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SpaceX to brief underwriters on the road to Falcon 9 reusability

SpaceX landed rocket

SINGAPORE – Launch-service provider SpaceX on May 30 said it would meet with insurance underwriters in the coming weeks to discuss the company’s plans to certify used rocket stages as fit for reflight, a long-held SpaceX ambition as a way to reduce launch costs.

SpaceX has said it hoped that recovery, refurbishment and re-qualification of previously Falcon 9 Full Thrust rocket first stages could reduce SpaceX’s already low launch costs by around 30 percent.

Addressing the CASBAA Satellite Industry Forum here, SpaceX Commercial Sales Vice President Jonathan Hofeller cautioned that any price reductions from the reuse of rocket first stages would not be known until the company has a better handle on what refurbishment costs will be.

Asked if SpaceX would be giving discounts to customers agreeing to fly with reused first stages, Hoffeler said:

“I think in the long term we will be. In the short term we have to establish what it is going to take to refurbish. People have been very public about what the discounts may be in the future. But we need to get to a cadence of reflight in order to reach those objectives.”

Satellite fleet operator SES of Luxembourg, which has been SpaceX’s biggest commercial supporter, has publicly said it would like to be the first to launch a satellite with a reused stage but would like a 50 percent price cut in return.

SpaceX Gwynne Shotwell has said the company could reduce total launch costs by about 30 percent with a reused first stage.

SpaceX has recovered four first stages from recent flights, including one from a launch to low Earth orbit that put less stress on the returning first stage than do missions taking commercial telecommunications satellites to geostationary transfer orbit.

SpaceX Chief Executive and Chief Designer Elon Musk has said a first reuse could occur as early as this summer.

Hofeller did not name SES or any other customer but said “a couple of different folks… actually want to be first” to launch with a refurbished stage. He said the inaugural mission likely would be with a commercial customer. “We are targeting to do that — say by the end of the year,” he said.

Meeting with insurance underwriters is a necessary step in preparing the market for reusability. Most commercial satellite fleet operators insure their launches in policies that also include the satellites’ first year in orbit. After that, lower-cost policies are available to cover each successive year in orbit.

“We are meeting with the insurance companies in the next couple of weeks to go through and make sure they understand our process for certifying these and getting them ready for flight,” Hoffeler said. “Ultimately we think reusability will only add to our production capacity right now. It is not a baseline but it will improve capacity and therefore drive down costs.”

SpaceX’s pitch to underwriters comes at a time of historic softness in the satellite insurance business. Launch insurance premiums have fallen steadily, to less than 6 percent now for both the Falcon 9 and Europe’s Ariane 5 rocket.

One insurer said the buyer’s market in insurance has led to a situation where the Falcon 9 Full Thrust vehicle, which made its first flight only last March, is now afforded about the same premium rates as Europe’s Ariane 5, whose design has not changed in the 16 years since the vehicle’s last failure.

This insurance official said that given the market’s current softness, underwriters have overlooked the fact that they are not always sure what modifications have been made to the Falcon 9 they are insuring.

“Insurers are more than willing to underwrite Falcon 9 launch policies,” this official said. “But we would like to know exactly what we are insuring. They have move rather quickly through design modifications for the rocket and it’s not always clear what new elements have been introduced.”

The chief commercial competitor to Evry, France-based Arianespace launch provider and SpaceX is Reston, Virginia-based International Launch Services (ILS), which markets Russia’s Proton rocket.

ILS Sales Vice President Tom Carroll said here that ILS and Proton builder Khrunichev Space Center of Moscow are focused on returning the vehicle to the market’s good graces after a string of failures, with the goal of reducing the insurance premium price difference.

ILS officials have said they have been able to reduce the insurance-cost effect by lowering their overall launch prices.

For SpaceX, the most immediate goal is increasing its launch cadence and rocket production rate, both of which will help bring down launch costs.

“With our four launch pads [in Florida, Texas and California] we are going to have a huge amount of capacity to launch,” Hofeller said. “We are ramping up production. For new vehicles we are trying for a rate of 40 cores per year, which translates to more than one engine per day. That is the target. There are lots of efficiencies in doing that much production, so that will result in lower cost.

“The next step after production is operations. We have multiple launch vehicle and spacecraft processing bays for lots of flexibility in what we do. Flexibility allows us to save costs and be more nimble on the launch pad. We are doing a lot of automation for rollout and going vertical in one hour. That will translate into cost savings as well.”

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SpaceX to brief underwriters on the road to Falcon 9 reusability

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