Aerospace Daily November 25, 2002
Analysts Say Tough Times Ahead, But Prognosis Good For EELVs
By Jefferson Morris
With both Lockheed Martin and Boeing's Evolved Expendable Launch Vehicles (EELVs) off to successful starts, analysts are generally positive about the long-term prospects for both, although they feel government support will be crucial to sustaining them through the current flat market period.
The Air Force partially funded the development of Lockheed Martin's Atlas V and Boeing's Delta IV rocket families to reduce the cost of launch and provide the U.S. with assured access to space.
The Air Force has awarded 28 EELV launch contracts, with Boeing receiving 21 and Lockheed seven. In addition to the launch awards, the Air Force reportedly is considering subsidizing both companies in fiscal year 2004 to help sustain the vehicles.
Both the Atlas V and Delta IV "are going to do just fine, because they're going to be cheaper, and in principle, should be more reliable," according to John Pike, director of GlobalSecurity.org. "I think that that long-term promise [of the vehicles] is currently obscured by the downturn in the international market."
Phil McAlister, director of space and telecommunications for Futron, also thinks that both vehicles will make it, but only with government help.
"All of our forecasts show that the market is not going to pick up for at least the next four to five years," McAlister told The DAILY. "Given that situation, both Lockheed Martin and Boeing are going to be relying on sales of their launch vehicles to government customers. If they didn't have that anchor, it would be ... very difficult, if not impossible, to stay in this market."
Richard DalBello, president of the Satellite Industry Association, praised the efforts of the EELV partners to bring down launch costs, although he believes the news in the commercial arena remains "chilly" for all players.
"There's no doubt that the cost reductions and the efficiencies that these vehicles bring to the U.S. fleet are important," DalBello said. "But overall ... there's undoubtedly overcapacity in the global industry. Looking out to the marketplace, there's still some chilly news out there."
Lockheed Martin and Boeing hope their new vehicles will allow them to gain ground on European launch provider Arianespace, which captured half of the world launch market in 2001. So far, few commercial customers have signed up for launches on either EELV, although this situation likely will change as the vehicles mature, according to McAlister.
"Boeing has not signed up as many commercial customers as Lockheed Martin's Atlas V has, and that's primarily because it's more of a clean-sheet-of-paper vehicle design, so they've got more to prove," he said. "But ... they have more military launch contracts on the books right now, so that's going to help them."
Analysts were divided as to whether either of the new vehicles could wrest the market crown away Arianespace. While McAlister anticipates the U.S. gaining market share, DalBello said he thinks Arianespace still may have a competitive edge.
"The Ariane vehicles are good vehicles, and they have spent a great deal of time focusing on making sure that customers are happy. So there's more that goes into the buying equation" than just technology, he said.
Case not closed
Given the current market situation, the business case for the EELV no longer makes sense from a purely commercial basis, according to recently released final report by the Aerospace Commission (DAILY, Nov. 19).
"EELV drew primarily on commercial demand to close the business case for two new launchers, with the U.S. government essentially buying launches at the margin," it says. "Today, however ... the business case for EELV simply does not close, and reliance on the economics of a commercially driven market is unsustainable."
According to the report, revenues from the 16 commercial launches in 2001 were an estimated $1.5 billion, a 44 percent decrease from the 2000 total of approximately $2.7 billion. The FAA expects 268 commercial launches over the next decade, a figure 16.5 percent lower than the agency's forecast in 2001, the report says.
Copyright 2002 Rodgers Publishing Ltd.
