22

100%

100%

100%

N/A

N/A

Long

Mar

ch 2

C,2

D,3

8/18

/96

216

109

910

0%88

%10

0%N

/AN

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-1N

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210

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/AC

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ne 2

, 312

/28/

00N

/AN

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686

%96

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29/9

720

N/A

12

150

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%N

/AN

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hena

4/27

/99

55

15

480

%67

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0N

/AN

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267

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tN

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/AN

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110

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610

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N/A

N/A

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44

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100%

100%

N/A

N/A

J-1

N/A

N/A

N/A

N/A

00

N/A

100%

N/A

N/A

N/A

Star

t-13/

1/95

2433

33

310

0%80

%75

%N

/AN

/AM

inot

aur

N/A

N/A

N/A

N/A

22

100%

100%

N/A

N/A

N/A

Pega

sus

XL11

/4/9

65.

55.

516

1616

100%

90%

100%

N/A

N/A

VLS

12/1

1/99

N/A

N/A

N/A

20

0%0%

N/A

N/A

N/A

Shav

it1/

22/9

8N

/AN

/AN

/A1

00%

75%

75%

N/A

N/A

Laun

ch V

ehic

leLa

st fa

ilure

(d

ate)

LV fa

ilure

to

next

LV

laun

ch

(mo)

LV fa

ilure

to

next

co

mm

erci

al

laun

ch (m

o)

# of

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ches

si

nce

last

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(thr

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12

/31/

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# of

la

unch

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0

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rate

th

roug

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rate

la

st 4

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ches

(th

roug

h 12

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00)

1998

La

unch

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sura

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rate

(est

.)

2000

La

unch

in

sura

nce

rate

(est

.)Ar

iane

510

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9712

266

76

86%

75%

100%

N/A

< 5%

Prot

on K

10/2

7/99

3.5

3.5

1439

3692

%89

%10

0%20

%Ze

nit3

SL

3/12

/00

4.5

4.5

25

480

%80

%75

%N

/A8~

12%

Long

Mar

ch 3

B2/

14/9

612

.512

.54

44

100%

80%

100%

25%

Aria

ne42

s,44

s12

/1/9

44

455

3636

100%

97%

100%

15%

-17%

< 4%

Long

Mar

ch 2

E/2F

1/26

/95

1010

31

110

0%78

%75

%N

/AN

/AAt

las

IIIA

N/A

N/A

N/A

N/A

11

100%

100%

N/A

N/A

8~12

%At

las

IIsN

/AN

/AN

/AN

/A25

2510

0%10

0%10

0%15

%-1

7%8~

12%

Del

ta II

I5/

4/99

16N

/A1

31

33%

33%

N/A

N/A

8~12

%So

yuz

U6/

20/9

61

2047

4343

100%

97%

100%

N/A

N/A

Del

ta II

1/

17/9

74

438

3938

97%

99%

100%

15%

-17%

N/A

Aria

ne40

N/A

N/A

N/A

N/A

22

100%

100%

100%

N/A

N/A

Long

Mar

ch 2

C,2

D,3

8/18

/96

216

109

910

0%88

%10

0%N

/AN

/AD

nepr

-1N

/AN

/AN

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210

0%10

0%N

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yclo

ne 2

, 312

/28/

00N

/AN

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/A7

686

%96

%75

%N

/AN

/APS

LV9/

29/9

720

N/A

12

150

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hena

4/27

/99

55

15

480

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0N

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267

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ocko

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110

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oliy

naN

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610

0%96

%10

0%N

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osm

os11

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00N

/AN

/AN

/A9

889

%96

%75

%N

/AN

/ATa

urus

N/A

N/A

N/A

N/A

44

100%

100%

100%

N/A

N/A

J-1

N/A

N/A

N/A

N/A

00

N/A

100%

N/A

N/A

N/A

Star

t-13/

1/95

2433

33

310

0%80

%75

%N

/AN

/AM

inot

aur

N/A

N/A

N/A

N/A

22

100%

100%

N/A

N/A

N/A

Pega

sus

XL11

/4/9

65.

55.

516

1616

100%

90%

100%

N/A

N/A

VLS

12/1

1/99

N/A

N/A

N/A

20

0%0%

N/A

N/A

N/A

Shav

it1/

22/9

8N

/AN

/AN

/A1

00%

75%

75%

N/A

N/A

81

12. Customer Preference The launch industry, which was operating at near capacity in 1998–1999, is now operating at significant over-capacity, creating a highly price-competitive buyer's market for LSPs. Satellite manufacturers and large SSPs encouraged this industry's growth through their earlier bulk-buy LV purchases. Bulk buys provided the investment capital needed for developing new LVs, and created a secondary market for the resale of these prepurchased LVs. Owners of the bulk-buy contracts, such as Hughes Space and Communications (HSC), could then resell LVs to their customers and their competitors at a profit. The purchasing criteria used by LSP customers continue to change as this industry evolves. Table 12-1 provides a snapshot of today's LV purchasing process, which is generally dependent on LV performance, price, reliability, and schedule flexibility. These factors are weighted differently by various customers, preventing the lowest-priced LSP from consistently securing commercial or government contract wins. Moreover, LSP selection criteria for both the SSP and satellite manufacturer communities change during each phase of the satellite purchasing/manufacturing process. New LSP strategic partnering agreements or LSP vertical integration into the satellite-manufacturing arena, as in the case of Boeing's recent acquisition of HSC, will further change LSP customers’ purchasing behaviors.

Table 12-1. Launch Service Purchasing Criteria

S/C Purchasing

StagePre-S/C Purchase S/C Contract

NegotiationsS/C Build and Test S/C Ship Date

ApproachesKey LV Activity Bulk purchase of LV

options on various LV'sLV options chosen LV selection narrowed Final LV

selectionSelection Criteria S/C Buyer Price, Schedule flexibility Price, Reliability,

Schedule, Customerpreference

Reliability, Schedule Launchavailability,Reliability

S/C Manufacturer Price, Schedule flexibility Government exportrules, LV profitmargins

S/C size and weight, LVprofit margins

Launchavailability,Reliability

Continued LV overcapacity has caused three of the world's biggest satellite operators—Intelsat, Eutelsat, and GE American Communications—to delay LV purchases as late as possible in order to obtain the most recent information about LVs and to secure the lowest prices.170 This practice could eventually eliminate LV bulk buys and could force LSPs to continue reducing their contract-to-launch cycle times. The reselling of bulk-purchased LVs has been an important revenue stream for satellite manufacturers. SS/L's satellite-building division reported a $40M drop in sales of launch services to its customers during its first quarter 2001.171 However, buying LVs in bulk 170 “Firms Delay Buying Launch Services,” Space News, May 28, 2001, p. 24 171 “Loral Counting on Satellite Services to Boost Profits,” Peter B. de Selding, Space News, May 7, 2001

83

does not guarantee that the LVs will be available when needed. HSC bought 10 launch options on the Japanese H2A in 1996, tying up valuable resources. When the H2A was unable to meet its deployment schedule, HSC decided to cancel this contract rather than continue tying up its cash. Strategic partnerships and barter arrangements can also influence LV selection decisions. For example, China's Sino Satellite Communications Co. Ltd. (Sinosat) agreed to be a tenant customer on the Intelsat APR-3 satellite; in return, Intelsat will launch the APR-3 on a Long March LV. Boeing will buy 10 Alenia Spazio-built Delta II upper-storage fuel tanks; in return, Alenia Spazio will purchase an undisclosed number of Delta LVs between 2003 and 2008.172 The Italian Space Agency (ASI) has offered to build a crew habitation module for the ISS in exchange for NASA's providing launch services for Italy's four Cosmo Skymed radar satellites and the opportunity for an Italian astronaut to fly on a space shuttle in 2003.173 12.1 Correlation Matrices Correlation matrices have been created to highlight customers’ buying histories. The coefficients of these matrices correspond to the percentage of LVs provided by each country to the LV consumer. Table 12-2 uses commercial and noncommercial 2000 launch data, showing that satellite buyers prefer to launch their satellites on LVs from their own geographical region. This is especially true for Russia and China, where their governments purchase most of their satellites from domestic companies and launch these satellites on domestic LVs. Japan and India are expected to do the same after they develop their own heavy-lift launch capability. Since U.S. customers tend to launch on U.S. LVs, the U.S. government could encourage more U.S. launches by supporting the continued development of U.S.-based satellite services. The U.S. government should also seek ways to encourage Russian and Chinese satellite launches on U.S. commercial LVs. This last suggestion may be difficult to carry out, since both the Russian and Chinese LVs are cheaper than U.S. LVs. Table 12-2 shows that European satellite buyers are relatively open to launching on other countries' LVs; the majority of the European satellite buyer's satellites are launched on non-European LVs. Also, European satellite buyers may be more likely to launch on U.S. LVs than U.S. satellite buyers are to launch on European LVs. 172 “Boeing and Alenia Spazio Expand Partnership,” Space News, April 2, 2001 173 “Italy Seeks Satellite Launch For Station Crew Quarters,” Brian Berger, Space News, May 14, 2001

84

Table 12-2. S/C Customer Country to LV Country Correlation (2000)

S/C Customer Country Total S/C US Europe Russia China Multi Other

US 39 .64 .13 .18 .05Europe 12 .17 .42 .42Russia 20 1China 5 1Multi 0Other 8 .13 .63 .25 .13 .13

Table 12-3 shows that satellite manufacturers follow purchasing behaviors similar to those of satellite buyers; satellite manufacturers are more likely to choose LVs from their own countries. In 2000, China and Russia did not use foreign LVs. Unlike China, however, Russia has successfully sold commercial LVs to European and U.S. satellite manufacturers at the expense of the European and U.S. LV markets. Table 12-3 shows that U.S. satellite manufacturers may be more likely to launch on European LVs than European satellite manufacturers are on U.S. LVs, although the difference between the two coefficients is small. Even though European LVs are more expensive than U.S. LVs, LSPs may be willing to pay more for European LVs because of perceived better customer service, reliability, or scheduling flexibility.

Table 12-3. S/C Manufacturer Country to LV Country Correlation (2000)

S/C Mfg. Country Total S/C US Europe Russia China Multi Other

US 45 .56 .22 .16 .07Europe 11 .18 .45 .36Russia 22 1China 5 1Multi 0Other 2 .50 .50

Table 12-4 shows the buying behavior of some SSPs that own the satellites being launched. These satellite owners have multiple satellites in orbit and sometimes have satellites on order. Owners of three or more satellites often use launchers from multiple countries in order to spread launch risk or secure pricing and scheduling benefits.

85

Table 12-4. S/C Purchaser and LV Country Correlation (1997–2000)

Customer Total S/C US Europe Russia China MultiIridium 20 .55 .15 .30

Globalstar 14 .50 .50PanAmSat 12 .17 .58 .17 .08

Eutelsat 8 .38 .50 .13GE Americom 8 .13 .63 .25

Intelsat 6 .33 .67SES 5 .40 .60

Echostar 4 .75 .25JSAT 3 .67 .33

Inmarsat 2 1

Launch Vehicle Provider Country

During 1997–2000, the total demand for Chinese and Sea Launch LVs by large satellite owners was low. Near-term demand for commercial Chinese LVs is expected to remain depressed until the U.S. government relaxes its export policy regulations. Although CGWIC recently won two commercial Long March launch contracts, these launches will be in jeopardy unless the U.S. government waives export restrictions. Demand for Sea Launch services should grow as its reliability record is established and as BSC, which purchased HSC last year and is a major partner in Sea Launch, directs Boeing Satellite Systems (BSS)-built satellites onto this launch system. Satellite customers buying from sister organizations that manufacture satellites have similar launch service purchase preferences. For instance, Globalstar and SS/L, and PanAmSat and HSC, show this trait. A strong correlation between spacecraft buyers and LSPs, or satellite manufacturers and LSPs, might indicate the existence of strategic alliances or bulk-buy agreements. These customers may be less price-sensitive and more able to absorb price increases associated with any increased range user fees. Table 12-5 is based on 2000 commercial and noncommercial launch data. It can be used to help describe and predict demand for LVs built by particular satellite manufacturers. For instance, in 2000 Lockheed Martin tended to launch on U.S. LVs, while SS/L split its launches between U.S. and Russian LVs.

Table 12-5. S/C Manufacturer and LV Country Correlation (2000)

S/C Manufacturer Total S/C US Europe Russia Multi

Lockheed Martin 14 .57 .21 .21HSC 11 .09 .64 .27SS Loral 6 .50 .50Alcatel Espace 5 .40 .60Astrium 2 1

Launch Vehicle Provider Country

86

12.2 Impact of Satellite Manufacturer Mergers In 2000, HSC launched most of its satellites on European LVs. However, the acquisition of HSC by BSC in October 2000 will probably change this. Future BSS-built satellites will probably be launched on BLS LVs whenever possible. Ties between BSS and GM-owned service providers PanAmSat, DirecTV, and Spaceway should weaken, since these SSPs are no longer part of the same company. Lockheed Martin markets the Proton LV through its ILS partnership. The recent elimination of Proton quotas should encourage further usage of ILS-marketed LVs for launching Lockheed Martin-built satellites. Therefore, Lockheed Martin is expected to purchase fewer Ariane 4 and Ariane 5s and more Proton and Atlas V LVs. The United States currently has excess satellite manufacturing and launch capacity. Continued overcapacity in these industries should result in consolidation and the probable elimination of at least one satellite manufacturer and one LSP within the next 5 years through mergers or acquisitions. Two possible candidates for this consolidation are SS/L and OSC. SS/L, facing serious liquidity problems, will probably merge with another company. SS/L funding may be inadequate to support the level of IR&D necessary to maintain a technological competitive advantage. SS/L also has a potential liability risk since 11 of its satellites have exhibited solar cell problems. Although the solar cell problem has not resulted in any satellite failures, it raises questions about SS/L's manufacturing processes and quality controls, which could result in SS/L's space insurance rates increasing. SS/L's engineers facing high housing costs in the area might choose to leave the company. SS/L's low share prices weaken its ability to retain employee through stock options. Lockheed Martin or Alcatel Space could acquire SS/L. Should this happen, LVs previously purchased for SS/L-built satellites will most likely be similar to those purchased by the acquiring company. Lockheed Martin could combine its ongoing U.S. government business with SS/L's commercial business, allowing Lockheed Martin to leverage SS/L's commercial technologies into Lockheed Martin's government contracts. This would help reduce the industry-wide satellite manufacturing overcapacity that has already forced Lockheed Martin to cut jobs at its manufacturing plants. Merging with SS/L could be seen as a continuation of Lockheed Martin's earlier purchase of SS/L's defense electronics business in 1996.174 175 Should SS/L merge with Lockheed Martin, more of SS/L's satellites could be launched on Lockheed Martin's Atlases or Russian Protons. Alcatel Space could also buy SS/L. Alcatel has the funds and an agreement with SS/L that precludes any other company from buying Loral without allowing Alcatel Space the

174 “Alcatel Sues Over Lockheed-Loral Talks,” Peter B. de Selding, Space News, April 16, 2001 175 “Lockheed Martin Cuts 125 Satellite Jobs,” Space News, May 14, 2001, p. 2.

87

opportunity to buy Loral first.176 Should Loral merge with Alcatel, it is likely that Ariane 4 and Ariane 5 LVs will be used in place of some of the Russian Proton LVs. OSC has also suffered financially by trying to enter into the service industry with its Orbimage and ORBCOMM subsidiaries. OSC has sold off its noncore operations, such as its stake in MacDonald, Dettwiler and Associates, and its imagery distribution rights to the Radarsat 1 remote-sensing satellite. BSC might be a possible suitor for OSC, which is a dominant supplier of small satellite buses. Recently PanAmSat, a repeat buyer of BSS satellites, ordered three small geostationary satellites from OSC for $160M. This niche market could require 3–5 small geostationary satellites per year. Also, OSC's small LVs would fill out BLS's stable of LVs. Another possibility is a merger with Lockheed Martin, which would allow Lockheed Martin to expand its revenue base. OSC has a number of government contracts (e.g., for satellite imaging) that Lockheed Martin might be interested in acquiring. 12.3 Satellite Service Providers’ Purchasing Behavior SSPs such as Intelsat, Inmarsat, and PanAmsat are significant direct purchasers of LVs, having bulk-purchase agreements in place with the major LSPs. Table 12-6 shows the size of the larger fixed satellite service (FSS) operators' fleets and satellites on order. FSS operators with large fleets have more purchasing power than those with smaller fleets. As a result, continued consolidation of the FFS operators will erode LSPs’ pricing power.

Table 12-6. FSS Operators’ Purchasing Power177

Company Country SatellitesSatelliteson Order

Major S/C Builder'97-'00

Launch VehicleCountry '97-'00

SES-Astra Europe 21 4 Boeing Europe/RussiaGE American Communications U.S. 20 7 Lockheed Martin EuropePanAmSat Corp U.S. 20 4 Boeing EuropeIntelsat U.S. 19 10 Lockheed Martin EuropeEutelsat Europe 18 6 Astrium, Alcatel,

AerospatialeEurope/US

Loral Space and Communications U.S. 13 5 Loral US/RussiaRussian Satellite Communications Russia 10 6 Russia RussiaJSAT Corp. Japan 8 1 Boeing USNew Skies Satellites N.V. Netherlands 5 3Star One S.A. (formerly Embratel) Brazil 5 0Indian National Satellite System (Insat) India 4 3Telesat Canada Canada 4 1Space Communications Corp (Superbird) Japan 4 0Arab Satellite Communications (Arabsat) Middle East 4 0Hispasat S.A. Europe 3 2Asia Satellite Telecomm Holdings (Asiasat) China 3 1Shin Satellite plc Thailand 3 1Telenor Norway 3 0Nordic Satellite AB Sweden 3 0Satellites Mexicanos (Satmex) Mexico 2 1

176 “Loral Offers Exchange,” Satellite Finance, March 14, 2001, page. 12. 177 “Intelsat, PanAmSat Top List of World's Largest Satellite Service Providers,” Sam Silverstein, Space

News, May 7, 2001

88

It is expected that when two FSS operators merge, the dominant FSS operator will direct LV purchases. FSS operators that repeatedly buy the same LVs may be less sensitive to minor increases in LV prices. LSPs may be able to push range user fee increases onto these FSS operators as long as their customers’ schedule and service requirements are met. FSS operators must maintain adequate in-orbit capacity for meeting near-term demand and for protecting their customers against unexpected satellite failures. FSS operators build global networks by buying and launching new satellites, acquiring smaller FSS operators, and creating strategic alliances. Inevitably, this evolution of FSS operators changes their LV purchase tendencies, as shown by the following two examples. GE American Communications Inc., which is in the process of being acquired by SES-Astra, may change its satellite and LV purchasing behavior. From 1997–2000, SES-Astra tended to launch on Russian LVs while GE American tended to buy Lockheed Martin-built satellites. However, GE American Communications recently purchased three telecommunications satellites from Alcatel Space of Paris. These satellites will be launched on Russian-built Protons, which are marketed through ILS.178 The decision to launch on Proton LVs may be influenced by SES-Astra's LV preferences or by Lockheed Martin's previous history of building GE American Communications satellites. In either case, there seems to be signs of customer loyalty, possibly indicating a willingness of SES-Astra and GE American to use Russian LVs. It is believed that minor changes in LV prices due to U.S. range fees would not shift demand away from U.S. LVs. BSC's recent purchase of HSC shows how mergers and acquisitions can impact satellite- and LV-buying behaviors. Prior to the sale of HSC, DirecTV, PanAmSat, and Spaceway were strategic and internal-company buyers of HSC satellites. However, this has changed. SS/L recently won a contract from DirecTV Inc. to build a Ku-band satellite. This is the first time DirecTV has bought a spacecraft from a company other than BSS.179 Based on the spacecraft manufacturer country correlation matrix, Table 12-3, this new satellite would be launched on a U.S. LV. However, based on the satellite manufacturer correlation matrix, Table 12-5, this satellite will be launched on either a U.S. or Russian LV. Only time will tell which tendency will dominate. The correlation matrices in this section provide valuable insight into customer loyalty to different LVs and each country's willingness to use other countries' LVs. An understanding of the buying behaviors of LV purchasers can be used to predict the impact on LV demand by international launch industry partnering agreements, FSS operator or satellite manufacturer mergers, or changes to U.S. range fee policies. LV market dynamics makes it vital that the U.S. government remain informed on LSP, SSP, and satellite manufacturer activities and forecasts. Frequent sampling of the environment will help the U.S. government to prioritize range improvements and create

178 “GE American, Eutelsat Order European Satellites,” Space News, April 30, 2001 179 “Space Systems/Loral Nabs DirecTV Contract,” Space News, April 23, 2001, p. 2

89

better policies, protecting both U.S. national security interests and the U.S. commercial launch industry.

90

13. Launch Service Provider Strategic Alliances Strategic alliances, partnering, and technology sharing between countries and LSPs are helping to consolidate the launch service industry. As a result, three global LSPs—consisting of partnerships with Arianespace, ILS, and BLS—have emerged. This section examines LSP alliances and the impact of strategic partnering efforts on this industry. 13.1 Cooperation Between Companies The three largest LSPs are Arianespace, BLS, and ILS. Arianespace manufactures and markets the Ariane 4 and Ariane 5, markets the Soyuz LV through Starsem, and markets the Russian Rockot LV through Eurorockot. BLS manufactures and markets the Delta LV, and markets the Zenit 3SL LV through Sea Launch. ILS, which is the marketing arm of Lockheed Martin Corporation, markets the Proton LV and the Atlas family of LVs. Additional details about these strategic partnerships are provided in Section 7. Other common LV partnering agreements include LV subcontractors buying launch services from their customers. For instance, Italy's Alenia Spazio has a $10M contract to produce upper-storage fuel tanks for 10 BLS Delta II LVs. In a separate agreement, Alenia will purchase a number of Delta LVs between 2003 and 2008 and will provide components for some of BSS' satellites.180 BSS has purchased Mitsubishi Electric satellite components for more than 20 BSS spacecraft since the early 1980s.181 In turn, Mitsubishi Electric Corporation will help develop BSS' aircraft-Internet Connexion service and will buy Delta IV launches. Alcatel and BSS have submitted a joint bid to build Intelsat's planned broadband Internet satellites, combining Alcatel's payload with BSS' 702 bus. This is similar to their previous partnering on two XM Satellite Radio spacecraft that were launched on Sea Launch.182 Other LV partnerships include General Dynamics' 2-year, $7.9M contract to build R-4D-11 engines for Europe's space station-bound Automated Transfer Vehicle (ATV), which is to be completed by 2006.183 The Lockheed Martin Atlas III will use the new RD-180 engine, which is produced by Pratt and Whitney and the Russian engine manufacturer NPO Energomash.184 Several LSP partnerships are also being considered. Arianespace is considering modifying its Ariane 4 launch complex in order to launch Soyuz LVs. BSS and the Russian Space Agency (Rosaviakosmos) are considering launching commercial payloads

180 “Boeing and Alenia Spazio Expand Partnership,” Space News, April 2, 2001 181 “Boeing, Mitsubishi Enter Partnership Agreement,” Space News, June 25, 2001 182 “Alcatel, Boeing Submit Joint Bid to Intelsat,” Space News, June 25, 2001 183 “U.S. Defense Contractor To Build Thrusters for European Space Tug,” Brian Berger, Space News,

April 23, 2001 184 “History in the Making: Russian Power for a U.S. Vehicle,” Frank Sietzen Jr., Space.com, July 11,

1999

91

on a two-stage variant of the Zenit LV from Baikonur under its Desert Launch initiative.185 13.2 Cooperation Between Countries Russia continues to be a major provider of LV hardware and launch services to Europe, the United States, Sea Launch, and India. More recently, Russian LVs are being considered for various Australia-based launch systems. Russia may eventually supplement Chinese launch technologies as China strives to develop its manned launch capabilities. Russia could conceivably exchange rides to the ISS aboard its Soyuz missions for LV hardware contracts with other countries, since the Soyuz missions have an extra seat that can be sold. Russia's first space tourist paid $20M for a ride to the ISS. A recent agreement between Russian authorities and ESA will give ESA the right of first refusal for the third seat of the Soyuz replacement missions, resulting in the transportation of up to six European astronauts to the ISS between 2001 and 2006. If ESA declines to take the flight, Russia can sell this seat to someone else.186 Since Russia is the only country providing this service, Russia has a valuable commodity to barter with when negotiating to establish other strategic relationships. Russia has taken the lead in commercializing the ISS and will profit through future sales of Soyuz seats. NASA is continuing to develop its own policy and business model for commercializing the ISS. Russia and Ukraine will continue to strengthen their already strong commercial ties. The Ukrainian Yuzhmash rocket manufacturing plant has 75 commercial partners in Russia, while Russia supplies 60–80 percent of the hardware for some of Ukraine's space-related enterprises.187 They have already signed cooperation agreements covering several space activities. Strategic alliances reduce the number of commercially competed launches, adding price and demand stability. Companies that successfully establish these alliances—such as Arianespace, BLS, and ILS—will continue to increase market share. Those who try to provide launch services as independent entities will experience lower profitability as the number of commercially competed launches shrinks while their launch overhead costs remain high; this may force them to merge with other small LSPs.

185 “Boeing, Russian Space Agency Study Collaboration,” Simon Saradzhyan and Warren Ferster, Space

News, April 16, 2001 186 “Russia to Ferry Europeans to Station,” Space News, May 28, 2001 187 “A Strategic Effort to Join Forces,” Victor Zaborsky, Space News, March 26, 2001

92

14. Launch Service Provider Competitive Analysis Previous sections compared LSPs on performance, price, schedule, reliability and other factors, and discussed how these factors influence buyers’ purchasing decisions. Table 14-1 summarizes each of the major LSP’s strengths, weaknesses, opportunities, and threats (SWOT). The launch service industry is dynamic, requiring LSPs to continually improve their competitiveness through modernizing range facilities, improving schedule flexibility and developing more powerful, reliable, and less expensive LVs. Arianespace is currently the market leader, though ILS and Boeing could quickly seize leadership should Arianespace encounter difficulty transitioning from the Ariane 4 to the Ariane 5. Of course, assumption of market leadership by either Boeing or ILS would hinge on the commercial success of their respective LVs. Table 14-2 reflects the result of each LSP's competitive position, summarizing the number of wins in 2000 for each of the major LVs. Several metrics, which are explained below, are included in this table in an attempt to further analyze each LSP's service. For this report, a commercial launch is defined as one that is internationally competed or whose primary payload is commercial in nature. • Market Suitability: Measures an LV's ability to meet customers launch capability

needs. This metric divides the number of satellites that could have been launched by this LV by the total number of launches in 2000. A satellite is counted if it weighs less than the LV's lift capability and is within one weight class of the LV, as defined by the FAA. This avoids considering small payloads on heavy-lift LVs. Heavy and intermediate-lift LVs were well-suited to the mix of satellites launched in 2000, while medium- and small-lift LVs were equipped to meet less than 20 percent of the total 2000 launch demand.

• Win Metric: Shows whether an LV is being successfully marketed to its potential

market segment. This metric is defined as the number of actual launches by an LV divided by the number of potential opportunities it could have supported. Some LVs—such as the Soyuz, Delta II, Cosmos, and Pegasus XL—were able to secure niche markets. In general however, LVs that were able to service large market segments were unable to also secure more than one-third of their target markets as a result of the competitiveness of this industry.

• Aversion Metric: Shows the tendency of customers to avoid an LV. This metric is a

ratio of the number of times an LV lost to a more expensive one, and the number of missions it could have supported based solely on meeting the payload lift requirements. A high aversion metric indicates that the LV is relatively inexpensive but suffers from some other deficiency, such as import/export restrictions. A high

93

Tabl

e 14

-1.

Laun

ch S

ervi

ce P

rovi

der S

WO

T A

naly

sis

CG

WIC

Star

sem

ILS

Aria

nesp

ace

Sea

Laun

chB

oein

gSt

reng

thC

aptiv

e an

d gr

owin

g C

hine

se

mar

ket

Onl

y co

mpa

ny m

arke

ting

Soyu

z la

unch

esM

arke

ts A

tlas

and

Prot

ons

Mob

ile p

latfo

rm c

an la

unch

fro

m e

quat

or; n

o U

.S. l

aunc

h si

te q

ueue

Mar

ket l

eade

r, m

ost p

ower

ful

heav

y-lif

t LV,

sch

edul

e fle

xibi

lity

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

er

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

erC

an b

undl

e C

hine

se s

atel

lite

purc

hase

s w

ith L

ong

Mar

ch

laun

ches

Rec

eive

sAria

nesp

ace

help

in

mai

ntai

ning

LV

relia

bilit

y an

d sh

ort s

ched

ules

Asso

ciat

ed w

ith L

ockh

eed

Mar

tin -

mos

t lik

ely

to la

unch

Lo

ckhe

ed-b

uilt

S/C

Inex

pens

ive

LVs

and

auto

mat

ed la

unch

pro

cess

Euro

pean

gov

ernm

ent

laun

ches

and

Sta

rsem

allia

nce

Rec

ently

acq

uire

d w

orld

's

larg

est s

atel

lite

man

ufac

ture

rR

ecen

tly a

cqui

red

wor

ld's

la

rges

t sat

ellit

e m

anuf

actu

rer

Inex

pens

ive

LV, l

ow p

rice

lead

erM

oder

n pa

yloa

d pr

oces

sing

fa

cilit

ies

Stra

tegi

c in

tern

atio

nal

partn

ersh

ips

Fina

ncia

l bac

king

and

maj

or

owne

rshi

p by

Boe

ing.

W

ell-m

aint

aine

d fa

cilit

ies;

st

ream

lined

laun

ch p

roce

sses

, de

dica

ted

laun

ch te

am

Sign

ifica

nt L

V ba

cklo

g in

clud

ing

gove

rnm

ent l

aunc

hes

Sign

ifica

nt L

V ba

cklo

g,

incl

udin

g go

vern

men

t lau

nche

s

Rel

ativ

ely

inex

pens

ive

LVs

Wel

l-pos

ition

ed fo

r acq

uirin

g bu

ilt s

atel

lite

laun

ches

Can

pro

vide

insu

ranc

e an

d fin

anci

ng in

tern

ally

. H

igh

relia

bilit

y, lo

w in

sura

nce

rate

s

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

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cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

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cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

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cus

tom

er lo

yalty

; no

laun

ch c

apab

ility,

relia

bilit

y, o

r sc

hedu

le a

dvan

tage

s

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cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

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ng s

ame

mar

ket s

egm

ent

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LVs

addr

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ng s

ame

mar

ket s

egm

ent

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LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

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ng s

ame

mar

ket s

egm

ent

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LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

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aunc

hes

year

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hind

sch

edul

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d fo

r gov

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aunc

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year

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sch

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d fo

r gov

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sch

edul

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eede

d fo

r gov

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aunc

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U.S

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lt R

D-1

80 e

ngin

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year

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hind

sch

edul

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eede

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r gov

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sch

edul

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d fo

r gov

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ent l

aunc

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ucce

ssfu

l LV

cost

re

duct

ion

initi

ativ

es c

ould

resu

lt in

con

tinue

d un

prof

itabi

lity

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ucce

ssfu

l LV

cost

re

duct

ion

initi

ativ

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ould

resu

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nsuc

cess

ful L

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st

redu

ctio

n in

itiat

ives

cou

ld re

sult

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ucce

ssfu

l LV

cost

re

duct

ion

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ativ

es c

ould

resu

lt

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atC

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erci

al la

unch

indu

stry

coun

tries

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mer

cial

laun

ch in

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ry

coun

tries

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mer

cial

laun

ch in

dust

ry

coun

tries

.

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mer

cial

laun

ch in

dust

ry

coun

tries

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mer

cial

laun

ch in

dust

ry

coun

tries

.

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mer

cial

laun

ch in

dust

ry

coun

tries

.

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mer

cial

laun

ch in

dust

ry

tied

to w

eapo

ns s

ales

to o

ther

co

untri

es.

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ket d

eman

d sh

iftin

g to

war

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avie

r GEO

laun

ches

. So

yuz

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ell p

ositi

oned

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ket d

eman

d sh

iftin

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war

d he

avie

r GEO

laun

ches

. So

yuz

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ket d

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avie

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r GEO

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ket d

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yet

, lim

iting

laun

ch

capa

city

Inve

stm

ent d

ecis

ions

by

Euro

pean

gov

ernm

ent

cons

ensu

s

U.S

. exp

ort c

ompl

ianc

e is

sues

hi

nder

sal

es o

f sat

ellit

es,

redu

cing

cap

tive

LV d

eman

d

U.S

. exp

ort c

ompl

ianc

e is

sues

hi

nder

sal

es o

f sat

ellit

es,

redu

cing

cap

tive

LV d

eman

d O

ppor

tuni

tyIm

prov

ed U

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elat

ions

hips

w

ould

enh

ance

com

mer

cial

m

arke

t opp

ortu

nity

Futu

re S

oyuz

laun

ches

from

Ko

urou

are

poss

ible

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inat

ion

of U

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roto

n la

unch

quo

taIn

crem

enta

lly in

crea

sed

LV

capa

bilit

y; m

ay e

vent

ually

In

crem

enta

lly in

crea

sed

LV

will

allo

w S

oyuz

laun

ches

from

Ko

urou

Star

sem

partn

erin

g ag

reem

ent

will

allo

w S

oyuz

laun

ches

from

Ko

urou

Del

ta IV

exp

ecte

d to

laun

ch in

20

02D

elta

IV e

xpec

ted

to la

unch

in

2002

Wea

knes

sU

.S. e

xpor

t reg

ulat

ions

re

duce

mar

keta

bilit

ySo

yuz

has

limite

d ad

dres

sabl

e m

arke

t siz

eC

anno

t lau

nch

U.S

. go

vern

men

t pay

load

s on

Pr

oton

Shor

t lau

nch

hist

ory

Hig

h Ar

iane

5 m

anuf

actu

ring

cost

sD

elta

III h

as p

oor r

elia

bilit

y re

cord

; may

influ

ence

Del

ta IV

in

sura

nce

rate

s

Del

ta II

I has

poo

r rel

iabi

lity

reco

rd; m

ay in

fluen

ce D

elta

IV

insu

ranc

e ra

tes

Wea

k m

arke

ting

and

low

m

arke

t sha

re.

No

sign

ifica

nt

inte

rnat

iona

l par

tner

ship

s

Rel

ianc

e on

a s

ingl

e LV

Atla

s V

deve

lopm

ent i

s ov

er

2 ye

ars

behi

nd A

riane

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rtial

fore

ign

owne

rshi

p re

quire

s U

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xpor

t co

mpl

ianc

e ov

ersi

ght

Kour

ou o

verh

ead

supp

orte

d by

on

ly tw

o la

unch

veh

icle

sD

elta

IV d

evel

opm

ent i

s ov

er

2 ye

ars

behi

nd A

riane

5D

elta

IV d

evel

opm

ent i

s ov

er

Gov

ernm

ent m

anne

d fli

ghts

will

incr

ease

LV

NR

E in

vest

men

tG

PS II

I la

unch

nee

dsPo

tent

ial la

unch

es fr

om

Baik

onur

Pote

ntia

l laun

ches

from

Ba

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urEv

entu

al la

unch

of G

alile

o an

d AT

V de

man

d fo

r ISS

Even

tual

laun

ch o

f Gal

ileo

and

ATV

dem

and

for I

SSN

umer

ous

stra

tegi

c pa

rtner

ing

agre

emen

ts w

ith c

usto

mer

s/

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erou

s st

rate

gic

partn

erin

g N

umer

ous

stra

tegi

c pa

rtner

ing

vend

or c

ompa

nies

Incr

easi

ng d

omes

tic

com

mer

cial

sat

ellit

e m

anuf

actu

ring

Atla

s V

expe

cted

to la

unch

in

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

2002

. An

gara

heav

y-lif

t LV

in

deve

lopm

ent

Stra

tegi

c al

lianc

e w

ith

alte

rnat

ives

Stra

tegi

c al

lianc

e w

ith

Assu

resa

t, pr

ovid

ing

insu

ranc

e al

tern

ativ

es

Dev

elop

men

t of V

ega

and

Dev

elop

men

t of V

ega

and

Euro

rock

otw

ill in

crea

se s

tabl

eC

reat

ing

new

sat

ellit

e-ba

sed

appl

icat

ions

can

driv

e la

unch

de

man

d; G

PS la

unch

nee

dsof

LVs

carr

y m

ultip

le L

Vs p

er tr

ip

CG

WIC

Star

sem

ILS

Aria

nesp

ace

Sea

Laun

chB

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arse

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unch

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m

arke

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nly

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pany

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g So

yuz

laun

ches

Mar

kets

Atla

s an

d Pr

oton

sM

obile

pla

tform

can

laun

ch

from

equ

ator

; no

U.S

. lau

nch

site

que

ue

Mar

ket l

eade

r, m

ost p

ower

ful

heav

y-lif

t LV,

sch

edul

e fle

xibi

lity

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

er

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

er

Stre

ngth

Cap

tive

and

grow

ing

Chi

nese

m

arke

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aptiv

e an

d gr

owin

g C

hine

se

mar

ket

Onl

y co

mpa

ny m

arke

ting

Soyu

z la

unch

esO

nly

com

pany

mar

ketin

g So

yuz

laun

ches

Mar

kets

Atla

s an

d Pr

oton

sM

arke

ts A

tlas

and

Prot

ons

Mob

ile p

latfo

rm c

an la

unch

fro

m e

quat

or; n

o U

.S. l

aunc

h si

te q

ueue

Mob

ile p

latfo

rm c

an la

unch

fro

m e

quat

or; n

o U

.S. l

aunc

h si

te q

ueue

Mar

ket l

eade

r, m

ost p

ower

ful

heav

y-lif

t LV,

sch

edul

e fle

xibi

lity

Mar

ket l

eade

r, m

ost p

ower

ful

heav

y-lif

t LV,

sch

edul

e fle

xibi

lity

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

er

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

er

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

er

Mul

tiple

LVs

, inc

ludi

ng D

elta

an

d Se

a La

unch

, w

hich

back

up

each

oth

erC

an b

undl

e C

hine

se s

atel

lite

purc

hase

s w

ith L

ong

Mar

ch

laun

ches

Rec

eive

sAria

nesp

ace

help

in

mai

ntai

ning

LV

relia

bilit

y an

d sh

ort s

ched

ules

Asso

ciat

ed w

ith L

ockh

eed

Mar

tin -

mos

t lik

ely

to la

unch

Lo

ckhe

ed-b

uilt

S/C

Inex

pens

ive

LVs

and

auto

mat

ed la

unch

pro

cess

Euro

pean

gov

ernm

ent

laun

ches

and

Sta

rsem

allia

nce

Rec

ently

acq

uire

d w

orld

's

larg

est s

atel

lite

man

ufac

ture

rR

ecen

tly a

cqui

red

wor

ld's

la

rges

t sat

ellit

e m

anuf

actu

rer

Can

bun

dle

Chi

nese

sat

ellit

e pu

rcha

ses

with

Lon

g M

arch

la

unch

es

Can

bun

dle

Chi

nese

sat

ellit

e pu

rcha

ses

with

Lon

g M

arch

la

unch

es

Rec

eive

sAria

nesp

ace

help

in

mai

ntai

ning

LV

relia

bilit

y an

d sh

ort s

ched

ules

Rec

eive

sAria

nesp

ace

help

in

mai

ntai

ning

LV

relia

bilit

y an

d sh

ort s

ched

ules

Asso

ciat

ed w

ith L

ockh

eed

Mar

tin -

mos

t lik

ely

to la

unch

Lo

ckhe

ed-b

uilt

S/C

Asso

ciat

ed w

ith L

ockh

eed

Mar

tin -

mos

t lik

ely

to la

unch

Lo

ckhe

ed-b

uilt

S/C

Inex

pens

ive

LVs

and

auto

mat

ed la

unch

pro

cess

Inex

pens

ive

LVs

and

auto

mat

ed la

unch

pro

cess

Euro

pean

gov

ernm

ent

laun

ches

and

Sta

rsem

allia

nce

Euro

pean

gov

ernm

ent

laun

ches

and

Sta

rsem

allia

nce

Rec

ently

acq

uire

d w

orld

's

larg

est s

atel

lite

man

ufac

ture

rR

ecen

tly a

cqui

red

wor

ld's

la

rges

t sat

ellit

e m

anuf

actu

rer

Rec

ently

acq

uire

d w

orld

's

larg

est s

atel

lite

man

ufac

ture

rR

ecen

tly a

cqui

red

wor

ld's

la

rges

t sat

ellit

e m

anuf

actu

rer

Inex

pens

ive

LV, l

ow p

rice

lead

erM

oder

n pa

yloa

d pr

oces

sing

fa

cilit

ies

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tegi

c in

tern

atio

nal

partn

ersh

ips

Fina

ncia

l bac

king

and

maj

or

owne

rshi

p by

Boe

ing.

W

ell-m

aint

aine

d fa

cilit

ies;

st

ream

lined

laun

ch p

roce

sses

, de

dica

ted

laun

ch te

am

Sign

ifica

nt L

V ba

cklo

g in

clud

ing

gove

rnm

ent l

aunc

hes

Sign

ifica

nt L

V ba

cklo

g,

incl

udin

g go

vern

men

t lau

nche

sIn

expe

nsiv

e LV

, low

pric

e le

ader

Inex

pens

ive

LV, l

ow p

rice

lead

erM

oder

n pa

yloa

d pr

oces

sing

fa

cilit

ies

Mod

ern

payl

oad

proc

essi

ng

faci

litie

sSt

rate

gic

inte

rnat

iona

l pa

rtner

ship

sSt

rate

gic

inte

rnat

iona

l pa

rtner

ship

sFi

nanc

ial b

acki

ng a

nd m

ajor

ow

ners

hip

by B

oein

g.

Fina

ncia

l bac

king

and

maj

or

owne

rshi

p by

Boe

ing.

W

ell-m

aint

aine

d fa

cilit

ies;

st

ream

lined

laun

ch p

roce

sses

, de

dica

ted

laun

ch te

am

Wel

l-mai

ntai

ned

faci

litie

s;

stre

amlin

ed la

unch

pro

cess

es,

dedi

cate

d la

unch

team

Sign

ifica

nt L

V ba

cklo

g in

clud

ing

gove

rnm

ent l

aunc

hes

Sign

ifica

nt L

V ba

cklo

g,

incl

udin

g go

vern

men

t lau

nche

sSi

gnifi

cant

LV

back

log

incl

udin

g go

vern

men

t lau

nche

sSi

gnifi

cant

LV

back

log,

in

clud

ing

gove

rnm

ent l

aunc

hes

Rel

ativ

ely

inex

pens

ive

LVs

Wel

l-pos

ition

ed fo

r acq

uirin

g bu

ilt s

atel

lite

laun

ches

Can

pro

vide

insu

ranc

e an

d fin

anci

ng in

tern

ally

. H

igh

relia

bilit

y, lo

w in

sura

nce

rate

s

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Rel

ativ

ely

inex

pens

ive

LVs

Wel

l-pos

ition

ed fo

r acq

uirin

g bu

ilt s

atel

lite

laun

ches

Wel

l-pos

ition

ed fo

r acq

uirin

g bu

ilt s

atel

lite

laun

ches

Can

pro

vide

insu

ranc

e an

d fin

anci

ng in

tern

ally

. H

igh

relia

bilit

y, lo

w in

sura

nce

rate

s

Can

pro

vide

insu

ranc

e an

d fin

anci

ng in

tern

ally

. H

igh

relia

bilit

y, lo

w in

sura

nce

rate

s

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Fina

ncia

lly s

trong

--sig

nific

ant

cash

flow

ava

ilabl

e fo

r LV

impr

ovem

ents

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

Low

cus

tom

er lo

yalty

; no

laun

ch c

apab

ility,

relia

bilit

y, o

r sc

hedu

le a

dvan

tage

s

Low

cus

tom

er lo

yalty

; no

sche

dule

adv

anta

ges

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

New

LVs

addr

essi

ng s

ame

mar

ket s

egm

ent

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

U.S

. bui

lt R

D-1

80 e

ngin

e 3

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

U.S

. bui

lt R

D-1

80 e

ngin

e 3

year

s be

hind

sch

edul

e; n

eede

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r gov

ernm

ent l

aunc

hes

year

s be

hind

sch

edul

e; n

eede

d fo

r gov

ernm

ent l

aunc

hes

Uns

ucce

ssfu

l LV

cost

re

duct

ion

initi

ativ

es c

ould

resu

lt in

con

tinue

d un

prof

itabi

lity

Uns

ucce

ssfu

l LV

cost

re

duct

ion

initi

ativ

es c

ould

resu

lt U

nsuc

cess

ful L

V co

st

redu

ctio

n in

itiat

ives

cou

ld re

sult

Uns

ucce

ssfu

l LV

cost

re

duct

ion

initi

ativ

es c

ould

resu

lt U

nsuc

cess

ful L

V co

st

redu

ctio

n in

itiat

ives

cou

ld re

sult

in c

ontin

ued

unpr

ofita

bilit

y

Uns

ucce

ssfu

l LV

cost

re

duct

ion

initi

ativ

es c

ould

resu

lt U

nsuc

cess

ful L

V co

st

redu

ctio

n in

itiat

ives

cou

ld re

sult

Uns

ucce

ssfu

l LV

cost

re

duct

ion

initi

ativ

es c

ould

resu

lt

Thre

atC

omm

erci

al la

unch

indu

stry

coun

tries

.

Com

mer

cial

laun

ch in

dust

ry

coun

tries

.

Com

mer

cial

laun

ch in

dust

ry

coun

tries

.

Com

mer

cial

laun

ch in

dust

ry

coun

tries

.

Com

mer

cial

laun

ch in

dust

ry

coun

tries

.

Com

mer

cial

laun

ch in

dust

ry

coun

tries

.

Com

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arke

ting

and

low

m

arke

t sha

re.

No

sign

ifica

nt

inte

rnat

iona

l par

tner

ship

s

Rel

ianc

e on

a s

ingl

e LV

Atla

s V

deve

lopm

ent i

s ov

er

2 ye

ars

behi

nd A

riane

5Pa

rtial

fore

ign

owne

rshi

p re

quire

s U

.S. e

xpor

t co

mpl

ianc

e ov

ersi

ght

Kour

ou o

verh

ead

supp

orte

d by

on

ly tw

o la

unch

veh

icle

sD

elta

IV d

evel

opm

ent i

s ov

er

2 ye

ars

behi

nd A

riane

5D

elta

IV d

evel

opm

ent i

s ov

er

Gov

ernm

ent m

anne

d fli

ghts

will

incr

ease

LV

NR

E in

vest

men

tG

PS II

I la

unch

nee

dsPo

tent

ial la

unch

es fr

om

Baik

onur

Pote

ntia

l laun

ches

from

Ba

ikon

urEv

entu

al la

unch

of G

alile

o an

d AT

V de

man

d fo

r ISS

Even

tual

laun

ch o

f Gal

ileo

and

ATV

dem

and

for I

SSN

umer

ous

stra

tegi

c pa

rtner

ing

agre

emen

ts w

ith c

usto

mer

s/

Num

erou

s st

rate

gic

partn

erin

g N

umer

ous

stra

tegi

c pa

rtner

ing

vend

or c

ompa

nies

Gov

ernm

ent m

anne

d fli

ghts

will

incr

ease

LV

NR

E in

vest

men

tG

over

nmen

t man

ned

fligh

ts w

ill in

crea

se L

V N

RE

inve

stm

ent

GPS

III

laun

ch n

eeds

GPS

III

laun

ch n

eeds

Pote

ntia

l laun

ches

from

Ba

ikon

urPo

tent

ial la

unch

es fr

om

Baik

onur

Pote

ntia

l laun

ches

from

Ba

ikon

urPo

tent

ial la

unch

es fr

om

Baik

onur

Even

tual

laun

ch o

f Gal

ileo

and

ATV

dem

and

for I

SSEv

entu

al la

unch

of G

alile

o an

d AT

V de

man

d fo

r ISS

Even

tual

laun

ch o

f Gal

ileo

and

ATV

dem

and

for I

SSEv

entu

al la

unch

of G

alile

o an

d AT

V de

man

d fo

r ISS

Num

erou

s st

rate

gic

partn

erin

g ag

reem

ents

with

cus

tom

ers/

N

umer

ous

stra

tegi

c pa

rtner

ing

Num

erou

s st

rate

gic

partn

erin

g

vend

or c

ompa

nies

Num

erou

s st

rate

gic

partn

erin

g ag

reem

ents

with

cus

tom

ers/

N

umer

ous

stra

tegi

c pa

rtner

ing

Num

erou

s st

rate

gic

partn

erin

g

vend

or c

ompa

nies

Incr

easi

ng d

omes

tic

com

mer

cial

sat

ellit

e m

anuf

actu

ring

Atla

s V

expe

cted

to la

unch

in

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

2002

. An

gara

heav

y-lif

t LV

in

deve

lopm

ent

Stra

tegi

c al

lianc

e w

ith

alte

rnat

ives

Stra

tegi

c al

lianc

e w

ith

Assu

resa

t, pr

ovid

ing

insu

ranc

e al

tern

ativ

es

Dev

elop

men

t of V

ega

and

Dev

elop

men

t of V

ega

and

Euro

rock

otw

ill in

crea

se s

tabl

eC

reat

ing

new

sat

ellit

e-ba

sed

appl

icat

ions

can

driv

e la

unch

de

man

d; G

PS la

unch

nee

dsof

LVs

Incr

easi

ng d

omes

tic

com

mer

cial

sat

ellit

e m

anuf

actu

ring

Incr

easi

ng d

omes

tic

com

mer

cial

sat

ellit

e m

anuf

actu

ring

Atla

s V

expe

cted

to la

unch

in

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

deve

lopm

ent

2002

. An

gara

heav

y-lif

t LV

in

deve

lopm

ent

Stra

tegi

c al

lianc

e w

ith

alte

rnat

ives

Stra

tegi

c al

lianc

e w

ith

Assu

resa

t, pr

ovid

ing

insu

ranc

e al

tern

ativ

es

Stra

tegi

c al

lianc

e w

ith

alte

rnat

ives

Stra

tegi

c al

lianc

e w

ith

Assu

resa

t, pr

ovid

ing

insu

ranc

e al

tern

ativ

es

Dev

elop

men

t of V

ega

and

Dev

elop

men

t of V

ega

and

Euro

rock

otw

ill in

crea

se s

tabl

eC

reat

ing

new

sat

ellit

e-ba

sed

appl

icat

ions

can

driv

e la

unch

de

man

d; G

PS la

unch

nee

ds

Cre

atin

g ne

w s

atel

lite-

base

d ap

plic

atio

ns c

an d

rive

laun

ch

dem

and;

GPS

laun

ch n

eeds

of L

Vs

carr

y m

ultip

le L

Vs p

er tr

ip

94

Tabl

e 14

-2.

LV M

arke

t Com

petit

iven

ess (

2000

)

Heavy Inter. Medium Small

Mar

ket

suita

bilit

yC

omm

erci

al

win

s

Win

met

ric

(win

s/

oppo

rtuni

ty)

# of

tim

es

chea

per t

han

win

ning

bid

Aver

sion

met

ric (%

tim

es w

as c

heap

er

than

win

ner)

Prem

ium

1 (%

ch

eape

r op

tion

was

av

aila

ble)

Prem

ium

2

(avg

# of

ch

eape

r op

tions

)

Mar

ket

surv

ivab

ility

met

ric

Non

-co

mm

erci

al

win

s

Adju

sted

m

arke

t su

rviv

abilit

y m

etric

(all

laun

ches

)

Aria

ne5

79%

415

%0

0%10

0%2.

0B

0B

Prot

on K

65%

627

%7

32%

100%

3.5

A8

AZe

nit3

SL

74%

312

%18

72%

67%

2.3

B0

BLo

ng M

arch

3B

71%

00%

1979

%N

/AN

/AD

+4

BAr

iane

42s,

44s

74%

832

%7

28%

100%

3.9

A0

ALo

ng M

arch

2E/

2F41

%0

0%12

86%

N/A

N/A

D+

0D

+At

las

IIIA

68%

14%

313

%10

0%6.

0C

0C

Atla

sIIs

53%

211

%4

22%

100%

5.0

C5

A-D

elta

III

53%

00%

1478

%N

/AN

/AD

+1

CSo

yuz

U12

%3

75%

00%

0%0.

0B-

10A-

Del

ta II

6%

150

%0

0%10

0%1.

0C

-5

A-Ar

iane

409%

00%

00%

N/A

N/A

F0

FSo

yuz

U /F

rega

t3%

00%

00%

N/A

N/A

F0

FLo

ng M

arch

2C

,2D

,33%

00%

00%

N/A

N/A

F0

FD

nepr

-13%

110

0%0

0%0%

0.0

C-

0C

-C

yclo

ne 2

, 30%

0N

/A0

NA

N/A

N/A

F1

C-

PSLV

3%0

0%0

0%N

/AN

/AF

0F

Athe

na18

%0

0%0

0%N

/AN

/AD

0

D+

M-5

18%

00%

00%

N/A

N/A

D1

C-

Roc

kot

15%

00%

00%

N/A

N/A

D1

C-

Mol

iyna

15%

00%

00%

N/A

N/A

D0

D

Cos

mos

15%

240

%0

0%50

%1.

0C

-1

B-Ta

urus

18%

00%

00%

N/A

N/A

D1

C-

J-1

9%0

0%0

0%N

/AN

/AF

0F

Star

t-112

%1

25%

375

%0%

0.0

C-

0C

-M

inot

aur

12%

00%

375

%N

/AN

/AF

2C

-Pe

gasu

s XL

9%2

67%

00%

100%

3.5

C-

0C

-VL

S 9%

00%

267

%N

/AN

/AF

0F

Shav

it3%

00%

110

0%N

/AN

/AF

0F

3440

Com

mer

cial

Lau

nche

s

Heavy Inter. Medium Small

Mar

ket

suita

bilit

yC

omm

erci

al

win

s

Win

met

ric

(win

s/

oppo

rtuni

ty)

# of

tim

es

chea

per t

han

win

ning

bid

Aver

sion

met

ric (%

tim

es w

as c

heap

er

than

win

ner)

Prem

ium

1 (%

ch

eape

r op

tion

was

av

aila

ble)

Prem

ium

2

(avg

# of

ch

eape

r op

tions

)

Mar

ket

surv

ivab

ility

met

ric

Non

-co

mm

erci

al

win

s

Adju

sted

m

arke

t su

rviv

abilit

y m

etric

(all

laun

ches

)

Aria

ne5

79%

415

%0

0%10

0%2.

0B

0B

Prot

on K

65%

627

%7

32%

100%

3.5

A8

AZe

nit3

SL

74%

312

%18

72%

67%

2.3

B0

BLo

ng M

arch

3B

71%

00%

1979

%N

/AN

/AD

+4

BAr

iane

42s,

44s

74%

832

%7

28%

100%

3.9

A0

ALo

ng M

arch

2E/

2F41

%0

0%12

86%

N/A

N/A

D+

0D

+At

las

IIIA

68%

14%

313

%10

0%6.

0C

0C

Atla

sIIs

53%

211

%4

22%

100%

5.0

C5

A-D

elta

III

53%

00%

1478

%N

/AN

/AD

+1

CSo

yuz

U12

%3

75%

00%

0%0.

0B-

10A-

Del

ta II

6%

150

%0

0%10

0%1.

0C

-5

A-Ar

iane

409%

00%

00%

N/A

N/A

F0

FSo

yuz

U /F

rega

t3%

00%

00%

N/A

N/A

F0

FLo

ng M

arch

2C

,2D

,33%

00%

00%

N/A

N/A

F0

FD

nepr

-13%

110

0%0

0%0%

0.0

C-

0C

-C

yclo

ne 2

, 30%

0

Mar

ket

suita

bilit

yC

omm

erci

al

win

s

Win

met

ric

(win

s/

oppo

rtuni

ty)

# of

tim

es

chea

per t

han

win

ning

bid

Aver

sion

met

ric (%

tim

es w

as c

heap

er

than

win

ner)

Prem

ium

1 (%

ch

eape

r op

tion

was

av

aila

ble)

Prem

ium

2

(avg

# of

ch

eape

r op

tions

)

Mar

ket

surv

ivab

ility

met

ric

Non

-co

mm

erci

al

win

s

Adju

sted

m

arke

t su

rviv

abilit

y m

etric

(all

laun

ches

)

Aria

ne5

79%

415

%0

0%10

0%2.

0B

0B

Prot

on K

65%

627

%7

32%

100%

3.5

A8

AZe

nit3

SL

74%

312

%18

72%

67%

2.3

B0

BLo

ng M

arch

3B

71%

00%

1979

%N

/AN

/AD

+4

BAr

iane

42s,

44s

74%

832

%7

28%

100%

3.9

A0

ALo

ng M

arch

2E/

2F41

%0

0%12

86%

N/A

N/A

D+

0D

+At

las

IIIA

68%

14%

313

%10

0%6.

0C

0C

Atla

sIIs

53%

211

%4

22%

100%

5.0

C5

A-D

elta

III

53%

00%

1478

%N

/AN

/AD

+1

CSo

yuz

U12

%3

75%

00%

0%0.

0B-

10A-

Del

ta II

6%

150

%0

0%10

0%1.

0C

-5

A-Ar

iane

409%

00%

00%

N/A

N/A

F0

FSo

yuz

U /F

rega

t3%

00%

00%

N/A

N/A

F0

FLo

ng M

arch

2C

,2D

,33%

00%

00%

N/A

N/A

F0

FD

nepr

-13%

110

0%0

0%0%

0.0

C-

0C

-C

yclo

ne 2

, 30%

0N

/A0

NA

N/A

N/A

F1

C-

PSLV

3%0

0%0

0%N

/AN

/AF

0F

Athe

na18

%0

0%0

0%N

/AN

/AD

0

D+

M-5

18%

00%

00%

N/A

N/A

D1

C-

Roc

kot

15%

00%

00%

N/A

N/A

D1

C-

Mol

iyna

15%

00%

00%

N/A

N/A

D0

D

Cos

mos

15%

240

%0

0%50

%1.

0C

-1

B-Ta

urus

18%

00%

00%

N/A

N/A

D1

C-

J-1

9%0

0%0

0%N

/AN

/AF

0F

Star

t-112

%1

25%

375

%0%

0.0

C-

0C

-M

inot

aur

12%

00%

375

%N

/AN

/AF

2C

-Pe

gasu

s XL

9%2

67%

00%

100%

3.5

C-

0C

-VL

S 9%

00%

267

%N

/AN

/AF

0F

Shav

it3%

00%

110

0%N

/AN

/AF

0F

3440

Com

mer

cial

Lau

nche

s

95

aversion metric requires fundamental change in the LV, marketing, or governmental policy in order to improve its marketability. It is doubtful that further price reductions by themselves will significantly increase demand for LVs with high aversion ratings. The Zenit 3 SL's and Delta III's high aversion ratings were probably the result of their relative newness and initial failures. The Long March faced U.S. export constraints. Strategic partnerships, in conjunction with relatively limited small LV demand, caused these LVs to have high aversion ratings.

• Premium #1: Measures an LV's ability to win launch contracts even though it is a

higher-priced option. This premium calculates the percentage of times that a cheaper launch option was available for each of the LV's commercial wins. With the exception of the Long March, most mature intermediate- and heavy-lift LVs were able to win over cheaper alternatives.

• Premium #2: Measures an LV's ability to win launch contracts over cheaper options.

This metric calculates the average number of cheaper alternatives for each of the LV's commercial wins. In order to have a high premium metric, an LV must offer substantial value added benefits that customers are willing to purchase. In general, intermediate- and heavy-lift LVs had to compete against multiple cheaper alternatives for each payload. The Ariane 4 and the Proton, each winning at least six launches, had on average more than 3.5 cheaper alternatives.

• Market Survivability Metric: Measures the overall survivability of these LVs in a

competitive commercial market. This metric is based on the size of the LV's addressable market segment and the LV's ability to win market share. The criteria for each ranking are listed in Table 14-3. Based on these results, heavy- and intermediate-lift LVs are better able to meet LV market demand, garnering the most commercial wins.

These criteria imply that the Proton and the Ariane 4 product lines should be continued. However, the Ariane 4 is being discontinued since it is not able to support the expected growth in payload size and weight. The Ariane 4 will cease operation once the current inventory is depleted in 2003. Small- and medium-lift LVs have poor market survivability ratings. Although many of these LVs will be unable to garner a significant commercial market share, they may still survive if their respective governments view their development as a strategic industry.

• Adjusted Market Survivability Metric: Uses the same criteria as Table 14-3 but

takes into consideration noncommercial launches. When adjusting for noncompetitive launches, market survivability ratings for the Atlas II, Delta II, and Soyuz are greatly improved because of the captive government markets that they serve.

96

Table 14-3. Market Survivability Criteria

Grade Criteria A Win 5+ launches; market suitability > 60% (-) if market suitability < 60% B Win 3–4 launches; market suitability > 60% (-) if market suitability < 60% C Win 1–2 launches; market suitability > 40% (-) if market suitability < 40% D No wins; market suitability > 15% (+) if market suitability > 30% F No wins; market suitability < 15%

97

15. U.S. Export Policy The United States has used embargoes and sanctions to hinder China and India from acquiring satellite and LV technology. An embargo was placed on Chinese launches of U.S.-built satellites or foreign-built satellites using U.S. satellite components after the Chinese government suppressed protesters in Tiananmen Square in 1989. U.S. sanctions were imposed against India and Pakistan following their respective nuclear weapons tests in May 1998.188 These restrictions have significantly hurt India's and China's space industries. For instance, the United States blocked Russia from transferring cryogenic rocket technology to the Indian Space Research Organization (ISRO) for several years, contributing to the delay of India's GSLV maiden flight. The United States has also prevented an Indian SSP from launching the Thaicom 4 satellite, which employs U.S.-built components and has been in storage at Alcatel for over 2 years. Alcatel is trying to obtain a U.S. presidential waiver for selling and launching this satellite on a Ariane LV for a prospective Indian buyer, Agrani Satellite Services, Ltd.189 More recently, the U.S. government's refusal to grant export licenses for U.S. components that were used in the European-built ROCSAT 2 satellite has caused the cancellation of an Indian Polar Satellite LV. ROCSAT 2 will be launched in late 2003 by a Taurus LV.190 Intelsat and Eutelsat may have to find alternative LVs for their satellites if the United States does not allow them to launch on Chinese LVs in 2002. Although Intelsat's APR-3 satellite was built by Astrium SAS (France) and Eutelsat's Atlantic Bird-1 satellite was built by Alenia Spazio (Italy), they contain U.S.-supplied components requiring them to obtain U.S. approval. U.S.-based satellite manufacturers and LSPs are also being hurt by U.S. export policies. Their customers have signed contracts with foreign contractors who are able to share technical data and avoid lengthy export compliance approval processes. U.S. export policy is one of the major contributors to U.S. LV market share loss and will continue to negatively impact the industry as satellite customers strive for the shorter contract-to-launch cycle times necessary for meeting their business plans. U.S. government policy also dictates that LVs launching U.S. national security payloads be built domestically to avoid reliance on foreign countries. As a result, a domestic RD-180 production line is being established to build Russian-designed rockets for the Atlas III and Atlas V LVs.191 Failure to successfully bring this production facility online in a timely manner could hurt U.S. launch capabilities.

188 “Sanctions Cause Taiwan to Drop Indian Launcher,” Peter B. de Selding, Space News, July 16, 2001 189 “Alcatel Seeks U.S. Export Waiver for Customer,” Space News, May 7, 2001, page 2 190 See note 184 above 191 “RD-180 Domestic Production Delayed Until 2008,” Jason Bates, Space News, May 28, 2001

99

16. Launch Fee Comparisons This section provides estimates for launch-associated fees at various launch sites. In this section, it is assumed that fees cover all costs associated with launching an LV from a particular site from the LSP's perspective. These fees are assumed to include usage of down-range assets, such as radar and tracking stations. Several methods are used in an attempt to capture the differences between launch site utilization and other issues. One method assumes launch fees include costs associated with launch site depreciation. The second method breaks launch fees into three major components—fuel, labor, and facility costs. The third method assumes launch fees are a percentage of LV prices. The final method is dependent on industry-provided fee estimates. As many of these four methods as possible are applied to each launch site in an attempt to estimate actual range fees. These launch fee estimates might be used to facilitate U.S. launch fee policy discussions. LV fuel costs are calculated by applying 2001 U.S. launch site fuel prices to each LV's estimated fuel requirements. Fuel requirements are based on the International Reference Guide to Space Launch Systems. Fuel pricing assumptions and range-provided fuel fees for each LV are included in Appendix C. At U.S. launch sites, it is assumed that fuel prices paid by LSPs are equal to the prices launch sites pay their fuel providers. U.S. launch sites are only allowed to pass on direct costs to commercial users. Labor costs are based on estimated headcount, launch support duration, and salaries. Most calculations assume that the level of launch support is a uniform 60 people during the duration of the launch campaign. This is an estimate, which could vary by ± 20 people. Foreign engineering and technical support salaries were either scaled from estimated average U.S. salaries or were based on secondary source estimates. Facility cost estimates are based on launch campaign duration, estimated depreciation costs of launch facilities (as if it were a commercial facility), and fees charged for using comparable facilities. Most major launch sites were initially created for their respective government use, and were made available for commercial launches at a later time. As a result, facility fees are influenced by a given government's position on the importance of encouraging a commercial launch capability and the government's need to acquire additional revenues for maintaining or modernizing its facilities. 16.1 Chinese Launch Fee Estimates Two methods were used to estimate Chinese launch fees. The first uses bottom-up cost estimates. The second method assumes that Chinese launch fees are a percentage of the LV price and that this percentage is about the same as that charged by Arianespace and U.S.-based LSPs.

101

16.1.1 Bottom-Up Costing Method This fee estimation method consolidates estimates for the three major components of launch fee costs: facilities, labor, and fuels. The Xichang launch facilities include an MST, a UT, two launch pads, a launch control center, a tracking station, a cryogenic propellant fueling system, and a storable propellant fueling system. Six to eight heavy-lift LVs can be launched from Xichang per year.192 Information about the construction costs for Xichang was unavailable, so cost information for some comparable U.S. launch complexes was used for comparison purposes. Space launch complex 37 (SLC-37), in the northeastern section of CCAFS, is under construction to support the Delta IV family of LVs. It has a single launch pad (with an option to build a second), an MST, a horizontal integration facility, a support equipment building, and fueling capability. SLC-6, which will also be used to launch the Delta IV at VAFB, consists of a single launch pad, an MST, support buildings, and fueling facilities. The facilities in Florida and California are expected to cost $250M and $120M, respectively.193 The Florida facility will cost more because a new complex is being built, whereas in California an existing complex is being modified. 16.1.1.1 Facility Cost Estimate The Xichang facility cost estimate shown in Table 16-1 assumes that it is similar in scope to the $250M Florida facility. However, the cost estimate for Xichang should be scaled to reflect the difference in cost structures between the United States and China. For the purposes of this analysis, it is assumed that 20 percent of the facility's construction cost is for the land, 30 percent for material and 50 percent for labor. Chinese labor and land are assumed to cost 10 percent that of the United States, while material costs are assumed to be similar. These assumptions result in the Xichang launch facility costing approximately $92.5M to build. Land is a nonconsumed resource; therefore, only $87.5M of the facility construction costs would need to be amortized over this facility's lifetime. This estimate assumes that the Xichang facility would have to be replaced after 30 years and that it launches six vehicles per year. Under these assumptions, the facility usage fee would need to be $486K/launch in order to be able to replace the facility at the end of its life. However, since the space industry is considered a strategic industry, the Chinese government would probably finance the majority of the launch facilities upkeep and modernization efforts. Therefore, fees for just using the facilities would be expected to be much less than $486K. In any case, it can be assumed that this amount would be the maximum fee charged for using the facilities, independent of labor and fuel associated launch costs.

192 http://www.cgwic.com.cn/launch/center1.html 193 World Space Systems Briefing, Delta IV, Teal Group Corporation, September 2000

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Table 16-1. Xichang Facility Fee Estimate (Depreciation of Launch Site)

Launch Site Cost Estimate

U.S. ($M) China ($M)Land 50 5Labor 125 12.5Material/Other 75 75

250 92.5

Depreciable Portion 200 87.5

Depreciation per launch ($K) 486

In comparison, the U.S. CCAFS SLC-46 facility usage fee is $250K. This fee does not include any fuel-related costs. Adjusting this facility fee downward to reflect the relative cost of Chinese labor and land would drop this fee to $50K per launch. The actual Chinese facility usage fee would probably be closer to $50K than to $486K, since Chinese facility usage fees are not expected to cover facility replacement costs, the Chinese facilities are not as modern as those at the CCAFS, and demand for using the Chinese launch facilities is low. 16.1.1.2 Labor Cost Estimate The launch campaign is assumed to last between 30–40 days. The number of people required to support a Chinese launch is assumed to be 60. This number is consistent with the following staffing profiles, which imply that between 25–103 people are used for launches at various launch sites: • The Florida spaceport has a staff of 25 people and 3–4 Air Force contractors for

scheduled maintenance. This is equivalent to approximately 30 launch site staff supporting launches.

• Arianespace has 55 permanent staff and 355 contractors at Kourou.194 The Kourou site can process four LVs in parallel—two Ariane 4s and two Ariane 5s. At peak launch, then, roughly one quarter of Arianespace's personnel or 103 people are required per LV.

Chinese labor rates are assumed to be roughly 10 percent of U.S. labor rates, or $700 per month. Based on a 40-day launch campaign being supported by 60 people, the labor fees for launching Chinese LVs would be around $50K per launch. In contrast, the U.S. Eastern Range charges $600K for prelaunch support. If the U.S. prelaunch fee were scaled to reflect the relative cost of Chinese salaries, the cost for this support would be $60K.

194 Ariane Operational Activities in French Guyana Organization and Funding, slide presentation,

November 2000

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16.1.1.3 Fuel Cost Estimate The largest component of the Chinese launch fee is expected to be for fuel. For this analysis, it was assumed that the Chinese launch industry would pay fuel prices consistent with the United States. Should the Chinese launch site be able to acquire fuel at rates different from the United States, then these fuel-cost estimates would need to be adjusted accordingly. The U.S. fuel cost assumptions are included in Appendix C; fuel requirements for each LV can be found in the International Reference Guide to Space Launch Systems. The total fees are thus estimated to be between $5 and $11M based on this method.

Table 16-2. Bottom-Up Fee Estimate (China)

Launch Vehicle

Launch Campaign

(Days)

Support Level

(Heads)Labor

Fee ($K)Fuel Fee Est. ($K)

Est. Facilities Fee ($K) Total ($K)

Long March 3B 40 60 $53 $10,900 $50 $11,003Long March 2C 40 60 $53 $5,200 $50 $5,303

Launch Vehicle

Launch Support Level

(Heads)Labor




Launch Vehicle

Launch Campaign

(Days)

Support Level

(Heads)Labor




Launch Vehicle

Launch Support Level

(Heads)Labor




16.1.2 Percentage of Revenues Method The second estimate assumes launch fees are a percentage of the LV price. Ariane 4 range fees were approximately 3 percent of LV price, while U.S. launch fees are estimated to be 2–3 percent during 1999–2000. Therefore, it is conceivable that Chinese launch fees might also be around 3 percent. However, if Chinese launch fees were to cover all range-associated costs—including fuel costs—then the fees would have to be greater than $5 to $10M per launch just to cover the range-provided fuel. This would require range fees to be 10–20 percent of the Long March prices. Table 16-3 applies this percentage range to Chinese Long March prices. It is doubtful that the range fees cover all costs and are likely to be less than 10 percent of actual LV prices, consistent with U.S. and European range fee percentages of price.

Table 16-3. Percentage of Revenues Fee Estimate (China)

Price ($M) 5.0% 10.0% 15.0% 20.0%Long March 3B 60 3.0 6.0 9.0 12.0Long March 2C 22.5 1.1 2.3 3.4 4.5

Percentage of Launch Price

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16.2 Russia Launch Fee Estimate Three methods for estimating launch fees were explored for the Baikonur launch site, which is leased by the Russian government from Kazakhstan. The first estimate spreads the cost of the Baikonur lease among the different LVs launched in 2000, allocating higher fees to larger LVs. The second estimate uses the bottom-up method of approximating the cost of facilities, labor, and fuel. The third estimate assumes that launch fees are a percentage of LV prices.

16.2.1 Amortizing Lease Method The Baikonur lease is $115M per year, of which $50M was paid in cash in 2000, while the rest was in goods and services.195 The high fee estimate spreads the total $115M lease fee over the number of launches in 2000, while the low fee estimate only spreads out the $50M cash portion of the fee. This method allocates fees based on the LV's weight class and assumes that fuel costs and electricity payments are included in the $115M lease. In 1999, the Russian government paid $17M for electricity and also made significant capital investment into the Baikonur infrastructure.196 It is assumed that these expenditures were part of the goods and services that Russia provided Baikonur in lieu of direct cash payments.

Table 16-4. Amortizing Baikonur Lease Fee Estimate (Russia)

Range User Fee Estimate2000 Low ($K) 2000 High ($K)

Proton $1,695 $3,898Soyuz $1,695 $3,898Zenit $1,695 $3,898Cyclone $847 $1,949Dnepr $847 $1,949Rocket $424 $975Cosmos $424 $975Start-1 $424 $975

16.2.2 Bottom-Up Costing Method The second method uses bottom-up estimating. Although Russian technicians are reported to receive $300/month, this range fee method assumes Russians receive $600 per month, making Russian salaries equal to Chinese salaries.197 The launch campaign duration for various Russian LVs is between 14–30 days, resulting in labor costs of

195 “Kazakhstan to Extend Baikonur Lease 10 Years,” Space Daily, November 16, 2000 196 “Stop Criticizing, Russia Warns Kazkhstan,” Space Daily, December 14, 1999 197 “The Changing Face of Baikonur,” Federic Castel, Space.com, October 28, 1999

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between $17K–$36K. In this calculation, 25 percent of the $17M in electricity expenses that the Russian government pays Kazakhstan has been added to the fuel costs; this assumes that the Russian government tries to recoup some of its expenses from its commercial customers. Fuel cost assumptions can be found in Appendix C. Facility expenses were assumed to be $100K per LV, somewhat lower that the $250K facility fees charged for using the U.S. CCAFS SLC-46. Table 16-5 summarizes the Baikonur range fee estimate for various LVs.

Table 16-5. Bottom-Up Fee Estimate (Russia)

Launch

Campaign (days)

Support Level

(Heads)Labor

Fee ($K)

Fuel + Electricity Est. ($K)


Proton 30 60 $36.00 $19,002 $100 $19,138Soyuz 30 60 $36.00 $289 $100 $425Zenit 21 60 $25.20 $325 $100 $451Cyclone 14 60 $16.80 $5,202 $100 $5,319Dnepr 14 60 $16.80 $5,702 $100 $5,819Rocket 14 60 $16.80 $252 $100 $369Cosmos 14 60 $16.80 $252 $100 $369Start-1 14 60 $16.80 $202 $100 $319

16.2.3 Percentage of Revenues Method The third method assumes launch fees are a percentage of the commercial LV price. If it were assumed that Russian launch fees are a percentage of LV prices that are consistent with those of Arianespace and U.S. LVs, then Russian launch fees would be between 2–4 percent. These percentages would result in fees similar to those estimated in Table 16-4. However, if launch fees are expected to cover the cost of launching at Baikonur using the bottom-up costing method defined in Table 16-5, then launch fees would have to be as high as 25 percent of the commercial LV price. In the case of the Proton, Cyclone and Dnepr LVs, all of which use liquid fuels, fuel costs represent a significant percentage of the launch site costs. The LV prices assumed are FAA estimates for commercial launches. Russian government launches are purported to cost 25 percent less than commercial launches.198 Table 16-6 shows the possible relationship between Russian LV price and launch fees as a percentage of these prices.

198 “Sales Drop at Russia's Progress Organization,” Simon Saradzhyan, Space News, February 26, 2001

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Table 16-6. Percentage of Revenues Fee Estimate (Russia)

Price ($M) 2% 4% 8% 10%Proton 85 1.70 3.40 6.80 8.50Soyuz 40 0.80 1.60 3.20 4.00Zenit 42.5 0.85 1.70 3.40 4.25Cyclone 22.5 0.45 0.90 1.80 2.25Dnepr 15 0.30 0.60 1.20 1.50Rocket 12.5 0.25 0.50 1.00 1.25Cosmos 13 0.26 0.52 1.04 1.30Start-1 7.5 0.15 0.30 0.60 0.75

Percentage of Launch Price

16.2.4 Europe Launch Fee Estimate Arianespace provided Ariane 4 launch fee estimates for this study. As a result, it is only necessary to estimate the launch fees for the Ariane 5 LV.

16.2.5 Comparable Fees Method From 1995 to 1998, the average Ariane 4 launch fee was $3.1M per launch. These fees covered 48 percent of the allocated range cost to the LV, the remainder of which was paid by a consortium of European governments.199 Ariane 5 fees are assumed to be cheaper than Ariane 4 fees. It is believed that Ariane 5 launch fees were temporarily reduced through 2001 to make the Ariane 5 more cost-competitive. The Ariane 5's launch fee could also be lower due to the fact that its launch-site-provided fuel needs are much lower than that of the Ariane 4. The estimated cost of fuel for the Ariane 4 is $6.5M, while the cost of Ariane 5 launch-site-provided fuel is estimated at $200K. Most of the Ariane 5's liftoff thrust is provided by its solid boosters, resulting in low liquid fuel demand from the launch site. For this reason, Ariane 5 launch fees are probably between $1.6–2.3M, or 50–75 percent of Ariane 4 launch-site fees. 16.3 United States Launch Fee Estimates U.S. launch site fees are based on discussions with industry participants, various reports, and public information. This section focuses on estimating launch fees paid by the LSPs to the launch sites and the impact of future launch fee increases on meeting current U.S. range budget shortfalls.

199 Ariane Operational Activities in French Guyana Organization and Funding, Arianespace slide

presentation, November 20, 2000

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16.3.1 Industry-Provided Method U.S. launch fees are estimated to vary between $200–500K for small LVs and $1.5–$2M for medium to heavy LVs.200 Current U.S. policy permits the Air Force to bill LSPs for the direct costs associated with commercial activities at the U.S. ranges. These fees cover expenses such as LV fuel and personnel necessary for each commercial launch, but do not included depreciation of facilities or overhead costs. The Spaceport Florida Authority finances a significant amount of infrastructure development and conversion at CCAFS and KSC that is not included in the U.S. launch fees, while the California spaceport has relied on private investment for similar infrastructure development. U.S. launch fees represent a small percentage of an LV's price, roughly 1 percent to 3 percent, but are significant nonetheless. One factor dictating U.S. launch fees is the kind of fuel being used. Liquid propellant launches are considerably more expensive than solid fuel boosters. Delta II, Delta III, Atlas II and Atlas III estimated launch-site-provided fuel costs are between $100–200K, while U.S. government Titan II and Titan IV estimated launch-site-provided fuel costs are between $5–$6.5M. The price charged LSPs for using CCAFS' SLC-46 for launching small solid fuel LVs is $250K. The fees associated with using SLC-46 assume four launches per year from this launch complex and do not include fueling fees, since SLC-46 does not have liquid fueling capabilities.201 Additional launch fees include $110K for each launch scrub that occurs within 6 hours of the launch regardless of cause. There are also nonrecurring costs for first-time launches to cover safety and environmental analysis. Prelaunch support for medium to heavy LVs costs approximately $600K. This price includes launch processing support and moving the LV to the pad. The U.S. Air Force does not provide detailed cost information to its customers. Typically, the LSP receives a bill 2 weeks prior to launch invoicing the total fee.

LSPs sometimes pay for services under existing Air Force service contracts. These contracts meet government requirements, which are more demanding than commercial launch requirements. As a result, services provided under government contracts are often more costly than services provided under commercially negotiated contracts. In some cases, LSPs have successfully negotiated new service contracts for commercial launches, thereby reducing their launch costs. For instance, security guards costing $300K per launch under an Air Force contract were obtained for $100K per launch under a commercial contract. Similarly, photography costing $110K per launch under an Air Force-negotiated contract cost only $50K under a commercial contract.202

200 “Air Force May Ask Congress to Amend Range Fee Rules,” Jeremy Singer, Space News, April 16,

2001 201 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

Athena section 202 Cost discussions with industry participants.

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16.3.2 U.S. Launch Fee Scenarios Table 16-7 shows a variety of possible U.S. launch fee scenarios. The baseline launch fees are estimates based on conversations with industry experts and publicly available information, while the 25–100 percent launch-fee-increase columns represent the four fee scenarios analyzed in Figures 16-1 and 16-3. The scenario of reduced launch fees was not included in this analysis, since it is unlikely that the U.S. government will reduce launch fees at this time because of U.S. range budget shortfalls.

Table 16-7. U.S. Launch Fee Scenarios

SuborbitalAthenaPegasusTaurusMinotaurDeltaAtlasTitan IITitan IVShuttle

Baseline25%

increase50%

Increase75%

increase100%

increase150 188 225 262.5 300250 313 375 437.5 500250 313 375 437.5 500750 938 1125 1312.5 1500750 938 1125 1312.5 15001500 1875 2250 2625 30001500 1875 2250 2625 30001500 1875 2250 2625 30002000 2500 3000 3500 4000250 313 375 437.5 500

Launch Fee Options ($K)

Figure 16-1 estimates the total U.S. launch fees that would have been collected in 2000 for each of the five fee scenarios listed in Table 16-7. The highest bold line assumes that the LSP absorbs all launch fees on U.S. government launches, while the lowest bold line assumes that the U.S. government pays for all launch fees associated with U.S. government launches. The middle bold line assumes that the U.S. government will pay for half of the launch fees for its launches. The dashed lines on either side of the three bold lines represent the impact to the total U.S. range fees collected caused by a ±10 percent change in the number of launches. These dashed lines assume that the change in the number of small, medium, and heavy LVs is proportional to the mix of LVs launched from U.S. ranges in 2000.

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Estimated LV Provider U.S. Launch Fees (2000)

01020304050607080

Baseline 25% Increase 50% Increase 75% Increase 100% Increase

Launch Fees

Com

mer

cial

Fee

s ($

M)

+/- 10% change in number of launches

+10%

+10%

+10%

-10%

-10%

-10%

100% Govt. P/L Range Fees paid by LV Provider

50% of Govt.P/L Range Fees Paid by LV Provider

0% Govt. P/L Range Fees paid by LV Provider

Market ShareChange

Figure 16-1. Total Estimated Commercial Launch Fees (2000) These three sets of lines show that increasing launch fees will result in a minimal net increase to launch site funding if U.S. LSPs push these fee increases onto their respective customers. The majority of the launches are for the U.S. government; in 2000, only five of the launches from the Eastern Range were commercial launches. This figure assumes that should the U.S. government have to pay higher fees, it will consequently reduce funding to the U.S. ranges by a proportionate amount. This expected response is shown in Figure 16-2. Figure 16-2 also shows how launch fee increases might result in commercial market share loss or reduced U.S. range federal budgets. In the long run, LSPs will try to push launch fee increases onto their customers. Since most launches are firm-fixed-price contracts purchased 2 years prior to launch, launch fee increases will not be felt immediately by satellite customers.

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Ranges increasefees

LSPpushes fees onto

customers

Commercial customersmove launches to foreign

sites

U.S. Governmentincreases budget for Government

launches

Commercial P/L

Government P/L

U.S. Government, havingless available budget,

reduces U.S. range budget

Fees from lost commercial launches

offset range fee increases

Figure 16-2. Range Fee Response Model Price-sensitive commercial customers could choose a non-U.S. LSP if U.S. launch fees are too high, resulting in loss of U.S. market share. Likewise, launch fee increases on U.S. government launches would make U.S. government launches more expensive. In order to pay for these more expensive launches, the U.S. government would have to reallocate budget. It is conceivable that funding might be shifted from the range operations budget, since increased launch fees should reduce the ranges' need for federal assistance. This scenario seems similar to the California lottery providing additional funding to California schools. As lottery revenue money was directed to the school system, the California school budgets were reduced. State legislators argued that schools needed less funding since lottery revenues were available. Likewise, it is possible that increased launch fees will have a smaller impact on meeting range budget shortfalls than expected. Figure 16-3 shows the impact of the LSP's passing launch fee increases onto their government customers under the five different range fee scenarios. The first graph assumes that the LSP absorbs 25 percent of the launch fee increases on U.S. government launches. The second graph assumes that the LSPs absorb 50 percent of the launch fee increases, while the third graph assumes that 100 percent of the fees are absorbed. The lower (blue) portion of each bar represents fees paid by commercial customers, while the upper (maroon) portion of each bar represents launch fees paid by U.S. government customers. Figure 16-3 shows that the net funding gained through increasing launch fees depends on both the launch fees charged and the percentage of these fees that flows back to the government in the form of higher launch prices.

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Estimated US Range Fees (2000)LSP absorbs 25% of Govt. Launches Fee Increases

010203040506070

Baseline 25%Increase

50%Increase

75%Increase

100%Increase

Range Fee s

Fees

($M

)Govt.

Com


010203040506070


50%Increase

75%Increase

100%Increase

Range Fees

Fees

($M

)

Govt

Com


010203040506070


50%Increase

75%Increase

100%Increase

Range Fees

Fees

($M

)

Govt.

Com

Figure 16-3. U.S. Launch Fee Increase Impact Launch fees for the various launch facilities often do not cover all launch expenses. Some launch fees are approximately 2–5 percent of the price of the LV. However, if launch fees were increased to cover all launch-associated costs, these fees would increase to as much as 25 percent of the LV price in some cases. As a result, it could be argued that launch fees more closely track the value each government puts on having its own commercial launch industry rather than the cost of running the launch sites and ranges.

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17. Conclusions LV performance and price are important to customers, but are not the only criteria for winning launch contracts. Arianespace LVs, which were among the most expensive, still enabled Arianespace to grow its commercial market share. In the case of U.S. LSPs, even if domestic range fees were eliminated, market share might continue to decline because of current U.S. export policies, competitors’ better schedule flexibility, competitors’ preexisting partnering agreements, and the current lack of a U.S. commercial heavy-lift LV. U.S. launch site fees are relatively small compared to the nonrecurring (NR) costs of establishing a commercial space system, recurring (REC) costs of operating the satellite system, and expected revenues over the life of the satellite. Table 17-1 compares various launch costs associated with launching a $200M satellite on a $100M LV. Numbers in parenthesis represent the percentage of the total system cost.

Table 17-1. Satellite System Cost Comparison

NR Satellite $200M (55% of total) NR Launch Vehicle $100M (28%) NR Insurance Premium $ 45M (12%) REC Operating Costs $ 15M (4% - per year) NR U.S. Launch Site Fee $ 1M (0.3% - for medium LV203).

In comparison, commercial revenues generated by these systems can reach hundreds of millions of dollars per year. For a business venture to be successful, commercial revenues must cover the expenses listed in Table 17-1 as well as provide a reasonable return on investment. On the other hand, predictable launch site fees are important to U.S. commercial LSPs. U.S. LSPs will probably have to absorb short-term range fee increases in order to remain price-competitive and to satisfy their existing firm-fixed-price contracts. However, future Delta IV and Atlas V LVs, which were designed to reduce launch costs and process times, may eventually allow U.S. LSPs to pass potential launch site fee increases to their customers while remaining price-competitive. Until that time, U.S. LSPs will need approximately 12–18 months’ warning prior to a launch site fee increase so that they can evaluate the impact of these fees on their business plans and make appropriate pricing adjustments. The U.S. government must continue to work with commercial LSPs, SSPs, and satellite manufacturers to seek ways to reduce costs, improve customer service, and apply commercial business practices to the U.S. ranges when appropriate. Continued 203 “Air Force May Ask Congress to Amend Range Fee Rules,” Jeremy Singer, Space News, April 16,

2001

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collaboration and cooperation is key to reestablishing U.S. launch industry leadership and proactively dealing with launch service industry issues. Possible ways to alter the launch site user fees charged at U.S. ranges are listed below. Although not all are feasible, they maybe useful for initiating other ideas that might encourage the U.S. government to become more business-minded and increase commercial LSPs’ involvement in day-to-day range operations and strategic planning. • Launch site fees could be set as a percentage of LV prices. This would encourage the

U.S. government to help U.S. LSPs increase the value of their LVs and allow LSPs to better predict total range fee costs.

• Launch site fees could consist of two components: the direct costs of supporting the commercial launch, plus a small range improvement fee. This requires detailed costing information, which once acquired would tie launch site fees to services received. This idea is currently being pursued; the major drawback is implementing a satisfactory cost accounting system and clearly defining and capturing "direct costs".

• Launch site fees could be reduced for forecasted low-launch months, encouraging LSPs to schedule launches during these months. Leveling launch rates throughout the year may be the cheapest and easiest way to reduce peak demand, reducing the need for increasing launch site capacity through additional capital investment. According to Appendix D, full launch capacity was required at most launch sites for only a few months in the 1997–2000 time period.

• LSPs that maintain launch schedules could be charged lower launch site fees, minimizing gaming of the launch manifest in anticipation of known late satellite deliveries.

• The U.S. government could provide lower launch site fees on the first 5–10 launches of a new LV to help offset higher space insurance premiums and launcher manufacturing costs.

• The U.S. government could set standard launch site fees and cost structure for specific services.

• LSP-provided services could be used as barter for launch site fee reductions. This would be similar to negotiations by the Italian government for U.S. launches in exchange for an Italian-built ISS Habitat module.

• The U.S. government could pay a set majority percentage of anticipated annual range costs. Commercial LSPs would negotiate among themselves the best way to split the remainder of the costs. Commercial LSPs could offset their costs by streamlining and improving launch processes. LSPs could also provide government launches at reduced prices, assume existing vendor contracts, or provide hardware and expertise for range modernization efforts in lieu of cash payments. LSPs might also provide services to other branches of the U.S. government, such as providing remote imaging in place of range fees.

• An export compliance tax could be applied to satellites launched on foreign LVs. Money received would be used to improve export compliance processes and U.S. launch sites. This tax might encourage more domestic launches of U.S.-built satellites. However, it might also encourage other countries to apply similar taxes to their domestically built, foreign-launched satellites.

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• An externality tax could be applied against all LVs to finance the cleanup of launch-generated pollution. This tax could be internationally negotiated to develop cleaner fuels or LVs.

• Companies and states could invest in spaceport bonds, which would then be used to finance range infrastructure improvements. Large bondholders might be offered reduced range fees or greater input into launch processes in exchange for their capital investment. This might also help coordinate the number of new launch sites being proposed, allowing states to support and benefit from spaceport-generated revenues even if the spaceport is not physically located in their state.

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Appendix A: Space Insurance and Risk Mitigation

Space insurance is typically the third-biggest expense for a satellite owner, after the purchase of the satellite and the cost of launching it.204 Insurance is crucial for financing new satellite ventures and for reducing loss of revenue risks. As a result, space insurance impacts LV marketability. Launch insurance premiums are influenced by the reliability of the LV, the number of LVs launched, the reliability of the satellite, payload complexity, and the implementation of new technology. Insurance can cover the LV, the satellite, and/or related equipment. The scope and amount of insurance coverage also influence premiums, as does the manufacturing company's product assurance plans, the insurance capacity of the industry, regulatory standards, and the nature of the mission (commercial or government).205 Companies trying to finance satellite ventures are often required to obtain full insurance coverage for the amount borrowed. Bankers, often loaning 50 percent or more of the funds needed to start a satellite project, use this insurance to mitigate technical risks.206 207 Some SSPs may insure the in-orbit performance of their satellites in order to make themselves more attractive to investors. For example, Eutelsat obtained in-orbit insurance coverage for its 19 existing satellites and for the two satellites it expects to launch in 2001. Eutelsat's insurance coverage will last until its expected July 2003 IPO.208 Usually 10–20 percent of the space insurance premium is required at the beginning of the policy period. The remainder of this premium is usually paid to the underwriters no later than 30 days prior to launch. Under most insurance policies, satellite owners may demand 100 percent payment of their insurance policies once their satellite loses 50 percent of its capacity. These owners may also keep the revenues generated by the satellite prior to its declared failure.209 However, insurance claim settlements are often disputed, since many of today's space-insurance policies, coauthored by multiple lead underwriters, are vaguely worded.210 Seven to ten large underwriters and several smaller underwriters fund the space insurance industry. European underwriters fund 50–60 percent of the available insurance, while U.S. underwriters fund another 20–30 percent.211 A space insurance package is supported by a combination of large and small underwriters, each committing up to 80–85 percent

204 “Space Insurers Hint of Possible Shortage,” Peter B. de Selding, Space News, March 19, 2001 205 Commercial Space Insurance, http://www.infowar.com/class_2/99/cox_report/8.htm 206 See note 200 above 207 “Satellite Systems Industry Poised for Double-Digit Growth,” Peter B. de Selding, Space News,

March 26, 2001 208 “Eutelsat Purchases 1st In-Orbit Policy,” Space News, March 26, 2001. 209 See note 200 above 210 “Insurers Criticize Vague Contracts,” Space News, March 26, 2001 211 An Update on the Space Insurance Market, slide presentation, John Vinter, 33rd Meeting, Commercial

Space Transportation Advisory Committee (COMSTAC), May 10, 2001

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of its available financial resources to one program.212 Since most satellite operators require complete coverage for their satellites, insurance availability may eventually limit the maximum size of geostationary communication satellites since larger satellites typically are more expensive and therefore more insurance is required. From 1996 to late 1999, the capacity to insure space projects increased from $800M to $1.3B, driving down premium rates for the whole industry. Through late 1998, brokers offered group insurance packages, combining coverage of new LVs with established LVs. This shifted some of the risk premiums away from the new LVs, increasing their marketability. However, failures in 1998 and 1999 caused insurance capacity to shrink and insurance premiums to rise. Furthermore, failures of the new LVs caused underwriters to change the way they write policies, focusing more on each LV's reliability record. As LV reliability became more important for determining insurance rates, insurance rates for highly reliable LVs, such as the Ariane 4, dropped relative to other LVs.213 Historically, 76 percent of space failures occur at launch, 15 percent occur in early orbit, and 9 percent occur while in orbit.214 Although individual launch failures do not significantly impact overall insurance premium rates, they do impact the insurance rates for the LV family involved. Table A-1 shows the number of launch or mission failures during early orbit that have occurred during the last 4 years. Launch failures during the last 4 years include:

• Proton LV carrying AsiaSat 3 (1997) • Delta III carrying Galaxy 10; Zenit 2 carrying several Globalstar satellites (1998) • Athena 2 carrying the Ikonos 1 satellite; Delta III carrying Orion F3 (1999) • Zenit 3SL (Sea Launch) carrying ICO; Cosmos carrying Quickbird 1 (2000) • X-43A research aircraft using a modified Pegasus 1st stage; Ariane 5 carrying

two satellites for ESA and OSC (2001) Insurance losses are booked differently by insurance companies. Sometimes losses are booked by year of the satellite launch and sometimes by year of the failure. In 2000, failures booked by year of launch resulted in $850M in losses, while failures booked in year of failure resulted in $1.3B in losses.215

212 Commercial Space Insurance, http://www.infowar.com/class_2/99/cox_report/8.htm 213 Arianespace and Insurance Companies, e.space, Arianespace newsletter, June 2000 214 Update of the Space and Launch Insurance Industry, FAA Quarterly Launch Report, 4th Qtr 1998 215 “Insurance Industry Loses Money Again in 2000,” Peter B. de Selding, Space News, January 8, 2001

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Table A-1. Health of the Space Insurance Industry216 217 218 219

YearCommercial Launches

Launch Failures / Mission Failures



Insurance Capacity

Max. Insurance per

programLoss /

PremiumsInsurance

Rates1996 24 53 800M 650M 350M / 985M decreased1997 54 1 / 1 35 3 / 1 300M / 1.6B decreased1998 36 2 / 0 46 5 / 0 800M - 1B 1.9B / 900M decreased1999 36 2 / 1 42 6 / 1 1.3B 1.2B increased

2000 35 2 / 0 50 2 / 0 1.2B 1.1 B850M-1.3B /

900M increased2001 < 1 B increased

YearCommercial Launches




Insurance Capacity

Max. Insurance per

programLoss /

PremiumsInsurance

Rates1996 24 53 800M 650M 350M / 985M decreased1997 54 1 / 1 35 3 / 1 300M / 1.6B decreased1998 36 2 / 0 46 5 / 0 800M - 1B 1.9B / 900M decreased1999 36 2 / 1 42 6 / 1 1.3B 1.2B increased

2000 35 2 / 0 50 2 / 0 1.2B 1.1 B850M-1.3B /

900M increased2001 < 1 B increased

The total insurance coverage available for all launch and satellite programs can be used to measure the health of the space insurance industry. This amount has steadily decreased from $1.2B in 1999 to $1.1B in 2000 and is expected to drop to $.9B in 2001 due to recent failures.220 221 However, the average insurance premium per launch has remained between $250–300M. 222 Although LVs have traditionally caused the most failures, this trend is starting to change as claims due to satellite in-orbit failures increase as a percentage of the total claims paid.223 1998 marks the start of increased in-orbit failures. In 1998, $1.4B of the $1.9B of losses were caused by 24 in-orbit satellite failures.224 This is in contrast to 1994, a more typical year, when 70 percent of all failures were caused by launchers.225 As a result of launch and in-orbit failures, several underwriters have quit the space side of their business altogether or are planning to reduce their participation. Underwriters do not need to offer space insurance, as annual premiums represent just 0.3 percent of non-life-insurance receipts worldwide.226 Claims made on policies written several years ago may not be paid in full, since some of the initial insurers may no longer be in business. Table A-2 shows insurance coverage that some major underwriters were willing to support in 1998, when the industry had overcapacity. Insurers lowered their premiums to secure market share and then incurred substantial losses when LVs failed. During that year, Lloyd's of London was willing to

216 “Manufacturer 'Short Cuts' Driving Spacecraft Losses: Insurers,” Satellite Today, February 3, 1999 217 “Space Insurers Hint of Possible Shortage,” Peter B. de Selding, Space News, March 19, 2001 218 “Insurance Industry Loses Money Again in 2000,” Peter B. de Selding, Space News, January 8, 2001 219 Arianespace and Insurance Companies, e.space, Arianespace newsletter, June 2000 220 See note 214 above 221 An Update On the Space Insurance Market, slide presentation, John Vinter, 33rd Meeting, Commercial

Space Transportation Advisory Committee (COMSTAC), May 10, 2001 222 See note 214 above 223 See note 213 above 224 See note 212 above 225 Satel Conseil 2000 Symposium, Stanislas Chapron, Symposium Speaker 226 “Long Term Insurance Policies May Hurt,” Space News, May 28, 2001, p. 24

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commit $80M for space coverage. Recently, Lloyd's dropped its coverage to $60M and will refuse to issue policies that provide coverage for more than 3 years.227 The overall insurance industry is expected to follow suit, providing more normal periods of coverage—launch and 1–2 years in orbit.

Table A-2. Top Six Underwriters’ Single Launch Maximum Coverage (1998)228

Underwriter ($M)

Assicurazioni Generali S.p.A. (Italy) 120AGF/AGA (France) 95La Reunion Spatiale (France) 95Marham Space Consortium of London (Lloyd's of London) 80BIS/Brockbank (USA) 75INTEC/AXA (USA) 65

Underwriters are seeking other ways to reduce risk. They are growing wary of the increasing complexity of satellites and the increase of in-orbit failures, which they attribute to satellite manufacturers’ shortened production cycle times through the elimination of some satellite integration testing. Underwriters have started to push for quality control improvements and implementation of more stringent satellite testing as a prerequisite to obtaining insurance. Several underwriters are also pushing for launching dummy loads on new LVs prior to their use on commercial insured satellites. The underwriters hope that these trial flights will flush out system problems, reducing the losses incurred on maiden flights. However, this is an expense that LSPs oppose. Underwriters have begun asking clients to retain a percentage of the insurance risk and to disclose adequate technical details. This would motivate clients to complete the projects successfully and would allow underwriters to better evaluate technical risk.229 Although the theoretical maximum amount of insurance coverage available for a single launch is $1B, it is expected that in 2001 the amount of coverage for a single launch will be less than $500M. This is $50M less than the amount of coverage offered for a single launch in 2000.230 Consistent with these insurance maximums, Telesat, which is seeking a $407.8M insurance policy for Anik F2, is having difficulty placing the policy because insurance underwriters are still uncertain of how Ka-band satellites will perform. The number of new technologies on Anik F2 that have never been flown before, combined with the last 3 years of losses, has made the underwriters more risk averse. This 227 “Insurance Industry Loses Money Again in 2000,” Peter B. de Selding, Space News, January 8, 2001 228 Update of the Space and Launch Insurance Industry, FAA Special Report, 4th Quarter 1998 229 Commercial Space Insurance, http://www.infowar.com/class_2/99/cox_report/8.htm 230 “Space Insurers Hint of Possible Shortage,” Peter B. de Selding, Space News, March 19, 2001

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difficulty in obtaining insurance coverage exists even though Telesat reportedly has good quality controls in place.231 A.1 Insurance Claims Table A-3 shows the magnitude of some insurance claims as well as the causes of failure. Of particular concern to insurance companies is the growing number of "serial" failures, such as the satellite control processor failures on the BSS 601 and the solar cell defects on the SS/L FSS-1300. Although the solar cell defects have not caused any satellites to fail yet, there is significant potential liability risk. U.S. government failures are not included in Table A-3, since U.S. government LVs require only third-party-liability insurance. 1999 U.S. government failures include the $682M Defense Support Program satellite that entered the wrong orbit on April 12 and the $800M Milstar military communications satellite that entered the wrong orbit on May 3.232 An increase in the number of claims weakens the insurance industry, forcing future insurance rates for both the satellite and LVs to increase.

Table A-3. Recent Insurance Claim Examples233 234 235 236

Satellite Claim ($M) Claim Year Additional risk ProblemOrion 3 265 1999 Non-usable orbitSolidaridad 276 2000 In orbit failureQuickBird-1 265 2000 Launch failureICO-F1 225 2000 Launch failureGalaxy 7 132 2000 In orbit failureGaruda-1 100 2000 damaged antenna

BSS 601 500 + TBD < 2001> 1 Billion for other in-orbit BSS 601's

Satellite Control Processor Failures

Loral FSS-1300 ? 1997-200011 out of 36+ have shown problem so far

Short-circuiting solar cell defect on 11 in orbit S/C

Sate

llite

sSa

telli

te

Bus

es

New LVs typically have higher failure rates, and therefore the LSP can expect to be charged higher premiums for new LVs than for established LVs. Table A-4 shows the number of failures and magnitude of insurance claims for up to the first 10 launches of various LVs. Only launch data through June 2000 has been included.

231 “Insurers Chided for Failure to Reward Quality Programs,” Peter B. de Selding, Space News, March

26, 2001 232 “Delta III Malfunctions,” Satellite Today, May 5, 1999 233 “Space Insurers Hint of Possible Shortage,” Peter B. de Selding, Space News, March 19, 2001 234 “Loral Investigating Solar Array Defect on 11 Spacecraft,” Peter B. de Selding, Space News, March

26, 2001 235 “NASA, Insurers Weigh Rescue Plan for Orion 3,” Brian Berger and Sam Silverstein, Space News,

March 12, 2001 236 “Satellite Insurers To Pay Aces for Loss of Garuda-1,” Space News, April 23, 2001

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Table A-4. New Launch Vehicle Failure Claims237

Launcher Failures Claims Paid ($M)Ariane 1-3 2/10 1 $21Ariane 4 1/10 1 $189Ariane 5 1/5 0 0Atlas 1 3/10 3 $250Atlas 2 0/10 0 0Delta 2 0/10 0 0Delta 3 2/2 2 $260Long March 2E 3/7 2 $260Long March 3B 1/5 1 $210Zenit 3SL 1/5 1 $235

A.2 Premiums There are four basic types of space insurance: prelaunch, launch, in-orbit, and third-party liability insurance. Launch and in-orbit insurance most directly impact commercial payloads. In-orbit policies are generally negotiated separately from launch-plus-3- or 5-year policies. In 1998, in-orbit policy rates were 1.2 to 1.5 percent of the coverage amount per year.238 Third-party-liability insurance, which indemnifies a third party from loss related to hardware or mission failure, is required on all launches. It is a relatively small expense (0.1–0.2 percent of the coverage premium) and is the only coverage that is used on government launches.239 But such coverage, according to existing law, does not cover emerging NASA-industry partnerships, such as the one that governed the reusable X-33. As a result, Congress would have had to approve third-party-liability insurance coverage for this type of LV.240 Insurance premiums are often quoted either as a percentage of the insured portion of the mission or as a percentage of the total mission price. For instance, Arianespace—which offers an option for a free Ariane 5 relaunch—might receive a 17 percent insurance rate for the insured portion of the mission, which in turn translates into 5 percent of the total mission cost. It is important to understand which "insurance rate" is being quoted when reviewing insurance rates. There is no set insurance premium for a particular LV or satellite. That being said, 1996–1997 insurance premiums averaged 7–8 percent of the total mission price (LV plus satellite) for a launch-plus-5 years-in-orbit policy, with the maximum rate approaching 15 percent. In 1999 the average launch-plus-5-years policy crept up to 8.8 percent. In 2000, the average insurance premium was around 10 percent, while the range for launch-plus-1- 237 e.space, Arianespace newsletter, June 2000 238 “Leonids and More on the Agenda,” Peter J. Brown, Satellite Insurance, via satellite, September 1998 239 Update of the Space and Launch Insurance Industry, FAA, 4th Quarter 1998 240 “NASA Urges Congress to Approve Liability Insurance for X-33,” Space Business News, September 3,

1997

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year insurance rates were between 8–12 percent.241 Exclusions of equipment known to be at risk, such as the SCPs on the Boeing 601 HP satellites, have recently been introduced.242 However, these insurance premiums apparently have not affected Arianespace launches. Arianespace claims that their insurance premium for an Ariane 4 launch is less than 4 percent, while an Ariane 5's premium is about 5 percent of mission price.243 It is expected that 2001 insurance premiums for launch plus 1 to 2 years will be 30–50 percent higher than 2000 premiums.244 These rates could climb above 15 percent in the next 5 years as insurance companies try to recoup 1998–2000 losses and as new LVs and more complex satellites are launched.245 Increasing insurance premiums could potentially kill launches or even put companies out of business.246 New contracts have incorporated these increased insurance premiums and will impact launches in 2002, roughly 18 months after the signing of the launch contracts. These increases are necessary to sustain the insurance industry. Without these increases, insurance coverage would be difficult to obtain by 2003.247 It is expected that in their first year of launch in 2002, Boeing and Lockheed Martin could pay a 16 percent premium for launch insurance for the Delta IV and Atlas V, respectively. These launch insurance premiums might be compared to an estimated 6–8 percent of mission price (assuming Ariane 5’s insurance premiums increase above those of 2000) for Ariane 5 launches. Until the Delta IV and Atlas V establish a history of successful launches, Arianespace 5 will receive a significant cost advantage by this insurance premium differential. This differential will gradually disappear after the first 10 launches, which is generally considered adequate for proving an LV's design and reliability.248 Even with its July 12, 2001 launch failure, which left two telecommunications satellites in the wrong orbit, the Ariane 5 probably will enjoy a launch insurance premium advantage over the Delta IV and the Atlas V. Arianespace has already launched ten Ariane 5s and will probably launch several more before Boeing launches its first Delta IV or ILS launches its first Atlas V. LV maturity is a significant criteria for establishing insurance premiums, especially since the risk of failure during the first five launches has increased from 50 percent to 65 percent during the last decade.249 In addition, Arianespace can partially self-insure launches by providing free replacement launches, or

241 International Space Broker slide presentation, Satel Conseil, 7th Symposium Paris -September 2000 242 “PanAmSat: SCP Exclusion from May 21,” Satellite Finance, May 16, 2001 243 Arianespace and Insurance Companies, e.space, Arianespace newsletter, June 2000 244 “Insurance Rates May Rise 50%-70% in 2001,” Interspace, January 3, 2001 245 “Launch Industry Officials Expect Increased Competition In Next Year Amid Fewer Deals,” Satellite

News, November 20, 2000 246 “Industry Insurance Rates Could Rise, Sources Say,” Space Business News, January 21, 1998 247 See note 240 above 248 Update of the Space and Launch Insurance Industry, FAA Quarterly Launch Report, 4th Qtr 1998 249 “Reliable, Flexible, Low-Cost Launch Services: The Key to Successful Space Business,” Theo Pirard,

Earth Space Review, Vol. 9 No.3, 2000

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by offering insurance through its S3R reinsurance company, which may assume all or part of the launch risk.250 Although the Ariane 5 is technically different from the Ariane 4, Arianespace's integration and launch processes, launch teams, and facilities are the same. Thus, Arianespace may even receive some insurance premium relief based on the Ariane 4’s reputation for high reliability. Boeing, on the other hand, may receive no relief because of previous problems with its Delta III. ILS may have a similar experience because the Atlas III, which was supposed to demonstrate the reliability of the Atlas V design, has only been launched once. Table A-5 shows the impact of insurance premiums on the total cost of launching a hypothetical $250M satellite in 2002. The insurance rates on all LVs for 2002 are expected to be higher than rates offered in 2001, reflecting rate increases due to previous years’ failures. These rates also include the higher risk on the maiden flights of the Delta IV and Atlas V, since roughly 50 percent of maiden flights fail.

Table A-5. Price Impact of Launch Insurance (2002 Scenario)

Ariane 5Delta IV (Med)

Atlas 5 (300-400) Proton

Sea Launch

Long March 3B

LV Maturity (Total Launches) 13-18 1-2 1-2 280-285 9-12 6-7Assumed P/L Cost ($M) 250 250 250 250 250 250Launch Vehicle Cost ($M) 165 98 83 94 85 60Insurance Rate (%) (L+ 1Yr) 6% 16% 16% 9% 10% 10%Launch Insurance 24.9 55.7 53.3 31.0 33.5 31.0Total Launch Cost ($M) 189.9 153.7 136.3 125.0 118.5 91.0

A.3 Government Insurance With the exception of third-party-liability insurance, governments do not insure their launches. Spacecraft and LV replacement costs, as well as any clean-up expenses, are paid for by taxpayer dollars. Although insurance rates do not impact the cost of government launches, government launch/satellite failures can cause insurance rates to increase for commercial launches, since any kind of failure raises concerns about design flaws and manufacturer quality controls.

250 Arianespace and Insurance Companies, e.space, Arianespace newsletter, June 2000

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Russia has indicated that it may be willing to begin insuring military space launches, since a launch or satellite failure would significantly handicap their space program. Russia's near-bankrupt economy is unable to fund replacement LVs or replacement satellites. Should Russia decide to insure its government launches, there is a possibility that India’s and Japan's governments might follow suit. On the other hand, there is little chance that Europe, the United States, or China will start insuring government launches.251 A.4 Risk Mitigation Launch insurance can be used to replace failed satellites or LVs, but cannot protect SSPs or replace lost revenues. The value of potential revenue from a given customer can be five to 10 times the value of the hardware. Therefore, it is imperative that SSPs have a way to insure service continuity during satellite failures. Having realtime, in-orbit satellite backups is one way that SSPs protect their customers. In the case of an in-orbit failure, customers can be moved from a failing satellite to a healthy one. Excess in-orbit capability can be provided either by the SSP itself or by a competing SSP. The first method requires investing in excess satellite capacity; the second method puts the failed SSP at the mercy of a competitor who may then try to acquire their customers. A more recent proposal by AssureSat provides in-orbit backup through the redeployment of one of three in-orbit backup satellites that AssureSat plans to launch. These satellites would be leased to any SSP that experiences a failure. AssureSat would launch these satellites during the next 4 years with the first AssureSat being operational in July 2002, and the second scheduled for launch 4 months later. Under this plan, customers will pay an up-front fee for the option to use the backup satellites as well as a monthly lease fee for actual usage. The total cost of the in-orbit fees would be dramatically less than the cost of owning and operating a dedicated backup. The launch backup fee would also be approximately half the cost of conventional launch insurance. Assuresat has already signed up various customers, including SS/L and Sea Launch. Sea Launch will launch AssureSat's first two satellites and will also buy backup services from AssureSat.252 As a result, Sea Launch may be able to use this service to reduce in-orbit insurance costs, reducing overall SSP launch costs. Another alternative to in-orbit spare satellites is to simultaneously build ground spare satellites. These satellites would be quickly launched upon any kind of satellite failure. In such cases, LSPs that have a short contract-to-launch duration have a competitive advantage. In 2000, Arianespace was able to launch two customers' satellites within 3

251 “Russia to Insure Military Missions?,” Satellite Today, July 22, 1999 252 “AssureSat's Entrepreneurial Venture Aims To Provide Backup Satellite Services To Communications

Providers Worldwide - Part 2,” Satellite News, May 29, 2000

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months of signing a launch contract. Arianespace, capitalizing on its ability for quick turnaround launches, also offers a free relaunch guarantee in case of an Ariane 5 launch failure. This guarantee is supported by the S3R reinsurance company, a member of the Arianespace group, which assumes all or part of the risk, depending on the insurance market's availability.253 Another method for reducing launch risk requires designing the satellite to fit on multiple LVs and securing launch options on these LVs. This method requires that the satellite undergo environmental testing consistent with the multiple LVs. The satellite might also face additional weight and size constraints, since it must now meet the most limiting design constraints of the chosen LVs. It is expected that the three dominant LSPs—BLS, ILS, and Arianespace—will continue to provide alternative LVs as backups to launch failures. Sea Launches—Zenit 3SL and BLS' Delta IV LVs will have similar capabilities but require development of some systems that will enable satellites to be switched readily from one LV to another. ILS' Atlas and Proton LVs, although completely different, provide a backup capability for each other, since ILS has developed similar processing timelines and common interfaces for the LVs. ILS subcontractors developed an adapter than can be fitted to both LVs. Likewise, Arianespace's Ariane 4 and Ariane 5 are launch backups. However, the Ariane 4 will be phased out by 2003, requiring Arianespace to find a new backup for the Ariane 5.254

253 Arianespace and Insurance Companies, e.space, Arianespace newsletter, June 2000 254 Sea Launch, Boeing Plan Cooperation,” Jason Bates, Space News, February 26, 2001

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Appendix B: Satellite Industry Financing In the late ‘90s, Wall Street financed several large-scale satellite systems, resulting in a short period of high LV demand. Iridium, ICO Global, ORBCOMM, and Globalstar received $15B of financing over a 4-year period. However, these four LEO satellite ventures, which were designed to provide voice or low-rate data communication services, were relatively unsuccessful, making it more difficult for new satellite systems to raise capital.255 Overly optimistic forecasts, technical problems, and limited satellite expertise among bankers were some of the problems limiting the success of these systems.256 Although satellite venture capital has become increasingly more difficult to obtain, it has not disappeared entirely. Over $8.8B ($5.82B in debt and $3.03B in equity) was raised from January 1999 to March 2000. Of this, $3.5B was raised in the 9 months following the bankruptcies of Iridium and ICO in August 1999. This $8.8B, which did not include vendor or internal financing, was used to finance satellite ventures such as Echostar ($3B), Globalstar ($1.2B), Sirius Satellite Radio ($775M), Loral ($750M) and Gilat ($620M). 257 The fees and interest rates paid by these ventures varies. SS/L was able to obtain a $500M loan for Globalstar by using SS/L's Telstar 6 and 7 Skynet satellites as collateral. As a result, Globalstar was able to save approximately $90M in interest expense, the difference in financing expenses of the new 9 percent loan and existing Globalstar's bonds that were yielding approximately 25 percent at the time of the loan.258 The bond yields for satellite ventures ranged from 5–14 percent. Sirius Satellite Radio (May 1999) and XM Satellite Radio (March 2000) 10-year notes offered 14 percent and above interest rates. Echostar (December 1999) 8-year convertible bonds and Gilat (February 2000) 5-year convertible bonds had yields below 5 percent. 259 Space Imaging and Intelsat provide examples of satellite financing costs in 2001. Space Imaging is in the process of securing a $300M credit line through a Citibank/Salomon Smith Barney syndicate. This revolving credit line has an all-in drawn rate of 1.25 percent above the London Interbank Offered Rate (LIBOR) and an annual fee of 17.5 basis points. However, in order to get this rate, Space Imaging had to be unconditionally guaranteed by its majority owners, Lockheed Martin and Raytheon.260 Intelsat is in the process of arranging a $1B standby letter of credit through Citibank/Salomon Smith Barney and Lehman Brothers to help with Intelsat's privatization. Intelsat's previous $150M credit facility with a Bank of America syndicate

255 “Satellite Industry Must Fight for Credibility,” Space News April 2, 2001 256 “Satellite Finance Sector Struggles In Wake Of Disastrous 1999,” Satellite Today, January 26, 2000 257 “Via Satellite's 2000 Global Satellite Survey,” Rob Fernandez, Satellite Today 258 “Telstar 6 and Telstar 7 Financing Guarantee: What Does It All Mean?,” Karekin Jelalian, Satellite

Today, July 10, 2000 259 See note 253 above. 260 “Space Imaging Refinances,” Satellite Finance, March 14, 2001

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cost 25 basis points over LIBOR. The margin on the new credit facility is expected to be 0.45 percent over LIBOR.261 At least $7B will be required to fully fund various broadband satellite ventures, digital radio services, and other new satellite applications over the next several years. Funding availability will be determined, in part, by the successes of the latest satellite services and will have a direct impact on the demand for LVs.262 Venture capitalists, strategic equity investors, LSPs, and ownership changes will provide some of this financing. Venture capitalists will continue to finance niche markets, such as remote sensing and satellite navigation.263 SS/L, which helped obtain Globalstar funding, could use its Skynet satellites to back Cyberstar's loans; Hughes Electronics Corporation could use its equity position in PanAmSat Corp. to back Spaceway loans.264 Arianespace, which helped finance three of its customers, including Euro*Star and Eurasiasat in 1999, may continue to do so in the future.265 News Corp's bid to purchase DirecTV would provide several billion dollars in additional funding by Microsoft. Similarly, any takeover of a number of U.S. fixed-satellite-services carriers, such as GE American Communications’ pending takeover by SES-Astra, could generate new financing alternatives.

261 “Inmarsat Meets Banks for US $600M,” Satellite Finance, March 14, 2001, p. 1 262 “Via Satellite's 2000 Global Satellite Survey,” Rob Fernandez, Satellite Today, March 2000 263 “Satellite Finance Sector Struggles In Wake Of Disastrous 1999,” Satellite Today, January 26, 2000 264 “Telstar 6 and Telstar 7 Financing Guarantee: What Does It All Mean?,” Karekin Jelalian, Satellite

Today, July 10, 2000 265 “Satellite Finance Sector Struggles In Wake Of Disastrous 1999,” Satellite Today, January 26, 2000

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Appendix C: Fuel Costs Table C-1 lists estimated fuel prices charged to U.S. LSPs for range-provided fuels. This data can be used to break out fuel-related costs from the total range fees paid by the LSPs, since U.S. launch sites are not allowed to profit from selling LV fuel. Only launch site-provided fuels are included in the cost estimates; the LSP provides solid fuels. FY 2001 fuel prices at U.S. launch sites are used for all LVs for consistency. Actual foreign site fuel acquisition costs may differ significantly. Fuel costs do not include monthly handling fees. Assumptions may not be applicable to all LVs and all launch sites.

Table C-1. Estimated Range-Provided Fuel Cost266 267

Fuel Cost AssumptionsRange-Provided-Fuel

Cost EstimatesOxidizer / Fuel ($/ton)

LN2 $70

Liquid Oxygen $148LOX/RP-1 $303Kerosene (RP-1) $650LOX/LH2 $862H2O2 $1,792LH2 $3,696N2O4 $15,680N2O4/UDMH $29,331N2O4/Aerozine 50 $33,280N2O4/UH25 $33,807N2O4/MMH $55,339

UDMH $64,960UH25 $64,960Aerozine 50 $64,960MMH $136,640

Launch VehicleEstimated Fuel

Cost at Range ($K)Long March 2C $5,221Long March 3B $10,936

Start $0Cyclone 3 $4,992DNEPR $5,491Soyuz ST $87Proton K/ Block DM $18,251Proton M/Breeze M $18,817Zenit 2 $123

Ariane 44L $14,252Ariane 5 $663

Sea Launch $128

Pegasus XL $0Taurus $0Delta 2 $225Delta 3 $41Delta 4-M $189Delta 4-H $195Athena 2 $0Atlas IIAS $47Atlas 3 $71Atlas V 400 $86Atlas V 500 $102Atlas V HLV $274Titan II $4,826Titan IV Centaur $6,341

Fuel Cost AssumptionsRange-Provided-Fuel

Cost EstimatesOxidizer / Fuel ($/ton)

LN2 $70



Oxidizer / Fuel ($/ton)LN2 $70







Sea Launch $128






Sea Launch $128


266 United Paradyne Corporation (UPC) 2001 price list 267 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, AIAA,

January 2001

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Appendix D: Historical Launch Metrics From 1997–2000 the largest launch sites launched up to five LVs monthly. Table D-1 shows the distribution of monthly launch rates for each launch site. For instance, from 1997–2000, VAFB had 18 months with no launches, 22 months with a single launch, 5 months with two launches, 2 months with three launches, and 1 month with four launches. Most launch sites seemed to have several months when facilities were underutilized. Only three launch sites had at least 1 month when they were able to support four or more launches in a month.

Table D-1. Occurrence of Monthly Launch Rates by Site

Launch Rate (Launches/Month) 0 1 2 3 4 5

Launch siteTotal launches

(1997-2000)Kwajalein Facility 47 1 1Wallops Flight Facility 44 4 4Vandenberg/ CA spaceport 18 22 5 2 1 42CCAFS/KSC/Spaceport Florida 6 15 16 8 1 2 85Sea Launch 43 5 5Kourou 16 21 9 2 45Baikonur 6 18 10 9 4 1 86Pletsetsk 27 15 6 27Svobodny 45 3 3Kapustin Yar 47 1 1Xichang 38 10 10Taiyuan 38 10 10Jiuquan 47 1 1

Occurence of Monthly Launch Rate (1997-2000)

Table D-2 shows information similar to that in Table D-1. However, in this case the distribution of monthly launch rates is by country, rather than by launch site. Countries with low launch rates, such as China, or the multinational Sea Launch system, tend to have many months with one or fewer launches. Countries with high launch rates such as the U.S, Europe and Russia have a wider distribution of monthly launch rates.

Table D-2. Occurrence of Monthly Launch Rates by Country

Launch Rate (Launches/Month) 0 1 2 3 4 5 6

Country Total launches

(1997-2000)US 3 6 11 17 4 5 2 132Multi 43 5 5Europe 16 21 9 2 45Russia 3 9 15 10 8 2 1 117Chinese 28 19 1 21

Occurence of Monthly Launch Rate (1997-2000)

Table D-3 shows the average monthly launch rate by launch site from 1997 to 2000. This data can be used to baseline nominal launch rates and staffing requirements. Comparing average monthly launch rates to peak monthly launch rates provides a range of launch

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scenarios that might need to be staffed. The difference between peak and average monthly launch rates may be influenced by factors such as bad weather. Table D-3 can be used to determine which months have historically lower average-monthly launch rates and might be subject to the least amount of schedule risk.

Table D-3. 1997–2000 Average Monthly Launch Rate by Site

Avg

1997-2000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Per YearKwajalein Facility .3 .3Wallops Flight Facility .3 .3 .3 .3 1.0Vandenberg/ CA spaceport .3 1.0 1.0 1.0 1.3 .5 .5 1.3 1.0 .5 .8 1.5 10.5CCAFS/KSC/Spaceport Florida 2.3 2.5 .5 1.8 2.5 1.5 2.0 1.5 1.0 2.8 1.8 1.3 21.3Sea Launch .5 .3 .5 1.3Kourou .5 1.3 .5 1.0 .5 1.0 1.8 1.8 1.0 2.0 11.3Baikonur .3 2.5 1.3 2.3 1.8 1.8 2.3 2.0 2.3 2.3 1.5 1.5 21.5Pletsetsk .3 .5 .8 .8 .8 .5 1.3 .3 .5 1.3 6.8Svobodny .3 .5 .8Kapustin Yar .3 .3Xichang .3 .5 .5 .3 .3 .5 .3 2.5Taiyuan .3 .5 .3 .3 .5 .3 .5 2.Jiuquan .3 .3

4-Yr Average Launch per Month

5

Avg1997-2000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Per YearKwajalein Facility .3 .3Wallops Flight Facility .3 .3 .3 .3 1.0Vandenberg/ CA spaceport .3 1.0 1.0 1.0 1.3 .5 .5 1.3 1.0 .5 .8 1.5 10.5CCAFS/KSC/Spaceport Florida 2.3 2.5 .5 1.8 2.5 1.5 2.0 1.5 1.0 2.8 1.8 1.3 21.3Sea Launch .5 .3 .5 1.3Kourou .5 1.3 .5 1.0 .5 1.0 1.8 1.8 1.0 2.0 11.3Baikonur .3 2.5 1.3 2.3 1.8 1.8 2.3 2.0 2.3 2.3 1.5 1.5 21.5Pletsetsk .3 .5 .8 .8 .8 .5 1.3 .3 .5 1.3 6.8Svobodny .3 .5 .8Kapustin Yar .3 .3Xichang .3 .5 .5 .3 .3 .5 .3 2.5Taiyuan .3 .5 .3 .3 .5 .3 .5 2.Jiuquan .3 .3

4-Yr Average Launch per Month

5

Table D-4 shows the 1997–2000 peak number of launches by launch site for a given month. A possible future scheduling strategy might consist of scheduling launches in months that have had historically lower launch rates. For instance, when possible, it might be better to schedule future launches at CCAFS in September or November rather than in October, because on average fewer launches take place in these months.

Table D-4. 1997–2000 Peak Monthly Launch Rate by Site

Peak

1997-2000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Per YearKwajalein Facility 1 1Wallops Flight Facility 1 1 1 1 2Vandenberg/ CA spaceport 1 3 2 2 2 1 1 4 1 1 1 3 12CCAFS/KSC/Spaceport Florida 4 3 1 3 5 3 3 2 2 5 3 2 24Sea Launch 1 1 1 3Kourou 1 2 1 1 2 1 2 3 2 3 12Baikonur 1 4 2 3 3 3 3 3 4 5 2 4 30Pletsetsk 1 2 1 2 1 2 2 1 1 2 9Svobodny 1 1 2Kapustin Yar 1 1Xichang 1 1 1 1 1 1 1 4Taiyuan 1 1 1 1 1 1 1 4Jiuquan 1 1

Peak Monthly Launch Rate

Table D-5 shows the 1997–2000 average number of launches by country for each month. This metric can serve as an overall launch capacity indicator for the country.

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Table D-5. 1997–2000 Average Monthly Launch Rate by Country

Avg

1997-2000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec per yearUS 2.5 3.5 1.5 2.8 3.8 2 2.5 3 2.3 3.8 2.5 3 33.0Multi 0.5 0.3 0.5 1.3Europe 0.5 1.3 0.5 1 0.5 1 1.8 1.8 1 2 11.3Russia 0.3 2.8 1.5 3 2.5 2.5 3 2.5 3.5 2.5 2 3.3 29.3Chinese 0.3 0.3 1 0.8 0.3 0.5 0.5 0.8 0.3 0.8 5.3

Average Total Launches 3.5 7.5 4.3 6.8 7.3 5.8 6.0 7.0 8.0 9.3 5.8 9.0 80

4-Yr Avg Launch per Month Avg1997-2000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec per yearUS 2.5 3.5 1.5 2.8 3.8 2 2.5 3 2.3 3.8 2.5 3 33.0Multi 0.5 0.3 0.5 1.3Europe 0.5 1.3 0.5 1 0.5 1 1.8 1.8 1 2 11.3Russia 0.3 2.8 1.5 3 2.5 2.5 3 2.5 3.5 2.5 2 3.3 29.3Chinese 0.3 0.3 1 0.8 0.3 0.5 0.5 0.8 0.3 0.8 5.3

Average Total Launches 3.5 7.5 4.3 6.8 7.3 5.8 6.0 7.0 8.0 9.3 5.8 9.0 80

4-Yr Avg Launch per Month

Table D-6 shows the 1997–2000 monthly peak number of launches by country. Some things that limit the peak launch rate include range and launch site infrastructure, the availability of satellites for launch, and bad weather.

Table D-6. 1997–2000 Peak Monthly Launch Rate By Country

Most

1997-2000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec per yearUS 4 5 2 5 5 3 4 6 3 6 4 5 37Multi 1 1 1 3Europe 1 2 1 1 2 1 2 3 2 3 12Russia 1 4 2 4 4 4 4 3 5 5 3 6 36Chinese 1 1 2 1 1 1 1 1 1 1 6

Most Launches in a Month Most1997-2000 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec per yearUS 4 5 2 5 5 3 4 6 3 6 4 5 37Multi 1 1 1 3Europe 1 2 1 1 2 1 2 3 2 3 12Russia 1 4 2 4 4 4 4 3 5 5 3 6 36Chinese 1 1 2 1 1 1 1 1 1 1 6

Most Launches in a Month

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Appendix E: Future Commercial Launch Sites E.1 Alcantara, Brazil The Brazilian government has invested $300M dollars into the Alcantara launch complex, which costs $5M a year to operate. An additional $80M dollars is necessary to make Alcantara fully operational for commercial launches.268 Brazil plans to use the facility for its own orbital LVs and some small U.S.-built LVs. In April 2000, the United States and the Brazilian congress signed a pact that could provide $14M annually for leasing out Alcantara to other countries. One provision in the pact bars Brazil from using launch site revenues to develop its own LV program. Furthermore, launches of satellites built by U.S. companies or foreign-built satellites with U.S. components will require U.S. export license approval.

E.2 Kourou, French Guiana ESA is evaluating launching Russian Soyuz LVs from Kourou. The two major issues are the potential cannibalization of Ariane 5 flights and the $200–300M investment needed for Ariane 4 launch pad modifications. The decision must be supported by all European countries in order for it to be approved. The French Parliamentary Office for the Evaluation of Scientific and Technological Choices wants to bring the Soyuz LV to French Guiana in order to head off the potential development of a Soyuz launch site on Australia's Christmas Island.269 E.3 Christmas Island, Australia The Asia-Pacific Space Center is developing the Aurora launch system, which would use an enhanced Soyuz lower stage and an RSC Energia-built upper stage and would be launched from Christmas Island, Australia. Most of the $500M needed for developing this system has been acquired. This project has also received approval to use Soyuz LVs from Russian Prime Minister Mikhail Kasyanov. However, commercial Soyuz launches are subject to a French-Russian Starsem agreement covering commercial uses of the LV. This agreement, which expires in July 2001 and covers Soyuz commercial launches from the Russian-run Baikonur Cosmodrome in Kazahstan, will probably be renewed.270

268 “Brazilian Congress Criticizes Bilateral Agreement with U.S.,” Frank Braun, Space News, May 14,

2001 269 “France Renews Call for Soyuz Guiana Launches,” Space News, April 23, 2001 270 “ESA Sets Deadline for Soyuz Launch Decision,” Peter B. de Selding, Space News, April 30, 2001

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E.4 Hainan, China In June 1999, The Hainan New Century International Commercial Space Ltd. proposed building a new launch site in Hainan for $500M. This site would include a launch complex with two pads capable of supporting the Long March 2E and Long March 3/3A families of LVs, a high-tech industrial park, and a tourist area.271

271 “Chinese Launch Sites: Present Capabilities and Future Plans,” Phillip Clark, Launchspace.com;

http://www.spaceandsatellite.com/archive/2000/051700.htm

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Appendix F: Future Heavy-Lift LVs This appendix describes heavy-lift LVs currently under development. They are expected to become commercially available and will compete with or displace existing LVs, further increasing this industry's price pressures. F.1 Angara The heavy-lift Angara LV is expected to replace the Proton. It will be marketed by ILS and supervised by the Russian Aviation and Space Agency (Rosaviakosmos).272 ILS already has a joint agreement with Khrunichev to market Proton launch services to satellite manufacturers and has agreed to spend $68M to market the Angara LV. The Angara family is modular in design. It includes small LVs that can lift payloads weighing up to 4 metric tons and larger LVs that can carry up to 30 tons. The rockets on each of these LVs are the same. However, the larger LVs have more engines in the first stage. The Angara uses only Russian components, has considerably fewer pieces than the Proton M, and is five times less labor-consuming to manufacture.273 In addition, the LV's first stage will be equipped with wings and jet engines to return it to the launch site, making part of this LV reusable. Completion of the Angara launch complex at Plesetsk, which includes two launch pads and integration and testing facilities, is underfunded and behind schedule. Although the RVSN (the Russian acronym for Strategic Missile Force) and Rosaviakosmos are required to fund the Angara program through the Federal Space Program they have not adequately done so. The Khrunichev State Research and Production Space Center and the Defense Ministry are investing funds into the Angara development project, while Rosaviakosmos' investments have been minimal.274 Should funding become available, the design and assembly of medium and heavy Angara LVs could theoretically occur shortly after the light LV is launched.275 The first light Angara LV, which is scheduled to be launched in 2003, is dependent on the Angara launch complex funding availability. This launch site was previously used to launch Zenit LVs. So far, all development and technical preparation has been completed for the first Angara light LV and the Khrunichev State Research and Production Center of Moscow has begun assembling it. The first small Angara variant will not be able to put a communication satellite into geostationary orbit.276

272 “Russia Moves Forward with Proton's Successor,” Yuri Karash, Space.com, January 19, 2000;

http://www.space.com/missionlaunches/launches/angara_contract_000118.html 273 “Medvedev Confirmed as Khrunichev Director General,” Yuri Karash, Space.com, February 12, 2001;

http://www.space.com/news/medvedev_khrunichev_010125.html 274 Space News Interview of Alexander Kuznetsov, Simon Saradzhyan, Space News, April 16, 2001 275 “Angara Awaits Funds,” Satellite Finance, March 14, 2001 276 “Khrunichev Begins to Assemble Angara Rocket,” Space News, April 2, 2001

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F.2 H-2A The Japanese H-2A is intended to launch virtually all National Space Development Agency (NASDA) large science and Earth-observation satellites despite development delays. The inaugural launch of a dummy payload on the H-2A is scheduled for August 25, 2001.277 If successful, NASDA could schedule two to three H-2A launches each year through 2004. In the meantime, commercial users are getting impatient with the delays. In June 2000, HSC terminated its contract with Rocket System Corp. for 10 launches aboard the H-2A.278 F.3 GSLV The Indian Space Research Organization's GSLV took 10 years and $233M to develop.279 Its maiden launch occurred on April 18, 2001, lifting a 1,550 kg experimental communications satellite from a coastal spaceport in the Southern Andhra Pradesh State.280 281 The GSLV will eventually be able to launch 2,000 kg payloads into orbit by 2003.282 By 2007, the ISRO plans to commercially launch 5,000 kg GEO satellites for $50M; this is equivalent to $10,000 per kilogram.283 The GSLV will launch India's indigenously built communications and weather satellites, which were previously launched on Ariane LVs. The GSLV will reduce India's reliance on foreign LVs and may eventually be used to lift commercial satellites. However, the GSLV must have two successful test flights before being declared operational.284 It must also increase its payload capacity to a minimum of 2,500 kg in order to lift commercial communication satellites. India still needs to decide whether to buy more cryogenic upper stages from Russia or to develop engines on their own. One of the reasons for the delayed GSLV launch is that the United States blocked Russia from transferring cryogenic rocket technology to ISRO. The United States placed technology import sanctions on India following their 1998 nuclear tests.285 The next GSLV flight will launch a 1,800 kg payload 12–18 months after its maiden flight. With this launch capacity, the GSLV should be able to launch India's Insat-class satellites.286 However, no Insat commercial satellite launches are scheduled on the GSLV until 2005.287 277 “Japan Reschedules H-2A Debut for Late August,” Space News, July 9, 2001 278 “NASDA Prepares H-2A Rocket For Launch,” Stew Magnuson, Space News, February 26, 2001 279 “GSLV Program Delayed By Launch Pad Glitch,” K.S. Jayaraman, Space News, April 2, 2001 280 “India Joins Geostationary Launcher Club,” Warren Ferster, Space News, April 23, 2001 281 “India Launches Satellite Three Weeks After Abort,” Kyoto International, Space.com, April 18, 2001 282 See note 277 above 283 “India Plans to Upgrade GSLV,” Space News, May 28, 2001 284 See note 275 above 285 See note 277 above 286 “Indian Space Agency Declares GSLV Mission a Success,” K.S. Jayaraman, Space News, April 30,

2001 287 See note 275 above

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Appendix G: Foreign TT&C Stations G.1 China TT&C The China Satellite Launch and Tracking Control Center (CLTC) manages China's launch facilities. Its control center and TT&C network tracks and control all of China's domestic satellites. The network ground stations are located throughout China and on South Tarawa Island off the Republic of Kiribati. CLTC also manages TT&C mobile stations and ships. CLTC and the Swedish Space Corporation (SSC) have a mutual ground station support program that will be implemented in late 2001. This agreement will allow both companies to expand their capabilities without increasing their telemetry, tracking and control costs. SSC owns and operates control centers and ground stations in Sweden, and owns 50 percent of Tromsoe Satellite Station in Norway. SSC and its U.S. partner, Universal Space Network, operate PrioraNet, a global network of ground stations.288 The following organizations support China's TT&C capabilities: • Beijing Aerospace Command and Control Center is responsible for organizing,

commanding, and dispatching space flight test tasks. It also manages the engineering, TT&C, LV, and spacecraft space flight test tasks.

• Xi'an Satellite Control Center manages China's spacecraft TT&C network, which consists of the command and control center, fixed and mobile stations, instrumentation ships, and reentry instrumentation airplanes. It tracks and controls all of China's domestic satellites.

• Domestic tracking stations are located throughout China, especially in the belt zone from Shichun Province to Fujian Province. Beijing and Nanjing Astronomical Observatory sometimes provide optics orbit observation, orbit calculation, and reentry prediction.

• An overseas tracking station, located in the south Pacific Republic of Kiribati, began operation in late 1997.

• Four tracking ships were commissioned between 1979 and 1999.289 G.2 Russian TT&C Control Centers. Golitsino-2 Space Flight Control Center is the main Russian spacecraft test and control center. The military space forces run the nation's space tracking networks and have their own spacecraft control center. During 1967–1972 the military control stations and communications networks were integrated into common communications centers, such as Golitsino-2.

288 “Chinese and Swedish Satellite Operators Sign Long-Term Access Agreement,” Soina Strand,

SpaceDaily, January 24, 2001 289 http://www.geocities.com/CapeCanaveral/Launchpad/1921/facilities.htm

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Vatutinki Space Flight Control Center is headquarters for the Space Intelligence Directorate, located 50 km southwest of Moscow. The Space Intelligence Directorate is responsible for the development, manufacture, launch, and operation of Russian space-based reconnaissance systems. There is also a control center at Korolev (formerly known as Kaliningrad) Tracking and Control Stations. Russian tracking and control stations are located at: Angarsk, Archangel, Baku, Baranovichi, Chekhov, Dzhezkazgan, Dzhusaly, Irkutsk, Kaliningrad, Kapustin Yar, Kolpashevo, Komsomolsk-na-Amure, Krasnoyarsk, Leninsk, Lyaki, Medvezhiy Ozera, Minsk, Mishelcvka, Moscow, Mukachevo, Naro-Fomiask, Nikolayev, Novosibirsk, Olenegorsk, Pechora, Petropavlovsk-K, Plesetsk, Pushkino, Sary-Shagan, Sevastopol, Shchelkovo, Simeiz, Simferopol, Skruada, Tarusa (interkosmos), Tbilisi, Tselinograd, Tyuratam, Ulan-Bator, Ulan-Ude, Ussuriysk, Vladivostok, Yevpatonya, Zvenigorod. There is at least one IL-18 Space Tracking aircraft.290 Over-The-Horizon Radars (OTHR) are located at Minsk, Nikolayev and Komsomolak-na-Amure for spacecraft tracking. Laser range finders were installed in Latvia, Czechoslovakia, Bolivia, Cuba, Egypt, Poland, and an agreement was made in 1988 for stations in Angola, Ecuador, India, Mozambique, Vietnam for Interkosmos use. Fourteen stations were in use in 1981.291 G.3 Europe TT&C Table G-1 lists the European Space Agency Operations Control Center (ESOC) worldwide network of ground stations. ESA ground stations are owned by ESA while the others are owned by other entities but used by ESA.

Table G-1. European Space Agency TT&C Locations292

Establishments OfficesESA Ground

StationsESA Used Ground

StationsESA Paris (France)

Brussels (Belgium)

Redu (Belgium)

Perth (Australia)

EAC Cologne (Germany)

Toulouse (France)

Kourou (French Guiana)

Maspalomas (Gran Canaria Island)

ESOC Darmstadt (Germany)

Kourou (French Guiana)

Odenwald (Germany)

Fucino (Italy)

ESRIN Frascati (Italy)

Moscow (Russia)

Villafranca de Castillo (Spain)

Malindi (Kenya)

ESTEC Noordwijk (Netherlands)

Washington DC (United States)

Kiruna (Sweden)

290 Russian Aerospace Guide, http://www.mcs.net/~rusaerog/space_centers.html 291 “Soviet Space Command & Control,” Henk H .F. Smid, Vol 44, No 11, Nov, 1991, pp. 525;

http://www.mcs.net/~rusaerog/tracking.html 292 European Space Agency Website: http://www.esoc.esa.de/pr/facilities/estrack.php3

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G.4 Sea Launch Sea Launch does not use U.S. government-operated launch and range facilities. They have a Proton telemetry tracker on the Assembly and Command Ship at the equator, and use NASA's TDRS system and a Moscow-based tracking system.

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Appendix H: Launch Site Locations

Table H-1. Launch Site Locations293

Country Launch Site Latitude LongitudeRussia Plesetsk Space Center 62.8° N 40.1° E

Russia (Kazakstan) Baikonur Space Center 45.6° N 63.4° ERussia Kapustin Yar Test Center 48.4° N 45.8° ERussia Svobodny Space Center 51.4° N 128.3° EUSA SeaLaunch Various VariousUSA Cape Canaveral/ KSC 28.5° N 81.0° WUSA Vandenberg AFB 34.4° N 120.35° WUSA Wallops Flight Facility 37.8° N 75.5° WUSA Edwards AFB 35° N 118° WUSA Kodiac Launch Complex 57.6° N 152.2° WUSA Kwajalein Missile Range 9° N 167°E

France Kourou, Guiana Space Center 5.2° N 52.8°W France Hammaguir 31.0° N 8°W Japan Tanegashima Space Center (TNSC) 30.4° N 131.1°E Japan Kagoshima Space Center 31.2° N 131.1°EChina Jiuquan 40.6° N 99.9°EChina Xichang 28.25° N 102.0°EChina Taiyuan/Wuzhai 37.5° N 112.6°EItaly San Marco Platform 2.9° S 40.3°EIndia Sriharikota (SHAR) 13.9° N 80.4°EIsrael Palmachim/Yavne 31.5° N 34.5°E

Australia Woomera 31.1° S 136.8°EBrazil Alcantara 2.3° S 44.4°WSpain Torrejon AB 40.5° N 3.5°W

293 Web site: http://www.jsc.nasa.gov/bu2/launch.html

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Acronyms

ATV Automated Transfer Vehicle BLS Boeing Launch Services BSC Boeing Space and Communications BSS Boeing Satellite Systems CALT China Academy of Launch Vehicle Technology CCAFS Cape Canaveral Air Force Station CCB Common Core Booster CGWIC The China Great Wall Industry Corporation CLTC China Satellite Launch, and Control General CNES Centre National d'Etudes Spatiales (French Space Agency) COMSTAC Commercial Space Transportation Advisory Committee CSG Guiana Space Center DTRA Defense Threat Reduction Agency EADS European Aeronautic Defense and Space Company EELV Evolved Expendable Launch Vehicle ESA European Space Agency FAA Federal Aviation Administration FCC Federal Communications Commission FSS Fixed Satellite Service GEO Geosynchronous Earth Orbit HSC Hughes Space and Communications Company GSO Geosynchronous Orbit GTO Geosynchronous Transfer Orbit HSC Hughes Space and Communications ICBM Intercontinental Ballistic Missile ILS International Launch Services IPF Integration and Processing Facility IR&D Internal Research and Development ISRO Indian Space Research Organization ISS International Space Station JSLC Jiuquan Satellite Launch Center KSC Kennedy Space Center KV Space Forces (Russia) LEO Low Earth Orbit LIBOR London Interbank Offered Rate LSP Launch Service Provider LV Launch Vehicle MAS Mobile Access Structure MoD Ministry of Defense MEO Medium Earth Orbit MST Mobile Service Tower NASA National Aeronautics and Space Administration NASDA National Space Development Agency NGSO Non-Geosynchronous Orbit

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NR Non-recurring OSC Orbital Sciences Corporation OSPSLV Orbital Suborbital Program Space Launch Vehicle PPF Payload Processing Facility RE Recurring RSA Russian Space Agency RSVN Strategic Missile Force (Russia) SAST Shanghai Academy of Spaceflight Technology SELVS Small Expendable Launch Vehicle Services SES Société Européenne des Satellites SLC Space Launch Complex SRF Strategic Rocket Forces SSED Space Systems Engineering Division SSI Spaceport Systems International SS/L Space Systems/Loral SSO Sun Synchronous Orbit SSP Satellite Service Provider SWOT Strengths, Weaknesses, Opportunities and Threats TSLC Taiyuan Satellite Launch Center TSNIImash Central Science and Research Institute of Machine-building UT Umbilical Tower VAFB Vandenberg Air Force Base XSLC Xichang Satellite Launch Center

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Bibliography 2000 Commercial Space Transportation Forecasts, Federal Aviation Administration's Associate Administrator for Commercial Space Transportation (AST) and the Commercial Space Transportation Advisory Committee (COMSTAC), May 2000 2000 Reusable Launch Vehicle Programs and Concepts, Associate Administrator for Commercial Space Transportation (AST), January 2000 (http://ast.faa.gov) Analysis 2 - The World Market for Expendable Launch Vehicles - 2000–2019, Forecast International, July 2000 Ariane Operational Activities in French Guyana Organization and Funding, Arianespace slide presentation, November 2000 “Baikonur Cosmodrome Eyeing the Future,” Federic Castel, Space.Com, July 10, 2000 (http://www.space.com/businesstechnology/baikonur_cosmodrome_000710.html) Bulk-Buy Practices by Satellite Operators Foster Further Commercialization of Launch Services Industry, Special Report by United States Department of Transportation, FAA, 3rd Quarter 1997 Commercial Space Transportation: 1997 Year in Review, Associate Administrator for Commercial Space Transportation (AST), January 1998 Commercial Space Transportation: 1998 Year in Review, Associate Administrator for Commercial Space Transportation (AST), January 1999 Commercial Space Transportation: 1999 Year in Review, Associate Administrator for Commercial Space Transportation (AST), January 2000 Commercial Space Transportation: 2000 Year in Review, Associate Administrator for Commercial Space Transportation (AST), January 2001 Cox Report, Commercial Space Insurance (http://www.infowar.com/class_2/99/cox_report/8.htm) The Future Management and Use of the U.S. Space Launch Bases and Ranges, Report of the Interagency Working Group, February 8, 2000 “Industry Faces Launcher Excess,” Marco Antonio Caceres, Teal Group Corp., Aviation Week and Space Technology, January 17, 2000 International Reference Guide to Space Launch Systems, Third Edition, Steven J. Isakowitz, Joseph P. Hopkins Jr., Joshua B. Hopkins, American Institute of Aeronautics and Astronautics, January 2001

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Launch Vehicles, The Space Review, AIRCLAIMS Launch Vehicles, World Space Systems Briefing, Teal Group Corporation, 2000 Leonids and More on the Agenda: Satellite Insurance, Peter J. Brown, Via Satellite, September 1998 Memorandum: Standard Prices (2001) for Missile Fuels Management Category Items, CMAL NO 00-06, United Pardyne Corporation (UPC), August 9, 2000 An Overview of the U.S. Commercial Space Launch Infrastructure, Special Report by United States Department of Transportation, FAA, 3rd Quarter 1998 Possible Futures for the American Space Launch Industry, Orbital Science slide presentation, Space Transportation Association, June 15, 2000 Range Integrated Product Team Report, HA AFSPC/DOSL, Captain Timothy A. Slauenwhite, Peterson Air Force Base, CO, November 16, 1998 Streamlining Space Launch Range Safety, Commission on Engineering and Technical Systems, National Research Council, National Academy Press, Washington, D.C., 2000 (http://www.nap.edu/html/streamlining_range/) Trends in Satellite Manufacturing: Changing How the Commercial Space Transportation Industry Does Business, Special Report by United States Department of Transportation, FAA, 1st Quarter 1999 Trends In Satellite Mass and Heavy Lift Launch Vehicles, Special Report by United States Department of Transportation, FAA, 4th Quarter 1997 Trends in Space Launch Services: Globalization and Commercial Development, Special Report by United States Department of Transportation, FAA, 4th Quarter 1996 An Update on the Space Insurance Market, John Vinter, President and CEO International Space Brokers, Inc. 33rd Meeting, COMSTAC, May 10, 2001 Update of the Space and Launch Insurance Industry, Special Report by FAA, 4th Quarter 1998 U.S. Launch Range Modernization Programs, Special Report by United States Department of Transportation, FAA, 3rd Quarter 1999 World Space Systems Briefing, Teal Group Corporation, Spaceports, 2000

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Relevant Web Sites

The Aerospace Corporation, SSED, Launch Log

http://cr553.aero.org/new_ssed/apps.cfm

Alaska Aerospace Development Corp (AADC)

http://www.akaerospace.com/frames1.html

The Aerospace Navigator (links to space centers)

http://www.ultranet.com/~adjm/aero/aeronav.html

Arianespace Homepage http://www.arianespace.com/news_mini.html Arianespace annual report http://www.arianespace.com/annualreport/english/default.htm Astronautix.com launch site index http://www.friends-partners.org/mwade/sites/lauindex.htm Boeing - Delta http://www.boeing.com/defense-space/space/delta/sitemap.htm Business and Commercial Development Links

http://www.cyberpursuits.com/space/comrcial.html

China Great Wall Industry Corp. http://www.cgwic.com.cn Chinese Space Links http://www.geocities.com/CapeCanaveral/Launchpad/1921/index.htm European Space Agency http://www.esa.int/esa/descrip/estabs.htm Europe tracking stations http://www.esoc.esa.de/pr/facilities/estrack.php3 FAA Assoc. Admin., Commercial Space Transportation

http://ast.faa.gov/

FAA Special Reports http://ast.faa.gov/launch_info/qlr/special_reports.html FAS World Space Guide http://www.fas.org/spp/guide/russia/facility/index.html International Launch Service (ILS) http://www.ilslaunch.com/ Jonathan's Space Report http://hea-www.harvard.edu/QEDT/jcm/space/jsr/jsr.html Launch Sites http://www.orbireport.com/Linx/Sites.html Launch Schedule http://www.space.com/missionlaunches/launches/launch_schedule.html Launchspace.com http://www.spaceandsatellite.com/index.html NASA Cost Estimating: Launch Vehicle and sites

http://www.jsc.nasa.gov/bu2/launch.html

NASA Watch Russian Space News

http://www.reston.com/nasa/russia.html

National Transportation Library http://search.bts.gov/ntl/index.html Orbital Report News Agency http://www.space-launcher.com/News.html Orbital Sciences Homepage http://www.orbital.com/ Rocketry.com (Fuel costs) http://www.rocketry.com/ Russian Aerospace Guide http://www.mcs.net/~rusaerog/ Russian Space.com http://www.russianspace.com/ Russian Space Industry http://www.fas.org/spp/civil/russia/index.html Space Business Archives (search articles)

http://www.spacearchive.org/links.html

SeaLaunch Home page http://www.sea-launch.com/ Space Daily Launcher Information http://www.spacer.com/launch.html Space and Missile Systems Center (SMC)

http://www.losangeles.af.mil/

Space.com Missions and Launches

http://www.space.com/missionlaunches/index.html

Space Shuttle http://www.spaceflight.nasa.gov/ Space Daily Search Portal http://www.spacedaily.com/gps.html Space Transportation Industry Links: Space Insurance

http://www.space-launcher.com/Linx/Insurance.html

Spaceport Florida http://www.spaceportflorida.com/ Starsem home page http://www.starsem.com Universal Space Networks http://www.uspacenetwork.com/

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Universe Today: Russian Space Agency

http://www.universetoday.com/html/topics/russia.html

Vandenberg Air Force Base http://www.vafb.af.mil/ WFF Range Users Handbook http://www.wff.nasa.gov/pages/range_users_handbook.html Woomera Launch Site http://www.powerup.com.au/~woomera/index.html

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