Mark your calendars, folks. On March 16, 2017, one era of space travel ended and another one began.
On that date at 2 a.m. EDT, reusable rocket pioneer SpaceX launched EchoStar Corporation's (NASDAQ:SATS) EchoStar XXIII communications satellite into high geostationary transfer orbit (GTO) in preparation for its final transition into a geosynchronous orbit (GEO). And in a development that would never have merited a headline as recently as 16 months ago, SpaceX did not then proceed to reland its rocket on a drone barge at sea.
One era ends
This happened because the Falcon 9 rocket that lifted EchoStar XXIII into GTO was not designed and equipped to reland. It was also the last rocket SpaceX has in inventory that's not designed for relanding. While it's theoretically possible that the company will build more such "expendable" rockets in the future, that's not the plan. Instead, this is the plan...
Another era begins
Ever since SpaceX landed its first Falcon 9R reusable rocket on a landing pad back on Earth in December 2015, the company has been working toward the goal of making all its rockets reusable. Its aim: to quit throwing away expensive rocket ships, drive the cost of space launch down to a few percentage points over the cost of launch fuel, and thereby cut the cost of space travel by 75%, or more.
In the course of doing so, the company could very well drive all of its competitors, including Airbus (NASDAQOTH:EADSY), Boeing (NYSE:BA) and Lockheed Martin (NYSE:LMT), completely out of the space business -- but that's just a side benefit. The real goal is to make space cheap enough for a whole lot of other companies that don't receive $1 billion in government subsidies to participate in the space economy.
Why the EchoStar XXIII Falcon may be SpaceX's last disposable rocket
If the aim is to land all rockets back on Earth, then why didn't SpaceX try to do this with the EchoStar XXIII's Falcon? The answer goes like this.
Even for SpaceX, a rocket's ability to reland depends on three things: the size of the payload, the distance it must travel, and the rocket's capacity to carry enough fuel to both lift the payload to the desired orbit and then lower itself back down safely to Earth. These three constraints conspired to make EchoStar XXIII's rocket un-relandable. Simply put, (a) the satellite was too big, (b) the GTO orbit was too high, and (c) the Falcon 9 rocket's fuel tanks were too small to carry enough fuel to both put the satellite in orbit and then power the rocket's descent back to Earth.
But that's not a problem SpaceX expects to encounter in the future. The reason, as SpaceX CEO Elon Musk explained on Twitter back in January, is that going forward, SpaceX will use either an upgraded Falcon 9 with more fuel capacity (for smaller payloads), or the company's new Falcon Heavy lift vehicle. The latter was designed from the ground up to lift very heavy payloads into space and still have enough fuel left to land Falcon Heavy's three first-stage boosters back on Earth.
It will no longer need to build disposable rockets.
"They were expendable"
It's hard to overemphasize how significant this development will be -- even to the extent of changing the language we use to describe spaceflight. Historically, all rockets going to space have been basically one-shot deals. You build a rocket, you launch it, you build another rocket. Going forward though, space writers and space investors will have to distinguish between rockets that are launched with the intention of relanding them (SpaceX reusable rockets), and everything else -- because no one else in all of spaceflight has a working rocket capable of delivering payloads to orbit and then landing back on Earth (although Blue Origin is working on it).
In the future, when you talk about reusable rockets, you'll be talking about SpaceX -- out of necessity. Everyone else's rockets -- what we used to just simply call "rockets" -- will be relegated to a class that's expendable, disposable, and somehow "less than" SpaceX's Falcons.
What it means to investors
But these other rockets will also be "more than" -- in that they'll cost more than SpaceX's rockets. Already, SpaceX's rockets are cheaper than anything else on the market -- with the possible exception of India's PSLV. And with SpaceX promising price cuts of as much as 30% for customers riding reused rockets, the spread between SpaceX's launch costs and everyone else's is only going to grow.
Granted, the jury's still out on whether SpaceX will be able to earn a profit at the low, low prices it's charging, and at the even lower prices it intends to charge. What is certain, though, is that by underpricing the competition and igniting a price war, SpaceX is making it harder than ever for companies like Boeing, Lockheed, and Airbus to earn profits of their own from space operations.
Investors in these other stocks should take heed. Unless Boeing, Lockheed, and Airbus figure out a way to compete with SpaceX on price -- and soon -- they may find themselves unable to compete with the new leader in reusable rockets.