As SpaceX has accumulated mission successes, launch insurance rates have fallen. Insurers rate both the risk of launch-vehicle failure as well as the chances that a satellite will fail and combine the two to get a coverage rate.
Now that SpaceX has made rocket landings somewhat routine, the next step is to prepare the recovered rockets for reuse to launch commercial satellites. Some of the technical hurdles it must clear also have financial implications.
In the next two weeks, the Hawthorne, Calif., space company will brief domestic and international insurance underwriters on its progress. As part of that regular annual review, they will discuss upgrades to the company’s Falcon 9 rockets, as well as its plans to reuse them.
SpaceX will need to determine how many launches it can get out of each reusable rocket as well as the costs of refurbishing them, said Michael Blades, senior industry analyst for aerospace and defense at consulting firm Frost & Sullivan.
Insurers have already given Falcon 9 a “tremendous amount of support” because the rocket has proved reliable so far, said Jeffrey Poliseno, chief executive of Aon International Space Brokers.
Most Read Business Stories
- Another record-breaking spike in home prices: See how Seattle compares to the rest of the U.S.
- Vacation hot spot Chelan County limits short-term rentals
- First came the ransomware attacks, now come the lawsuits
- No crabs, no scallops: Seafood is vanishing from menus in U.S.
- Safeco Plaza in downtown Seattle to sell for $465 million
“It’s a matter of keeping the market educated on what’s going on,” said Poliseno, who will be attending the meetings with insurers. “Generally when you do that and demonstrate something works, they’ll be very supportive.”
Chief Executive Elon Musk has said SpaceX expects to get to a point where there is little work to be done between reuses other than refilling the propellant tanks. But the company is putting its first landed boosters through rigorous tests to determine each rocket’s condition after re-entry.
The company lists its starting price for the Falcon 9 rocket at $62 million. The average price of a launch with United Launch Alliance, a joint venture of Boeing and Lockheed Martin that competes with SpaceX for national security satellite launch contracts, is $225 million.
SpaceX executives say prices could go down even further if the company is able to make good on its plans to offer reusable rockets for launch.
Competitors have speculated that SpaceX launches either at cost or at very small profit margins to drive business. Those financial details are not publicly available because SpaceX is a private company.
But even a cost savings of 10 to 20 percent, along with a track record of reliability for its reusable rockets, could help the company gain more market share, said Blades, of Frost & Sullivan.
SpaceX said a number of customers have expressed interest in launching their payloads on a reusable rocket. One of the most vocal is SES, a satellite operator in Luxembourg that launched one of its satellites aboard a Falcon 9 three months ago and has a contract with SpaceX to launch six more.