By Jason Rainbow

Satellite Finance

Mon Jan 13 2014, 12:46 PM

Having overcome a challenging 2013 with the Proton rocket again suffering a launch failure, International Launch Services has returned to flight and is bullish about the year ahead. SatelliteFinance’s Jason Rainbow spoke with ILS CEO Phil Slack about his company’s future prospects and how it plans to adapt in an ever evolving sector.

Jason Rainbow: How is your launch manifest looking for 2014?

Phil Slack: Proton has consistently demonstrated the highest heavy lift launch tempo – more that Ariane, SpaceX and Sea Launch combined – over the last six years. It will again be a very active year for ILS and Khrunichev in terms of the Proton launch manifest in 2014.

We are working with all of the 2014 commercial customers with mission integration and schedule planning. Khrunichev is in full production at their various factories, with the final assembly and testing facilities in Moscow. Refurbishment of launch pad 24 is complete, and enhancements at launch pad 39, used for most of the ILS missions, will be finished by this spring.

We expect up to 12 Proton missions in 2014. This will include up to six commercial missions starting with the Turksat 4a launch in mid-February.

JR: Following a spate of launch failures on the government side, ILS announced plans to increase oversight on every stage of production. Is this now in effect and what kind of difference is it making?

PS: Yes, ILS and Khrunichev jointly developed quality improvements and production oversight which were focused on increasing quality, reliability and mission assurance. ILS and Khrunichev expect that these improvements will increase the overall reliability of the Proton vehicle and our customers will reap the benefits. These improvements included additional quality audits, increased use of automated tools and measuring equipment, additional training of operators and quality control personnel, expanded analysis of post-flight telemetry and implementation of more rigorous inspection techniques. In addition, the following two initiatives are expected to provide near-term results:

1)  In late 2012, the Russian Center for Certification of Rocket and Space Technology (TsSKT) was contracted for an independent audit of a set of Proton hardware launched in 2013. This hardware set also utilised some of the planned new automation equipment and tooling. This audit focussed on identifying any changes in hardware/software configuration, processes or certification and followed the build of the vehicle from initial production through successful launch. All identified items were reviewed by the audit to validate that proper procedures were utilised for their qualification and acceptance for flight use. All parties agreed that periodic detailed independent audits such as this provided positive feedback to Khrunichev and improved visibility to the customer and insurance community.

2)  A Breeze M reliability study has been on-going since early last year and will likely be completed this year. KhSC, through the National Institute of Space Systems (NiikS), is conducting an independent, detailed subsystem review of the Breeze M to identify and mitigate any potential issues associated with design, manufacturing, assembly, testing and operation.

In addition, we are working to increase our customers’ insight into KhSC’s Quality Management System. The establishment by ILS of the Proton Committee on Quality Compliance is a key facet of this. The structure and scope of the Proton Committee are being developed and should be defined in early 2014.

ILS and KhSC are fully committed to continuously improving the Proton launch vehicle’s reliability and performance to meet our customers’ expectations.

JR: How have those failures impacted the company when it comes to bidding for launch contracts? Have you seen a dip in sales and if so do you feel this will turn around in 2014?

PS: Yes, commercial sales were impacted by our recent Proton launch record. In 2013 we booked five new missions and we are certain we would have won several more without these impacts. We are confident that the quality improvements we have discussed previously will continue our string of successful Proton missions and 2014 looks like a better year for ILS in terms of new business. We have the advantage of having availability in late 2015 and throughout 2016 which provides a key schedule assurance discriminator for ILS.

JR: Do you foresee a fall in demand for launch contracts in general over the next couple of years due to satellite order cycles or for it to remain around the same?

PS: We don’t anticipate much change in the next few years and expect that demand will remain relatively flat at around 20-22 new commercial geostationary spacecraft orders per year. We do see that there may be a shift between the heavy and light spacecraft with the advent of electric and hybrid propulsion which could create more demand for stacked dual-launch for which Proton is ideally suited.

Industry changes in Russia

JR: What is your view on plans to unify Russia’s space operations under the control of United Rocket and Space Corporation?

PS: The plans are still evolving and developing. Our understanding is that KhSC will be included in this corporation along with numerous other entities; however we do not see this impacting our business in any regard.

JR: Do you think it will allow for better quality control?

PS: We believe that the primary goal was defined to create more efficiencies and effectiveness, with one of the specific stated objectives being to improve quality across the Russian space industry.

JR: Oleg Ostapenko, the new head of Russian space agency Roscosmos, was quoted by local media to be considering a ban on ordering satellites from abroad to boost Russia’s domestic space sector. Do you think this is a possibility?

PS: We are not in a position to respond to this question as it is beyond the scope of ILS’ charter. We are providing commercial launch services to the international satellite industry.

JR: Russia and Kazakhstan have previously had issues over the usage of the Baikonur launch facility; does this concern ILS at all?

PS: Public arguments have hadno impact on any of the 84 ILS launches conducted to date. The lease of the Baikonur Cosmodrome by the Russian Federation is a 55 years lease which expires in 2050.  There are three Proton launch pads available as well as ongoing investment and improvements to the Baikonur launch site. There is no concern about the use of the facility to launch Proton for the foreseeable future.

JR: Roscosmos is also developing an alternative launch site in Vostochny in Eastern Russia. Does ILS anticipate operating from there when it is complete in 2018?

PS: Angara 1 is planned to launch from the Plesetsk launch site in mid-2014 with the heavy lift Angara 5 expected to launch by the end of 2014. There have been ongoing studies about launching Angara from the Vostochny Cosmodrome, however, there is currently no firm decision. We are collectively evaluating all options in order to bring Angara successfully into the commercial market.

Rocket development

JR: How are plans to increase the Proton’s fairing coming on?

PS: ILS has been discussing future requirements with customers and manufacturers to help determine future payload fairing volume requirements. Based on these discussions, ILS has decided to focus efforts on an extension of the existing four-meter diameter payload fairing.

JR: And what is the significance of the ILS Proton dual launch capability?

PS: There are several advantages to a dual launch on an ILS Proton. These include cost effectiveness, higher lift capability, mission flexibility, and reduced orbit raising duration for the spacecraft. Customers can cost effectively launch smaller stacked satellites to various orbits on Proton – either GTO or GSO or a combination of the two. Dual launching reduces the cost to orbit, with Proton launching two stacked satellites for the same price as a dedicated single launch. This means we could launch two electric propulsion satellites. This could be two larger spacecraft of three or more metric tons each, which could provide up to 10 kw payload power each or could be used for smaller spacecraft like the Boeing 702SP which would have the advantage of decreasing the orbit raising time from months to days. This creates the opportunity to start generating revenue earlier and avoid the risk associated with the Van Allen Radiation Belt.

JR: What’s next in the evolution of the Proton rocket?

PS: Khrunichev and ILS have continually improved the Proton product offering to address the evolving needs of the commercial market.

The lift capability of Proton has been increased from five metric tons in the mid-1990s to the current demonstrated performance of 6.15 metric tons to GTO and 6.35 metric tons to SSTO.

Khrunichev is currently developing the next phase of enhancements which will provide an additional 200 kg of performance bringing the total payload systems mass capability to 6.35 metric tons to GTO and 6.55 metric tons to SSTO.

These enhancements are limited primarily to low risk weight reduction initiatives obtained by further optimised use of composite materials, lighter weight high strength aluminium, and tighter tolerances provided by the use of new high-precision tooling. These are planned to be flown starting in 2015.
JR: With the increased usage of small satellites, is ILS looking at carrying out small satellite launches using for example the Dnepr or Rokot vehicles?

PS: Currently ILS only markets the Proton launch vehicle commercially with plans to offer Angara in the future. There are no plans to expand our vehicle offerings in the near future. ILS does expect to capture a share of the small satellite launch demand with the Proton dual launch capability.

Increasing competition

JR: SpaceX of the US promises to shake up the launch services market with its recent entry into the geostationary market – is there an upheaval on the way?

PS: With our lift capability in excess of six metric tons, Proton primarily addresses the heavy lift market while Falcon 9 is launching satellites of less than five metric tons. For over 20 years ILS Proton has been serving the commercial satellite marketplace with over 80 launches for commercial customers and 390 missions overall. We believe that our combination of lift capability, mission flexibility, schedule assurance and launch tempo as well as equitable commercial terms will assure that Proton will remain a major launch provider for years to come.

JR: The sector is not just seeing increasing competition from SpaceX, but Mitsubishi, Boeing and Lockheed Martin are all looking for a wider slice of the commercial pie. Have you noticed an affect when it comes to applying for tenders?

PS: With only one order each, HIIA and Atlas V had limited sales success in 2013. Whether the recently announced contracts are an indication of their return to the commercial marketplace, or whether unique conditions were satisfied with their specific launch capabilities, only time will tell. Proton will remain a strong competitor in the commercial marketplace.

JR: Has it made you evaluate your pricing?

PS: We believe that we offer very competitive pricing when you consider the overall value offering of a Proton launch service – especially when taking into account the combination of Proton’s heritage, lift capability, mission flexibility, schedule assurance and launch tempo as well as equitable commercial terms.

JR: In terms of your own bids, have you looked to utilise the Russian export credit agency EXIAR?

PS: We are excited with the developments that have taken place with EXIAR (Export Insurance Agency of Russia) over the last year. Several major international banks have completed or are completing their due diligence process of the EXIAR offering. EXIAR has expressed their interest in cooperating with export credit agencies of other countries. ILS introduced EXIAR to many of our customers in 2013 and will actively continue this effort in 2014.

There are several advantages to an EXIAR credit guarantee over those offered by [France’s] Coface or [US] ExIm Bank which will significantly improve the Proton value proposition for our customers.


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