Third Mover Disadvantage: ArianeGroup & Reusability

FYI, for those interested, Orbify has posted another of my articles: Earth Observation: Why technical Excellence is Not Enough.

The thing about bombastic headlines is that everyone who reads them understands there’s not much substance backing them. Inflicting those headlines on most readers likely results in a raised eyebrow or cringe. And pity the article’s author, who likely had no say in what the editor decided to use as the headline.

I wonder, then, what ArianeGroup’s and Arianespace’s reaction was when Euronews posted the following: “Move over, SpaceX: ArianeGroup to make Europe’s first reusable and ‘eco-friendly’ rockets”?

That’s embarrassing, isn’t it? For the rest of us, it’s probably a little funny, too.

This analysis isn’t to make fun of ArianeGroup or Arianespace. Unless either is proud of that headline, then they totally deserve mockery.

Courting Customers with Reusability and Eco-friendliness?

The article, however, is a re-hash of an ArianeGroup press release (which has a wordy and boring headline). Within that release, the company touted that the European Commission is providing more money to manage two projects, hoping that some kind of competitive rocket will result from the subsidy. Also, the projects themselves are primarily developmental, they don’t seem to be about manufacturing a specific rocket, merely developing the technologies to allow that to happen. According to the release, the resulting rockets will preferably be reusable and environmentally friendly:

“Each project is built on the joint expertise of ArianeGroup, industry, research institutes and start-ups, to accelerate Europe’s transition to increasingly innovative, competitive and eco-friendly access to space.”

It is worth noting that both the EC and ArianeGroup are bringing up the idea of a reusable rocket again. The European space industry (in the form of ArianeGroup) is getting serious about rocket reusability. It knows it’s essential. It sees SpaceX’s annual rising launch rates. But, based on the rationales within the press release, it’s not clear that it understands why. The reasons for this observation are the two words used throughout the release: reusable and eco-friendly. Those seem to be politically-driven rationales and not marketplace demands. Especially when they are coupled with other words used in the release: European sovereign access to space.

To be clear, I have nothing against the European sovereignty concept. However, those words don’t reflect the typical characteristics that commercial customers demand from rocket launch providers. Those desires can differ from customer to customer. It may not be surprising that some customers would love to save money on launches. Others may wish for the ability to launch right away. Some might want to launch large spacecraft, while others would look for the ability to deploy multiple, smaller spacecraft. All would undoubtedly expect reliability, despite what a few startups may say.

There are likely as many reasons for a customer to select a rocket as there are customers. Each one of those reasons is another marketplace data point and opportunity. However, no customer is probably worried about whether a rocket is environmentally friendly or not. And while reusability looks cool, it may not mean much to a company if the reusable rocket is still too expensive to use–unless the customer is a government organization. There appears to be little emphasis or worry about launch costs with that particular customer. After all, it’s for a good cause: European space sovereignty.

European sovereignty is a limited concept in a global market. It’s been preached as a reason for European spacecraft operators to pay for Ariane 6 launches–it’s their duty. But it encourages a company like ArianeGroup to stay in the European market while not pushing the need to compete beyond. While I’ve not seen any of the EC leadership admit it, it sounds protectionist. European sovereignty builds a wall even as dynamic competition flows around it.

Reusability Isn’t Just About Launch Costs

Pursuing reusability for reusability’s sake can result well or poorly. Manufacturing a reusable system because others have already done so is a common reason for committing to such a project. Sometimes projects stemming from such motivations work out. Following instead of leading contains somewhat less risk as well, because the first mover has already established what can be done. But large projects like this require a business plan for success, not a political agenda. If the business plan can’t answer what these programs bring to potential customers that’s better than what an Ariane 5 or 6 offer, then that’s a signal that things won’t go the way the company believes they’ll go.

Many arguments have been levied against building reusable rockets. For example, Arianespace threw quite a few reasons against the wall for why not: it doesn’t work for us; it doesn’t meet our business case; we’re not sure that reusability is cost-effective; we must support workers on the rocket manufacturing floor; we’re uncertain that low prices are sustainable; etc. However, based on ArianeGroup’s acceptance of EC money for developing reusable technology, it seems that none of those reasons stuck.

Like Arianespace, a few industry folks still argue that reduced launch costs due to reusability aren’t yet apparent, despite what SpaceX offers. However, their focus may be a little too narrow—there are perhaps more compelling but less obvious reasons to build a reusable system, such as launch reliability and flexibility.

Before the use of reusable launch systems, launch system reliability tended to be characterized by the ratio of launches versus launch failures during a range of years (the Space Foundation uses a decade as the range). For example, a Proton or a Soyuz 2-XX had launch reliability rates in the low 90th percentiles. On the other hand, an Ariane 5, Long March 3B, or Soyuz-FG had reliability rates of 100%. With reusable systems, that reliability ratio still exists, but there’s an additional component of reliable availability. In other words, is a rocket available if customers would like their satellites launched? Could a launch be conducted in less than a month after an agreement has been signed? Less waiting usually indicates less money required–critical for startups.

Launch flexibility, on the other hand, was not something that launch providers worried about. It worried the U.S. military, which is why it pursued programs for tactical orbital launch capabilities. But launch flexibility in the case of a reusable system also describes the capability to add launches to a schedule (with the big limitation being rocket turnaround and range operations). SpaceX is doing something like this as it adds OneWeb launches to its manifest. Because it’s decoupled (somewhat) rocket manufacturing from rocket launch operations, the launch side merely focuses on the act of launches. Unless some catastrophe occurs, it knows there will be rockets available. Flexibility in this way allows SpaceX to pursue launch customers and opportunities that its competitors can’t.

It helps the company make money.

Separate Manufacturing From Launch

In an earlier analysis, I observed:

“On the other hand, SpaceX seems to be able to ratchet up its launch cadence at will. The company’s first-stage reusable rockets are an asset, as it doesn’t need to manufacture rockets as more customers step forward. That SpaceX is supplying the least expensive and most reliable launch service makes it desirable to many commercial customers, to begin with. That the company can launch its rocket not just more quickly but predictably is a capability unheard of in the “bespoke” rocket launch industry. Combined, SpaceX’s Falcon 9 has obvious virtues attractive to companies exploring launch options. During the past six years, we have witnessed the partial implementation of a new business model in the industry thanks to SpaceX–a launch SERVICE.”

“In the past, I’ve labeled most rocket launch manufacturers as launch service providers. However, the reason for that is that even though they manufactured the rockets, they also provided the service to launch them. Some deviations exist, but Arianespace (except for Soyuz), ULA, SpaceX, Rocket Lab, Virgin Orbit, etc., all build and launch their rockets. The upshot is that each company must have customers not just willing to use their service–those customers must also pony up the money to manufacture the rockets.”

The existence and operations of a reusable rocket provide glimpses of the future. It’s possible that rocket manufacturing becomes fully decoupled from rocket launch services. There may come a time when reusable rockets will be available for sale. Companies that buy and operate them will be similar to those that buy and operate ships for freight services. For that to happen, there will need to be plenty more orbital launch customers than currently exist. They will all have reasons for using all types of launch vehicles, including those made in Europe. Admittedly, that future is all conjecture.

While it’s doubtful that “eco-friendly” will be a significant consideration for most prospective companies, reusability might be. But, of course, it depends on whether the launch pricing of the European version of such a system is competitive on a global market and if the resulting service is increasingly reliable and flexible.