Is SpaceX Undercutting the Competition Even More Than Anyone Thought?

By David Z. Morris

New Air Force budget estimates suggests that Elon Musk’s Space Explorations Technologies Corp.—better known as SpaceX—may be realigning the market for trips to space even more dramatically than previously believed.
According to analysis by Ars Technica, the figures suggest that competing launch provider United Launch Alliance continues to charge several times more than SpaceX on average, despite ULA’s efforts to lower costs. The document shows an estimated 2020 cost of $422 million per launch if the Air Force selected United Launch Alliance to conduct them. That combines costs for launches using ULA’s large Delta rocket as well as its smaller, less expensive Atlas V rocket.
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By contrast, SpaceX has been awarded two Air Force contracts at far lower per-launch costs of $83 million and $96.5 million. At the time they were awarded, those contracts were estimated to undercut ULA prices by around 40%. The new budget estimates suggest the gap could be even larger.
United Launch Alliance is a joint venture of Lockheed Martin and Boeing.
It's worth noting that the stated costs are for the launch of Global Positioning System satellites rather than the more sensitive spy satellites that the Air Force launches in significant numbers. ULA’s reputation for reliability may help justify a large part of the markup for those missions.
SpaceX launched its first spy satellite, for the National Reconnaissance Office, in May. The terms of that contract were not disclosed. SpaceX will also launch an Air Force space plane later this summer as part of another contract poached from ULA.
United Launch Alliance CEO Tory Bruno took to Twitter on Friday to call Ars Technica’s analysis “misleading” and its data “cherry picked.” Bruno cited 2013 ULA graphics showing all-inclusive government launch costs of $164 million for the Atlas V and $400 million for the Delta Heavy, spread over 78 launches.
SpaceX has not yet launched the Falcon Heavy, its answer to ULA's Delta Heavy, but it has promised launch prices barely higher than those for the Falcon 9. The first Falcon Heavy is expected to launch this year.
ULA, under pressure from SpaceX, has continued to push its prices down, announcing this April that it would dropping the cost of Atlas V launches by a third, putting it very close to the cost of a SpaceX Falcon 9 launch. ULA also said it would eliminate nearly a quarter of its workforce by the end of this year as part of cost-cutting.
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