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Ariane Chief Seems Frustrated With SpaceX For Driving Down Launch Costs (arstechnica.com)
schwit1 shares a report from Ars Technica: Like United Launch Alliance, the [France-based] Ariane Group faces pricing pressure from SpaceX, which offers launch prices as low as $62 million for its Falcon 9 rocket. It has specifically developed the Ariane 6 rocket to compete with the Falcon 9 booster. But there are a couple of problems with this. Despite efforts to cut costs, the two variants of the Ariane 6 will still cost at least 25 percent more than SpaceX's present-day prices. Moreover, the Ariane 6 will not fly until 2020 at the earliest, by which time Falcon 9 could offer significantly cheaper prices on used Falcon 9 boosters if it needed to. (The Ariane 6 rocket is entirely expendable). With this background in mind, the chief executive of Ariane Group, Alain Charmeau, gave an interview to the German publication Der Spiegel. The interview was published in German, but a credible translation can be found here. During the interview, Charmeau expressed frustration with SpaceX and attributed its success to subsidized launches for the U.S. government.
When pressed on the price pressure that SpaceX has introduced into the launch market, Charmeau's central argument is that this has only been possible because, "SpaceX is charging the U.S. government 100 million dollar per launch, but launches for European customers are much cheaper." Essentially, he says, launches for the U.S. military and NASA are subsidizing SpaceX's commercial launch business. However, the pay-for-service prices that SpaceX offers to the U.S. Department of Defense for spy satellites and cargo and crew launches for NASA are below those of what other launch companies charge. And while $100 million or more for a military launch is significantly higher than a $62 million commercial launch, government contracts come with extra restrictions, reviews, and requirements that drive up this price.
When pressed on the price pressure that SpaceX has introduced into the launch market, Charmeau's central argument is that this has only been possible because, "SpaceX is charging the U.S. government 100 million dollar per launch, but launches for European customers are much cheaper." Essentially, he says, launches for the U.S. military and NASA are subsidizing SpaceX's commercial launch business. However, the pay-for-service prices that SpaceX offers to the U.S. Department of Defense for spy satellites and cargo and crew launches for NASA are below those of what other launch companies charge. And while $100 million or more for a military launch is significantly higher than a $62 million commercial launch, government contracts come with extra restrictions, reviews, and requirements that drive up this price.
I'm from Europe and I'm thoroughly embarrassed by this guy. Yes, SpaceX is subsidized by the US government, but his company is subsidized by European governments. And his claim that it's only the subsidies that drive the costs down is ludicrous. Sure, subsidies help with development costs, but it's not like SpaceX doesn't make a profit off of commercial launches.
I do agree that a monopoly by SpaceX would be bad (which btw. even Musk agrees with), but the cure for that is to be innovative yourself, not to cry about others.
The main difference I see here is that SpaceX is an actual company that can make decisions based on what the best for the company is, while Ariane is the typical state-originating pseudo-company where politics plays a way too direct influence.
SpaceX provided actual innovation in a field that was stagnant for a long time. The correct answer here is to be innovative yourself in different ways, not to whine about it. And who knows, maybe a different company will out-innovate SpaceX in the next couple of years. But from the looks of it that company isn't going to be Ariane.
Actually it would be such a case if this was about ULA who was being paid multiple times what spaceX was for the same thing. Ariane and the traditional companies like Boeing had a sweet sweet deal all these years, that's why they have trouble competing
One of the most significant differentiators is that when governments control the funing paths of industry they also control decision making in the industry.
SpaceX is independent and makes their own decisions. They just happen to have written a screw the feds contract that brings more money in.
NASA is a government run industrial institution. It's priorities are set by politicians. But in order to maintain funding other decisions are made to favor the politicians. For example where are the NASA jobs going to be located? The answer is a political one. Where are parts going to be developed, tested, assembled etc. All political answers.
The politically driven process is inherently more expensive. Simply because the most efficient and cheapest way to conduct business is usually not the chosen path.
With the Ariane 6 the proposal on the board is that Ariane plans to buy out the government stake in the company. Thus freeing it to directly compete on a level footing.
All credit to the government sponsored space programs over the decades. They created the seed tech and the science that is now being capitalized by the private industry.
waaaaaahhh!
Is this guy serious? Because ArianeSpace isn't subsidized out the wazoo by the EU? So because SpaceX got (far less) subsidies and managed to make better rockets with them, you're going to cry about it?
A simple message for you and your employees (if they aren't on strike right now): Adapt or die. Disruption has come to the launch market, and you can either get your costs down or not win contracts.
Slashdot still doesnâ(TM)t support Unicode after it was added to the HTML standard in 1997.
SpaceX is independent and makes their own decisions. They just happen to have written a screw the feds contract that brings more money in.
I wouldn't be so sure of that. I run a small manufacturing company and I've build products for government contracts. I also happen to be a certified accountant. The amount of administrative burden for a government job can in some cases easily double the cost. Particularly for military work. While I'm not privy to the inner workings of SpaceX, I could see a military launch easily adding many millions of dollars of administrative costs for legitimate reasons not controlled by SpaceX.
Now I know that a bunch of your are thinking that this is government inefficiency at work (and sometimes it is) but most of the time it is simply procedures put in place to ensure the government actually gets what they are paying for. These procedures are developed based on previous experiences. Private enterprise routinely tries to screw the government as hard as possible (and they often succeed) and government fights back by making extremely detailed requirements to ensure that doesn't happen or to at least minimize the problem. It's not an easy problem to solve especially when the number of qualified suppliers for a complicated product (like a rocket) are few.
It's only dumping if SpaceX is offering launches below the cost of the launch. If SpaceX is breaking even or worse, making a profit at $50M, it's not dumping.
SpaceX charges $62M for a commercial launch. The only reason they charge $100M for a government launch is because a government launch comes with a whole pile of conditions that SpaceX feels costs them an extra $38M to fulfill.
Presumably, at $50M, they're still making money, perhaps attracting a lot of commercial interests. It's more of an "introductory rate" to EU customers. The problem is Ariane can't compete - they don't have a rocket capable of such cheap costs, and the one in development costs 25% more. Even at $62M for "regular rate" it's still too cheap. (Even the governmental rate is cheaper than ULA and others).