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| Uh-oh! It Seems the Ariane 6 Rocket Might Not Deliver Cost Savings for Europe |
A decade ago, the European Space Agency unveiled ambitious plans for the Ariane 6 rocket, intending to create a cost-effective competitor to SpaceX's Falcon 9. The goal was to have it operational by 2020, but significant delays have plagued its development, and it's now expected to launch no earlier than mid-2024. Furthermore, there are growing concerns that the Ariane 6 won't meet its initially targeted price reductions.
The cost of Ariane rockets has long been a mysterious subject, with the baseline Ariane 5 estimated at around 150 million euros. The original plan aimed to cut this cost in half, making it competitive with the Falcon 9, which starts at $67 million. However, this 50 percent cost reduction is no longer feasible. In June, Toni Tolker-Nielsen of the European Space Agency acknowledged that the Ariane 6's cost per launch would be around 40 percent less than the Ariane 5, falling short of the initial goal.
Adding to the uncertainty, Stéphane Israël, the CEO of Arianespace, recently indicated that costs are rising, which will likely impact launch prices. He cited inflation as a contributing factor, echoing the challenges faced by the broader economy.
In a new development, ArianeGroup, owned by Airbus and Safran, is reportedly seeking an increase in subsidies for the Ariane 6 rocket. The European Space Agency has been providing a 140 million euro annual subsidy since 2021 to make the Ariane 6 more competitive. However, the request for an increase to 350 million euros annually could negate any cost savings.
To better understand the situation, consider this scenario: assuming Arianespace achieves a cadence of six Ariane 6 launches annually by 2026, this would cost 540 million euros, still close to the Ariane 5's price. With the 350 million euro subsidy, the total expense becomes nearly the same. In essence, the Ariane 6 costs remain on par with its predecessor.
The picture may improve if they increase launch cadence, but the substantial development cost of approximately $4 billion for the Ariane 6 needs to be spread across launches. Should they reach 100 launches during its lifetime, the cost per mission would be $40 million.
When considering the European taxpayer's perspective for Project Kuiper satellite launches, let's assume a cadence of 10 Ariane 6 launches per year. One-tenth of the annual subsidy amounts to $35 million, while one-hundredth of the development cost is $40 million. Thus, European taxpayers would be subsidizing each launch for Jeff Bezos by roughly $75 million.
Given the high development costs and ongoing subsidies, questions arise about why Europe embarked on the Ariane 6 project in the first place. The dependable Ariane 5, if not retired, could have met market demand. Unfortunately, there's now a gap in Europe's satellite launching capabilities until the Ariane 6 becomes operational.
Moreover, during the decade spent developing the Ariane 6, Europe missed out on the trend of reusing rocket first stages that SpaceX has championed, which could have provided cost savings and operational advantages. The European Space Agency now lags behind and is only starting basic technology demonstrations instead of delivering a true Falcon 9 competitor.
Andrew Parsonson, who authors the Europe in Space newsletter, suggests that the billions in subsidies to ArianeGroup could be better allocated to innovative commercial companies in Europe, such as Isar Aerospace, Rocket Factory Augsburg, and Latitude, which are working on more cutting-edge launch systems. In hindsight, it appears the Ariane 6 project may have missed the mark and overlooked valuable opportunities in the evolving space launch industry.
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