ORAL PRESENTATION
BY
PATRICIA GRACE SMITH
ASSOCIATE ADMINISTRATOR FOR
COMMERCIAL SPACE TRANSPORTATION
U.S. FEDERAL AVIATION ADMINISTRATION
AT THE
INTERNATIONAL SPACE UNIVERSITY
CONFERENCE
"THE SPACE TRANSPORTATION MARKET:
EVOLUTION OR REVOLUTION"
STRASBOURG, FRANCE
MAY 24 - 26, 2000

Good morning, ladies and gentlemen. I am extremely pleased to be here at the International Space University and to chair this panel on the future market for space transportation. My thanks to Dr. Karl Doetsch, ISU President, Dr. Yoshinori Fujimori, Program Committee Chair, and special thanks to Lindsay Chestnutt for her many helpful faxes and e-mails as I prepared for this very important event.

In the way of background, I head the office in the U.S. Government's Federal Aviation Administration, in fact the only office in our government responsible for licensing, regulating, facilitating and promoting the U.S. commercial space transportation industry. We are responsible for ensuring the safety of launches conducted by our citizens anywhere in the world or if a U.S. citizen controls a foreign launch operator where there is no regulatory regime in place. Hence our licensing of the Sea Launch operations from a platform in the mid-Pacific Ocean in which the lead international partner is the Boeing Company of the U.S.

Our primary focus is safety, making sure that all launches under our jurisdiction are carried out with minimal safety risk to uninvolved persons and property. Our licensing authority also applies to reentry activities, that is - the future reentry of reentry or reusable launch vehicles. Historically, U.S. launches have taken place from four federal launch sites: Cape Canaveral, Florida; Vandenberg Air Force Base, California; Wallops Flight Facility, Virginia, and, White Sands Missile Range, New Mexico. We also license and regulate operation of non-federal launch sites, such as the California Spaceport Authority, Florida Spaceport Authority, the Alaska Aerospace Development Corporation and the Virginia Commercial Spaceport Authority.

I am proud to say that in the 11 years and 126 commercial launches during which this office has been responsible for performing this safety role, there has not been a single incident of death or injury, nor significant property damage resulting from activities carried out under our licenses.

Back home, my office is referred to as AST in the shorthand of the Federal Aviation Administration, or FAA. I shall refer to it by that designation.

That bit of housekeeping out of the way, let me get to the subject I have been asked to address here: Commercial space transportation: Recent Trends and Projection for 2000-2010.

My office develops annual reports on trends and projections in commercial space transportation relating to both low Earth orbit (LEO) and geostationary Earth orbit worldwide. This report is developed in partnership with the Commercial Space Transportation Advisory Committee, known as COMSTAC, a group of top level leaders of our space launch providers, their customers, and related industries and organizations, appointed by the Secretary of the U.S. Department of Transportation. This organization meets periodically to advise the Secretary, and through him our President and members of his Administration on issues and policies related to the industry. Dr. John Logsdon of your ISU board serves as a member of COMSTAC.

Since the latest rendition of this report, containing the trends and projections for 2000 through 2010, is due to be released next week, I have been asked by the organizers of this conference to present a preliminary view of its contents. This information is also covered more fully in a paper I have submitted for publication in connection with this gathering.

Over the past 10 years, the number of commercial space launches worldwide has tripled from an average of 12 launches a year between 1990 and 1994, to between 36 and 37 commercial launches in each of the past three years. This dramatic growth is the result of the increasing demand for geosynchronous communications satellites and the emergence of non-geosynchronous (NGSO), or low Earth orbit communications constellations. Several such systems - Iridium, Globalstar and Orbcomm - were deployed between 1997 and 1999, opening an entire new market for commercial launches.

While there were 18 launches to GSO in 1999, there were also 18 launches to NGSO to deploy global satellite communications systems, remote sensing and developmental spacecraft.

Annual commercial launch revenues have grown by two thirds over the period from 1995 to 1999; 1995 revenues were about $1.3 billion U.S. dollars compared to $2.2 billion U.S. dollars in 1998, but are still lower than the high of $2.4 billion in 1997, due to the increase in the proportion of lower-cost NGSO launches.

The rise in commercial launch activity has steadily eroded the domination of space by government activities, with commercial launch activities, defined as launches that are commercially competed in the international launch market, now representing over 40 percent of worldwide launches conducted per year. As a proportion of total world launches, the number of commercial launches continues to grow relative to government-sponsored launches. Commercial launches were 23 percent of the total in 1995, 44 percent in 1998 and 46 percent in 1999. In the U.S. market, commercial launches actually outnumbered government launches in several recent years, and the government is increasingly turning to licensed commercial launches to meet its needs.

This change in relative shares of the market represents not only growth in commercial activity, but a decline in government launches. Since the end of the Cold War, worldwide government launches have fallen by more than 50 percent, from 106 in 1990 to 43 in 1999, the lowest number since 1960.

Over the past five years the industry has been diversifying. One of the most significant developments is the commercial marketing of the Russian Proton and Soyuz launch vehicles and the emergence of the international Sea Launch venture, each the result of partnerships between former Soviet launch vehicle manufacturers and Western partners.

At the same time, longtime commercial launch providers Arianespace, Boeing and Lockheed Martin have introduced, or are introducing, new vehicles designed to be both more capable and less costly. The Ariane 5 heavy-lift vehicle is already in commercial service, and Boeing's Delta 3 and Lockheed Martin's Atlas 3, scheduled to launch the Eutelsat satellite tonight from Cape Canaveral, have entered commercial service in the U.S., to be followed in a few years by the even more advanced Delta 4 and Atlas 5 vehicles.

As the number of commercial launches have increased over recent years, my office has been issuing forecasts of future launch activity. For example, in 1999 the FAA projected that an average of 51 commercial launches would be conducted each year through 2010 - an increase of 42 percent over current levels. This dramatic growth was projected in large part on the basis of the large number of proposals to deploy multi-satellite NGSO communications constellations.

Since mid-1999, however, a number of developments in the satellite communications market have led to a re-examination of those more optimistic forecasts. The most significant was the bankruptcy of Iridium, the pioneering low Earth orbit mobile telephone service constellation. After 20 launches deployed 88 spacecraft costing over $5 billion U.S. dollars, Iridium failed to attract enough subscribers to support continued operation and was forced to declare bankruptcy. A similar filing by ICO Global Communications before it even launched a satellite further chilled the market. As a result, many of the proposed non-geostationary constellations slated to be launched in coming years are now facing increased skepticism from the financial community and may not be launched.

In the face of these developments, my office and the COMSTAC reevaluated our projections of last year when we developed the 2000 Commercial Space Transportation Forecasts. In the report to be published next week, the preliminary numbers predict an average of 41 commercial space launches worldwide will occur annually through 2010. This is an increase of just over 14 percent from the 36 commercial launches conducted in 1999, down 20 percent from our prediction last year.

What we have determined is that the NGSO market will not decline, on average over the next 10 years. In fact, the out years appear slightly higher than current launch levels, but below the level of growth forecast last year.

Specifically, the forecasts project that on average the number and type of launches each year will include:

  • 23 launches of medium-to-heavy vehicles to GSO
  • Seven or eight launches of medium-to-heavy vehicles to LEO or NGSO
  • 10 or eleven launches of small launch vehicles to LEO.

A disappointing reduction from our previous optimistic projection, but still, positive growth in an industry for which we are still very optimistic.

If I may paraphrase a renowned American writer, Mark Twain, "Statements concerning the death of the LEO market are premature." There remain many opportunities for the launch market to satisfy the future demand for NGSO satellites and we expect that over the next 10 years additional uses for NGSO activities will arise along with the development of reusable launch vehicles which, once they have demonstrated their reliability and safety, will increase launch rates over the following decade.