Satellite Launch Vehicle Market

The global satellite launch vehicle market is growing at a rapid rate due to increasing defense expenditure & frequent launches of military satellites. Significant investments by venture capital firms in the space industry are also driving the growth of the market. However, the high cost of development and launch is expected to hamper the growth of the market during the forecast period.

Globally, military spending has increased significantly in recent years. According to the Stockholm International Peace Research Institute (SIPRI), global military expenditure rose by 1.1% to approximately USD 1.74 trillion from 2016 to 2017. During the same period, China, Saudi Arabia, and India increased military spending by 5.6%, 9.2%, and 5.5%, respectively.

Furthermore, India overtook the UK to become the fifth-largest defense spender in the world. Although there was a slight decline in the US defense spending during the same period. It is estimated that the US will spend significantly more on its military for the next two years, with a focus on the modernization of defense systems. Other countries have also announced plans to invest in advanced technologies and are focusing on expanding, modernizing, and enhancing the operational capabilities of their armed forces.

Factors such as ongoing conflicts in the Middle East & Africa, long-standing tensions, territorial disputes between countries in Asia-Pacific, and a focus on counterterrorism activities are pushing governments to strengthen their defense capabilities. Moreover, the nature of warfare has changed significantly over the past decade. It is transforming from being a weapon centric to technology-centric. Thus, a rise in military spending directly boosts the demand for advanced defense systems, which covers everything from aircraft and weapons to satellites.

Currently, military forces and defense organizations around the world are using satellites. Satellites can carry payloads, offering voice or data communication and optical imagery. These features offer several benefits in communication, intelligence, surveillance, and reconnaissance. Moreover, the launch of these satellites is increasing from the last few years. In 2019, the Indian Space Research Organization (ISRO) launched five military satellites to enhance surveillance capabilities of security forces. Likewise, in the same year, the US Air Force launched its 10th military communication satellite.

Therefore, the increase in defense expenditure and frequent launches of satellites for military application are consequently driving the growth of the satellite launch vehicle market.

The requirement of high cost in the development and launch of the satellite is the major deterrent in space exploration and space utilization. A reusable launch vehicle can be a better solution to reduce the cost of development and launch of the satellite. A reusable launch system is a space launch system that includes the recovery of some or all stages of satellites. To date, several fully reusable sub-orbital systems and partially reusable orbital systems have been flown.

The first reusable launch vehicle was the Space Shuttle, which was not able to accomplish the intended goal of reducing launch costs than that of expendable launch systems. For instance, SpaceX achieved a successful landing and recovery of a reusable orbital-class launch system of Falcon 9 rocket. Currently, SpaceX is developing Starship, a fully reusable two-stage vehicle, intended to support missions to the Moon and Mars.

Therefore, with the development of a reusable launch vehicle, the cost of satellite launching can be reduced; this would provide significant growth opportunities to major players operating in the market.

Some of the factors that drive the cost of satellites are the equipment and materials used to build them. A typical weather satellite costs around USD 290 million for its development. Likewise, a spy satellite might cost an additional USD 100 million. Among other components, transponders alone require thousands of dollars a year for maintenance, while bandwidth cost per MHz is priced at around USD 5,000 a month. Running a satellite at a 36MHz bandwidth will cost over USD 1.5 million per year. There are also other gadgets and equipment that have to be built into the satellite to perform its intended function. These can include computers, computer software, and cameras.

Another factor that contributes to the expense associated with satellites is the cost of putting one into the orbit. It is estimated that a single satellite launch can range from about USD 10 million to about USD 400 million. Launching a space shuttle mission can easily cost USD 500 million, although one mission is capable of carrying multiple satellites and send them into the orbit.

Also, to be considered in the cost of satellites is its maintenance. After getting one into the orbit, it has to be monitored from a ground facility, which requires manpower. Satellites are also not impervious to damage or downtimes. Furthermore, if things do not go too well during launch, a multi-million endeavor can either end up in pieces or sustain damages that will cost more money to repair. Therefore, the high cost of development and launch of satellites is expected to hinder the growth of the market.