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Satellite 2010 Update: Commercial Launch Providers Panel

Date of News Item: 
March 18, 2010

Satellite 2010 conference

Please click here to learn about the Satellite 2010 Welcome Reception hosted by IL

During the Satellite 2010 conference in National Harbor, Maryland, March 15-18, ILS President Frank McKenna participated as a panelist during the session on commercial launch vehicles, entitled “The Launch Vehicle Manifesto: New Options for Evolving Requirements” held on March 16. The session, hosted by Owen Kurtin, Co-Founder and Principal of The Vinland Group LLC, covered a range of topics and issues surrounding the commercial launch sector. Other participants included Jean Yves Le Gall, Arianespace, Kjell Karlsen, Sea Launch, and Yin Liming, of China Great Wall Industry Corp.

The following is a summary of ILS remarks and key discussion points made during the panel.

Performance is Key

McKenna’s opening statement addressed Proton’s track record of over 350 launches over 45 years since its maiden flight in 1965. With its first commercial flight in 1996 with the Astra 1F satellite, ILS Proton has been serving the commercial marketplace for 15 years with 57 launches to date. Proton’s evolutionary system has been improved and enhanced over time. The consolidation of the Russian space enterprises under Khrunichev and the unified Quality Management System (QMS) has contributed to the robust launch rate of 7-8 commercial and 3-5 Federal annually. McKenna said the talented professionals of ILS and Khrunichev work together to provide the best overall value for global customers on each and every launch.

What Sets ILS Apart

Addressing the differentiators with ILS compared to other providers, McKenna cited several factors that sets ILS apart to optimally serve the dynamic commercial satellite market:

  • Schedule Performance and Reliability-ILS Proton’s track record for launching on-time for customers is unmatched. To date, there have been 20 consecutive Protons in 20 months; Proton is the only launch provider with this robust tempo and record of achievement.
  • Proton production rate-with 12-14 systems produced and ready to launch annually, this is the highest level of production in Proton history. This translates to real value for our customers with on-time delivery.
  • Flexibility-ILS has the unique ability to assist customers who need to launch within a critical timeframe with a dedicated launch produced atsuch a high throughput in the factory. For example, the W7 satellite for Eutelsat and AsiaSat 5 for AsiaSat were integrated and launched within record time. Additionally, ILS is able to accommodate both the SES and Intelsat Multi Launch Agreements flexibly and effectively, meeting customers’ schedules to support their business plans.

Oversupply and Market Rationalization

Currently, the level of supply with the two main players in the market, ILS and Arianespace, can adequately support the level of demand with 20-22 commercial satellite launches per year. Periods of oversupply in the marketplace have proven to be detrimental to the commercial launch business and leads to instability and rationalization. This was demonstrated with the exiting of the Atlas and Delta vehicles from the commercial market which now exclusively serve the more profitable US Government market. The Sea Launch bankruptcy is another example of commercial launch oversupply . While Sea Launch was a technological accomplishment, it was a “train wreck” from a business, financial and management standpoint and resulted in widespread damage to the customers, shareholders, suppliers, and the commercial launch industry, said McKenna.

The credibility issues that have occurred will take years to repair and hundreds of millions of dollars of investment in what is likely to be a down business cycle. McKenna said he did not see the business rationale behind supporting the reemergence of Sea Launch into the commercial launch market given the negative effect it would have on the industry with market oversupply. "The markets will rationalize,” said McKenna, “You need to capture business on the up cycle. I think we are on a very rocky road if we increase capacity at this time,” he said. ILS/Proton has weathered the storms and will continue to add the strong foundation that customers can depend on for years to come.

Achieving the Right Balance in a Dynamic Marketplace

With a healthy backlog of 22 missions and a concurrent Federal program run by Khrunichev, ILS is a strong, sustainable business. The evolution of the market is based on comparative economic advantages. “It is imperative to achieve the right balance and develop a price structure that works,” said McKenna. He added that is it important to expand your level of services to serve new growth opportunities, as ILS has, but that heavy lift will still be the primary offering.

McKenna said, “Our job is to support the market,” and added “we are ready for both the up and down cycles and for new competition.”

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