What SpaceX’s launch failure means for the private space industry

January 15, 2016 – 11:59 pm

The faulty strut that failed mid-flight and doomed SpaceX’s June 28 mission to resupply the International Space Station could end up costing SpaceX “hundreds of millions” in lost revenues. Meanwhile, the company’s Falcon 9 rockets will remain grounded pending the definitive results of an investigation into what caused the crash, founder Elon Musk said in a conference call with reporters Monday.

Whatever problems SpaceX faces in the months ahead, they pale in comparison to what other companies —including one of SpaceX’s key competitors—in the commercial space industry are dealing with. While SpaceX engineers work on fixing company design flaws, others in the industry—particularly Boeing-Lockheed Martin joint venture United Launch Alliance—are racing to overcome problems within their own companies.

Their inability to do so quickly has put something of a squeeze on the entire commercial space industry as satellite operators are forced to choose from a limited number of launch providers and launch vehicles. And, while the grounding of SpaceX’s rockets might seem like a rare opportunity for the company’s competitors to steal a bit of its market share—if not its thunder—no other company in the industry is well-positioned to do so.

United Launch Alliance, or ULA, remains SpaceX’s biggest competition in the U.S. and formerly the U.S. military’s only certified launch provider for sensitive (and lucrative) national security-related payloads. Rising launch costs and dwindling space and defense budgets have put pressure on ULA’s leadership to trim costs and streamline their operations in recent years, all while SpaceX significantly undercut ULA’s Atlas V and Delta IV rockets on price.

All that, coupled with ongoing political controversy surrounding ULA’s dependence on Russian rocket engines, have triggered both a leadership shuffle and a strategic realignment within the company as it attempts to restructure itself. Though Boeing and Lockheed Martin shared half a billion in profits generated by ULA last year, the companies have increased pressure on ULA to boost its competitiveness with SpaceX, all while tightening the purse strings. “They’ve had us on a very short leash, ” ULA CEO Tory Bruno told the Wall Street Journal recently.


Source: fortune.com

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