Expendable Launch Vehicle Revenues Increase as Industry Emerges from Soft Market

Like the rest of aviation, the expendable launch vehicle industry is emerging from a sluggish market and a near-term resurgence now seems likely. According to a recently released Forecast International market analysis, "The World Market for Expendable Launch Vehicles: 2004-2013," launch industry revenues have risen over 60 percent – from $3.7 billion in 2002 to over $5.5 billion in 2003. Also, in 2003 seventeen new commercial geosynchronous communications satellites were ordered, compared with only three in 2002. Satellite industry officials also believe that demand will exceed capacity and the need to replace older satellites will push satellite orders to about 20 by 2006. This rate of production is then expected to remain steady for several years.

The analysis projects that the world’s launch vehicle manufacturers will produce approximately 742 Expendable Launch Vehicles (ELV) from 2004-2013. While some 397 of these will be built in the 2004 to 2008 timeframe and only 345 from 2009 to 2013, current market conditions indicate that the difference in value of production between the first and second halves of the forecast period will be within $2 billion. The total value of the ELV market between 2004 and 2013 is expected to be just over $62 billion.

In 2003 there were 63 launches, of which 47 were strictly government-funded missions. "Governments will continue to be the dominant customer of the launch industry – a trend that has been fully established," said John Edwards, Forecast International space systems analyst. "It’s a good thing too," he added, "since government contracts have been the saving grace of launch providers during the doldrums of the commercial satellite market and nowhere is this more prevalent than in the United States."

The European space industry has long recognized the value of the guaranteed, lucrative government contracts enjoyed by US manufacturers that serve as insurance to the bottom-line. While Europe is not expected to match US government launch activity, Edwards said, "the current wave of satellite program consolidation and launch program restructuring within Europe will bring the region much closer to the more balanced military/commercial US model." The European Space Agency, in its Ariane 5 managerial position, is intent on establishing a unified space policy, and will likely push for minimum guaranteed launch contracts from its member nations. This bodes well for the Ariane 5, the Soyuz, Proton, and the upcoming Vega.

Satellite manufacturing trends, in accordance with consumer demand, have split between large communications and interplanetary systems and small, lightweight Earth observation/science satellites. The market focus among the major players is the development of greater lift capacity to Geosynchronous Transfer Orbit (GTO), along with the capability to deploy multiple payloads into separate orbits.  "Access to all boosters is becoming much easier because of the backup service agreements established through firms such as ILS, Boeing Expendable Launch Vehicles, Arianespace, Mitsubishi Heavy Industries, and EADS," Edwards said. This trend is expected to continue in the larger ELV market and trickle down to include the new smaller players as well.

The launch market is showing signs of recovery, and the anticipated resurgence in demand for geosynchronous satellite communications capacity bodes well for a considerable market upturn. Industry leaders have learned, however, to proceed cautiously and to not bank so heavily on commercial communications market trends and projections. In the interim there will be plenty of military constellations, remote sensing systems and scientific spacecraft to engage the services of ELVs and keep production lines moving over the next 10 years and beyond.

 FMI: www.forecast1.com