Part 1: Q&A with Arianespace CEO Jean-Yves Le Gall
BY STEPHEN CLARK
Posted: March 22, 2012
Spaceflight Now recently sat down for lunch with Arianespace chairman and CEO Jean-Yves Le Gall, who offered his views on Arianespace's position in the commercial launch market, pricing trends, and the future of the Ariane rocket family.
Based in Evry, a suburb of Paris, the company is jointly held by the French space agency CNES, Ariane rocket-builder EADS Astrium, and other shareholders from 10 European nations.
Despite a strong record of success, which include an ongoing streak of 46 consecutive flawless Ariane 5 missions since 2002, Arianespace is experiencing the effects of a global economic crisis, an ever-changing commercial launch market, and European government decisions on the future of the continent's rocket industry.
Le Gall says he sees a shift of commercial business from the United States and Europe toward the Middle East and the Asia-Pacific, which now account for half of Arianespace's business.
Spaceflight Now and other media outlets visited with Le Gall in Washington last week. Here is the transcript from the meeting over lunch.
Le Gall: Last year, we had two Soyuz launches from French Guiana on the 21st of October and the 16th of December, and those two flights were perfect. In particular, the one on the 16th of December, we lofted six satellites. We introduced Vega as well. We had the first launch on the 13th of February, which was also perfect. Now we have three launchers, which is why we say we have the power of three.
This year, beyond the first Vega flight, we plan to have six or seven Ariane 5 launches, depending on the availability of satellites this year, five Soyuz launches, three from French Guiana and two from Baikonur, because we have many Soyuz launches, and we can only do a certain number from French Guiana. So we have the next Soyuz flight on the 23rd of May to launch MetOp B, which is an Earth observation satellite for meteorology from Baikonur.
During this conference, we have announced two new contracts. One will be for the launch of Eutelsat 25B, which is a joint venture between Eutelsat and Qatar. And we are going to sign a new contract for Jabiru 1 from NewSat, which is an Australian satellite. Since the beginning of the year, we signed a huge contract with the European Commission to launch 12 more Galileo satellites, and for one Ariane 5 firm with four satellites. Today, there are 24 satellites for Galileo which are under construction, and we will launch 12 of them with six Soyuz from French Guiana - two on each Soyuz. And we will launch an Ariane 5 with four satellites.
Since the beginning of the year, we have signed three GTO contracts. The first one is for an undisclosed government customer. They want to wait for a couple of weeks before announcing it. And two others.
Le Gall: What we see is some difficulties with our competitors. As for SpaceX, we will see what they do this year, but last year we expected a launch which never came. With Proton, there are a number of issues. Last year, they had a failure, and within the past six years, they have had a total of five failures. This year, I understand that some launches are delayed. Sea Launch is exiting from Chapter 11, but what they announced recently are not new contracts. These are contracts which are already on their order book, and in fact, which are announced now. We are almost the only ones to launch new contracts with new satellites. And we think this year the market will be quite robust because we see many projects in Asia - the area going from Arabian Gulf to California over Asia and the Pacific.
I was in Dubai two weeks ago, and there are many projects for companies like AsiaSat, Arabsat, Al Yah. There are also plenty of projects for small satellites for Earth observation. There are projects in almost every country in Asia. In Australia, last year we signed a contract with Optus. Now, we are announcing Jabiru. As you know, NBN has ordered two big satellites from Space Systems/Loral. We are going to launch in mid-May Vinasat 2, which is a second satellite for Vietnam. When we launched the first one three years ago, the second one was supposed to arrive six years later. It is now ready, and they have two other satellites in the project. In many countries in Asia, there is a huge growth and a real need for space communications because they don't have terrestrial networks. This is where the growth is.
Question: We have weakening economic conditions in Asia, as well as a potential recession in Europe, and economic weakness in the United States, and perhaps other regions, too. Have you seen any fallout yet from those economic problems in your business?
Le Gall: What we see is that, in fact, there is a move of our market. Ten years ago, when I joined the company, it was about 40 percent in the U.S., 40 percent in Europe, and 20 percent in Asia. Five years ago, it was one-third in each area. And now, we are moving to a situation where we have 25 percent in the Americas, 25 percent in Europe, and half of our activity in Asia.
Question: 25 percent in the U.S., 25 percent in Europe, and 50 percent in Asia?
Le Gall: Yes, 50 percent. Let's say that is an area from the Persian Gulf to Asia.
Question: You're including the Gulf states and the Middle East?
Le Gall: Yes. There is huge growth in those countries.
Question: There are a number of people talking about growth in Latin America and some in sub-Saharan Africa. I'm wondering what you see in that and what it means for your company?
Le Gall: In Africa, we are supporting their development. We launched New Dawn last year for South Africa. It's a joint venture between Intelsat and a local company, Convergence Partners, in South Africa. We are going to launch the O3b constellation. O3b stands for the three billion people who are not connected today, and so we are going to launch 12 satellites with three Soyuz from French Guiana. In the past, we launched two Rascom satellites and there are projects in Egypt, Nilesat, Arabsat. There are projects to cover Africa. In South America, we also have a good market share there. We launched all the satellites for Star One. We are going to launch Amazonas 3 at the end of this year for Hispasat. These are also areas with strong growth.
Question: Launch prices over the last decade have been relatively stable, accounting for inflation. What trend do you see pricing for launch services over the next decade?
Le Gall: I think everybody knows the situation. The prices with Ariane are quite stable, as is our quality. I think, for our competitors, pricing is increasing as quality is decreasing. The Proton prices are increasing in an incredible way. Six or seven years ago, a Proton launch was under $50 million. Today, it's over $110 million.
Our prices are quite stable. We have a business model which is very specific in conjunction with the European governments. I think our customers accept this business model. Of course, they may have an interest in new commerce explaining to them that they will launch for half the price. But we don't see these launches. You can't compare apples with carrots because we launch every year - five, six or seven Ariane 5s. When a customer signs a contract with us, he knows that he will be launched right on time. When a customer signs a contract with another company, particularly new companies you all know pretty well, today they don't see launches. Let us wait. Three years from now, the situation will be different. But today, on our side, you see contracts and deliveries. On the other side, you just see promises.
Question: You say three years from now things might be different. And it could be once Falcon 9 gets up and going. What do you see in the longer term, five or ten years from now?
Le Gall: We are continuing with Ariane 5. We have the strong support of European governments for both the exploitation of Ariane 5, and for some developments. In Europe, there are now some thoughts about what should be the follow-up to Ariane 5. Is there an upgraded version of Ariane 5 or a new launch vehicle? What is very positive, in my mind, is that there is a commitment of European governments to continue to support the European launch industry.
Question: People have been talking about a new upper stage for Vega, a new fourth stage, a German-built fourth stage to replace the Ukrainian engine.
Le Gall: It has been announced the day of the launch of Vega. Today, you have Vega with three lower stages which are solid propellant boosters made, for the P80 first stage in French Guiana, and the two other Zefiro motors are made in Italy. And the upper stage uses an engine made in Ukraine and tanks made in Russia. The thought is to Europeanize this upper stage, so to develop an upper stage made in Europe, specifically Germany. It has been announced on the evening of the first launch of Vega that people are going to work on this issue. Of course, it will take time. Let's say for the next five years, we will continue to fly Vega with the Ukrainian engine and the Russian upper stage. But for the mid-term, I think the upper stage of Vega will be probably made in Europe.
Question: Can you elaborate on the timeline and the desired performance?
Le Gall: We'll see. Vega today fits the market needs. Moving the upper stage from Ukrainian-made to European-made is not to have any performance reduction in Vega. We can meet the market needs with the Ukraine-made upper stage, but if there is a move to make a German upper stage, we will commit.
Question: Are there any plans to move all commercial Soyuz launches to French Guiana?
Le Gall: We can sustain only three or four Soyuz launches in French Guiana a year. We see there is business for more than three or four launches, so we will continue to perform launches from Baikonur.
NEXT PAGE: Le Gall discusses Arianespace's market strategy, the arrival of SpaceX, and Ariane's next rocket