Russia-Ukraine War Bringing Opportunities, Bottlenecks to Commercial Space
Russia's Ukraine invasion is creating potential business opportunities, and also possible bottlenecks, for the commercial space industry, per a Washington Space Business Roundtable panel talk Wednesday. Quilty Analytics founder Chris Quilty said a recent dip in investor funding for commercial space could just be a blip, depending on the performance of the market overall and of a wave of space companies recently going public.
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Virgin Orbit Chief Strategy Officer Jim Simpson said the company is seeing heightened interest in its launch capabilities due to the invasion. Rocket Lab is similarly getting more inquiries from satellite customers looking for another U.S. launcher to help cover U.S. launch demand, said Stephen Ananias, vice president-finance.
Demand for launch services is strong, and potentially a dozen new launch vehicles are entering the Western market this year, but spaceport access could be a problem, Quilty said. A quarter of all launches in the past decade were out of Russia, but there almost surely won't be Western payloads there anytime soon, he said. However, the nine years it took SpaceX to get all the necessary launch licenses and environmental clearances it needed for its Brownsville, Texas, facility, points to a bottleneck problem in launch locations, he said. About 77 nations have space agencies, but only 10 have the ability to launch, Simpson said. He said there have always been proposed launch vehicles that never end up coming to market.
Launch access could be a big determiner of whether various proposed broadband mega constellations are sustainable businesses, Quilty said. Given the numbers of satellites involved and their relatively short lifespan, "you never stop launching," he said. He said small satellites were largely a niche market a decade ago, used for science and tech demonstrations, in part "because you couldn't get the damn things launched" due to a launch market focused on geostationary orbit (GEO) satellites. Smaller cancellations for such applications as IoT and earth observation will still need a constant cadence of replenishment flights, he said.
Space insurance premiums were expected to hit $600 million this year, but sanctions mean insurers -- which are mostly in the U.S. and Western Europe -- can't insure Russian risk, said Mark Quinn, CEO of Willis Towers' Global Inspace. That could cut the premium income by 10%-20% this year, putting the space insurance business itself close to the tipping point of being unprofitable. He said the conflict also is disrupting the supply chains of commercial space operators, as a number of satellite manufacturers and launch providers use some Russian components. He said the massive Ukrainian-made Antonov cargo planes, often used to ferry satellites to launch sites, have either been destroyed or are being used in the war effort, and that could mean delaying launches into next year.
Those hurdles could also be business opportunities for non-Russian suppliers, Quinn said, citing Arianespace's Ariane 4 rocket gaining market share after 1986's Challenger explosion left U.S. operators without the space shuttle as a heavy-lift vehicle for GEOs.
Investors in the slew of 2021 space special purpose acquisition company (SPAC) deals (see 2109220053) might not be particularly happy with stock performance, but funding availability for commercial space compared with a decade ago remains "night and day," Quilty said. Since 2015, dozens of space companies have come to market and investment tops $1.5 billion a year even when not counting SpaceX and OneWeb spending, he said. He said the SPAC deals provided good returns for early investors in those companies who were then able to cash out via the companies going public, which should help ensure commercial space attracts funding. He said space SPAC performance hasn't been notably different from SPACs in other industries.