As government spending decreases worldwide, space launch expenditures within established national programs will steadily decrease with the implementation of cost-cutting measures. Instead, governments will become more reliant on commercial companies to execute space launches. While global space launch expenditures will spike in 2013 and 2014, these will gradually drop as competition between commercial companies for space launch contracts heats up. The global commercial space launch market will transition from the oligopoly of United Launch Alliance (ULA), Arianespace, and International Launch Services (ILS) to a more competitive market with several, smaller companies that manufacture cost-effective launchers.
Frost & Sullivan's Aerospace & Defense (www.frost.defense.com) practice finds that global spending for space launch activities totaled $6.70 billion in 2011. Space launch spending is forecast to spike to over $9 billion in 2013 and then steadily decrease to $8.36 billion by 2020.
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With the proliferation of cellular devices, networks, and direct-to-home (DTH) services, the need for additional bandwidth is the main driver for the space launch market. This is because the large communications satellites required to distribute this bandwidth are the most expensive to build and launch. However, since launch vehicles are so cost prohibitive, governments will be forced to subsidize the market to some degree.
"Due to the extreme costs of space launches, government budgets will always be heavily involved in driving the market," said Frost & Sullivan Senior Industry Analyst Michael Blades. "However, forcing competition should drive costs down."
Competing companies could win government business in a couple of ways. First, due to the market's cost barrier, any company looking to enter the market would likely need to partner with an established market competitor. Further, any company that can produce a reliable, reusable launch vehicle (RLV) will gain a distinct advantage in per launch cost. However, while more than one company is currently pursuing this capability, there is market-wide speculation that the technology to complete such a project is several decades away.
"There is considerable debate on whether RLVs for placing payloads into orbit can be designed to not require significant, costly refurbishment upon return from space - otherwise the benefit of reusability will be negligible," said Blades.
This fact highlights a submarket - the small payload launch - that could see significant interest as commercial competition increases. The small payload launch market will be coming into focus as several companies vie to place smaller satellites into orbit using fixed-wing aircraft as a base for launching payload carrying rockets.
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