European small launch companies respond

Are European small launch companies struggling to compete with SpaceX rideshare missions?

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European small launch companies respond

On 18 October, SpaceNews published an article that described how small launch companies are struggling to compete with SpaceX rideshare missions. I thought the article was poignant and insightful, but I was curious what European launch startups thought about the issue. The article included a brief comment from PLD Space and a comment from an Arianespace Vega business unit representative, and I'm not sure Vega fits into the small launch category. Vega-C, the current or rather soon-to-be current version of the launch vehicle, is, according to Arianespace, capable of delivering 3.3 tons to low Earth orbit. That puts the vehicle firmly into the medium-lift category, although definitions of medium-lift certainly do vary. Nonetheless, even if you did include Arianespace, the vast majority of European small launch companies had not been surveyed. 

Launch providers are, however, only a part of the puzzle. In order to understand the full picture, I also went about surveying launch aggregators like Precious Payload and customers who had flown aboard SpaceX rideshare missions in the past. 

The launch providers

Latitude - Adeline Pitrois, Head of Sales
“Rideshare missions and dedicated missions are two faces of the same coin: they’re complementary in the smallsat’s path to orbit. Rideshare missions could be an appropriate support to validate technology or for the proof of concept phase. Once the model is validated, they tend to transition to dedicated launches that will allow them to manage their own mission to drive their business and revenue generation. Our business model and customer success will be managed independently from SpaceX's strategy.”

Orbex - Martin Coates, CEO
“In the enterprise IT world, there is the concept of 'Total Cost of Ownership,' which encourages executives to look beyond the top-line software or hardware costs and understand at a deeper level what other costs come with it. We need that same level of evolved thinking in the satellite launch market.

For example, what is the cost of having your satellite grounded for three years, not earning you any revenue? What is the risk to your business if your satellite is bumped to a later launch date if and when a larger customer takes priority? What are the time and monetary costs of shipping a satellite halfway around the world? What is the additional cost of your satellite not being injected precisely into the optimal orbit? What’s the environmental cost of launching on a particular vehicle? When the total cost of ownership is considered, there are plenty of circumstances where a dedicated launch on a microlauncher – particularly a sustainable one – makes the most commercial sense.

If we're being sensible about it, we don't even need to think of rideshare options being in direct competition with dedicated launches. They are different options for different circumstances. It is like saying that we don't need cars or trains or boats anymore because buses exist. Satellite owners need options.

When people talk about the market being shared by nearly 200 microlauncher projects ‘in development,’ it’s just not realistic because most of those only exist in PowerPoint. There are only a handful of businesses with the technical, financial, and commercial momentum to build a successful long-term launch business. And even if all of those are successful, there is still enough business to go around. That is especially true considering the growing use case of replenishment of smallsat constellations.

Orbex has several launch contracts already signed, and we expect to secure more in the coming years. There is still a large backlog of small satellites waiting for launch, so the demand is very clearly still there, and it’s only going to increase over time.“

HyImpulse - Christian Schmierer, co-CEO
“I think the price metric alone is too one-dimensional. When we speak to customers, not all of them want to launch for the lowest price with SpaceX. They are interested in the overall price-performance ratio with the following metrics (just to name a few from the top of my head):

1. price per kg

2. price per volume

3. level of service

4. payload accessibility during preparations

5. time to launch after contract signature

6. access to dedicated orbits

7. late access to the payload

8. responsiveness for certain missions

9. launch site (some prefer to launch outside of the US)

10. reliability (not as in technical reliability. SpaceX is the top there, but in reliability as a supplier, as a partner) and partnership

While we will get very close in the future (with scaling production and partial reusability) to SpaceX pricing with a Falcon Transporter, it’s not the right metric.

We also have the strong impression that a transporter mission for many customers was just right from the beginning until now. But now they get more mature with their satellites and own services, and they care much more about their own needed orbits. And not an orbit that they get informed about a few weeks before launch.

Low prices challenge us, of course, to innovate, and that’s what we’re doing with our proprietary hybrid propulsion technology. Miniaturized liquid rockets will not do the job.”

Pangea Aerospace - Adrià Argemí, CEO
“SpaceX is disrupting the market with low prices and high offer volume. However, small/medium-class vehicles have coexisted and will coexist with Heavy and super-heavy vehicles. Both markets exist because they cover different needs. Rockets like the Electron (Rocketlab), with a much higher price per kg, will still have demand providing dedicated launch services for smaller payloads, which can be key for certain missions such as the ones related to defense or institutional payloads preferring local players.  

However, if we take a look at Rocket Lab's accounts, it's clear that small launchers have not yet found a way to be profitable. Even the ones that are more advanced and have a lot of experience and investment are struggling. From our perspective, competition is hard now and will be tougher in the next years. This should be pushing us to react and think outside of the box, both in finding disruptive and profitable solutions.

At Pangea Aerospace, we saw this some years ago already and took it as a huge market opportunity rather than a threat. We are innovating both in our business model and in our technology to try to profit from it. We advocate for a new business model, which is the one used in the aeronautics industry, creating companies focused on specific topics so they can do it better, innovate, and get economies of scale.  

Pangea Aerospace is addressing the need for efficient propulsion systems for this new generation of launch vehicles that won’t be profitable if they want to be OEM-integrator-operators. Not only is performance key, but full and rapid reusability is a topic that we cannot avoid when thinking of competitive solutions. In the end, it offers the possibility to improve margins, decrease capital needs, and create a viable economic model. ”

SmallSpark Space Systems - Joseph Ward, CEO
Although not directly related to SpaceX rideshare mission pricing, I thought this response to my question made for an interesting addition to the overall picture.

“As a business, we’ve all but moved away from launch for the foreseeable future - our focus is on developing core technologies and products to support more efficient participation in the cislunar economy. A lot of our tech has transferred over - but we felt the margins in launch were too small, even for our tech, the capex requirements were too great, and we would have to rely on endless investor capital to maintain the projected operations. “ 

HyPrSpace - Alexandre Mangeot, CEO
“SpaceX rideshare pricing should not be an issue for microlaunchers. Those who launch with SpaceX rideshare and those who launch with micro-launchers are not the same typology of customers. We do not address the same needs.

To launch with SpaceX, you have to anticipate approx. 24 months ahead and be willing to accept to be delayed to another slot. Microlauncher business is to be more available and flexible than a conventional launcher. Obviously, these service feature comes with a premium, and I believe there is a segment of the market that is willing to pay this premium.

Furthermore, as a European microlauncher we can provide a ride to space without the scrutiny of the US DoD because your satellite will not have to go into the US. If you have sensitive tech onboard your satellite, I strongly invite you to book a launch with us.”

B2Space - Valentin Canales, CTO
“I think SpaceX's rideshare missions are currently shacking the market with their low prices, and it looks like they'll keep on dropping. But the big talk right now is all about cost, and I'm not sure that's the smartest focus for small launcher companies. It's tough to beat SpaceX when it comes to costs, mainly because they launch so many rockets and reuse them over and over, which is amazing.

So, what's my opinion? I think small launchers should be all about giving customers a launch tailored to their specific needs, but at a price that's still in the game. Think about customers who need to get their satellites into particular orbits or trajectories – they'd usually have to use an orbital transfer vehicle or a "space tug" if they don't use a small launcher. That's where B2Space aims to step in and shine. There's a niche market there, and it's the sweet spot for small launchers to thrive.

On the flip side, if small launchers go head-to-head with SpaceX on costs, it's a tough battle, and they might end up needing government deals and handouts to keep the lights on.”

MaiaSpace, Isar Aerospace, and Rocket Factory Augsburg were asked to contribute but declined.

The launch aggregator

These companies are essentially third parties that connect customers with launch providers and streamline the process while removing some of the administrative burden from the customer. As these companies offer flights aboard both SpaceX rideshare missions and dedicated small launch missions, they offer a more objective look at the market.

Precious Payload - Andrew Maximov, CEO
“SpaceX has the capability to operate its Falcon 9 rideshare missions at very slim to non-existent profit margins. Their resilience, especially in the face of needing capital, stands out, surpassing even VC- or government-backed companies.

European companies, despite their efforts, can't match or beat this aggressive pricing — a truth that stood firm both in times of abundant and scarce capital. This dynamic, shaped heavily by SpaceX's presence, is a market reality that the European launch sector will deal with for the foreseeable future.

While this does present challenges, it's not pragmatic for European launch providers to compete directly with SpaceX on price or launch frequency. The path forward is innovation. European launch businesses should focus on crafting unique solutions, exploring untapped market niches, better customer experience, leveraging EU support programs, and convenience of European operations.”

The Customers 

While insight from launch providers and aggregators is useful, it is only half the equation. The other half is, of course, the customers. 

To gain some insight into why customers were selecting SpaceX rideshare missions and if they would pay more to launch aboard a dedicated mission, I emailed every single customer who flew aboard the last SpaceX rideshare mission in January. Inevitably, due to NDAs, most declined to comment. However, a few did respond, and a few more chose to comment as long as it was anonymously. 

Innova Space CTO Elyka Abello explained that her company had first selected a third-party service provider that just happened to be launching aboard a SpaceX rideshare mission. However, the company has, for its next mission, purposefully selected a third-party provider that is launching aboard a SpaceX rideshare mission due to the reliability of the service and a launch window that matched its needs. Abello did, however, state that there were downsides to launching aboard a rideshare mission.

"We have no control over the date at all, and we have experienced delays of more than two months from the original date. Another downside for small and amateur satellites is the fact that there are around 100 satellites deployed at the same time, so it could take a lot of time and effort to identify your satellite TLEs."

When it came to the all-important question of whether the company would pay more to fly aboard a dedicated mission, the answer was not in the short term.

"At the development and funding stage that we are in, no, we wouldn't pay more for a more dedicated service. In the future, for final constellation deployment, we could evaluate it."

Another SpaceX rideshare customer that chose to remain anonymous stated it plans to regularly utilize the service in the future. It identified price, launch opportunities, and reliability as key factors for continuing to launch with SpaceX.

"SpaceX offers very competitive pricing and several launch opportunities per year. Sometimes, their launches are delayed, which can increase the level of complexity, but that is true for every launcher on the market. Plus, the experienced launch delays were limited and acceptable."

When asked whether they would consider a more expensive dedicated service, the company said it would. “Depending on the actual price difference and the specifics of the premium service, we would consider it.”

The Royal Netherlands Aerospace Centre (NRL) was the only respondent that spoke specifically to price. When asked if the cost paid by NLR was close to the $275k minimum stated on the SpaceX website, the organization explained that it hadn't but that the equation wasn't a simple one.

"The price was significantly higher, but it also depends on how the $275k statement is being framed (per kg, volume, etc.)."

The NRL spokesperson explained that the organization had selected the SpaceX rideshare mission due to reliability, the available launch window, and the target orbit. 

When asked if it would consider a more expensive dedicated service, the spokesperson explained that it would depend on the "mission objectives."

Conclusion

I think that it cannot be denied that the availability of the SpaceX rideshare missions is no small part the reason that many European newspace startups are able to envision a clear path from founding to profitability. Would I prefer these companies launch European? Sure. But how can I begrudge a company with an innovative world-beating solution from selecting the only option that they can afford?

SpaceX rideshare missions are not a death knell for companies pursuing the small launch market. Small launch is hard. The margins are tight, and the competition is fierce. I am still not entirely convinced that there is any way to make small launch vehicles profitable. I know there is an argument for reusability and huge launch cadences being key factors, but I am not convinced. I think the companies that will survive the coming purge in the next five years must already be planning vehicles that move further into the medium launch category or have a diverse offering that enables a launch division to be a loss leader.

That’s not to say that I don’t think small launch companies can’t have a significant impact in the short to medium term. I think the likes of RFA, Isar, Latitude, Orbex, PLD Space, and MaiaSpace represent a coming sea change in the availability of European-supplied launch capacity. I think it’s absolutely vital that these companies are supported with institutional contracts from the European Commission, ESA, and national space agencies to allow them to transition from small launch to a more profitable future. This is a ball that Europe cannot afford to fumble.