Bowman: Open the pod bay doors, HAL.
HAL 9000: I'm sorry, Dave. I'm afraid I can't do that.
-- 2001: A Space Odyssey
Like astronaut Dave Bowman on Discovery One, space logistics company Spaceflight Inc. found itself on the wrong side of the airlock last month -- and without an option to get back in. Spaceflight's problem wasn't a homicidal computer, though. Instead, Spaceflight found itself pitted against space industry behemoth SpaceX, and its stranglehold on the market for small satellite launches.
Image source: Getty Images.
A crisis years in the making
I hate to say "I told you so," but I really did predict this would happen -- three years ago, in fact.
For those not familiar with the company, Spaceflight Inc. began as a subsidiary of Spaceflight Industries, and soon began to build itself a business reselling "extra" payload capacity aboard other companies' rockets. When a customer hired SpaceX, for example, to launch a satellite that wasn't quite big enough to fill up a Falcon 9 rocket fairing, Spaceflight Inc. would step in, buy the extra capacity, and then resell it to customers with smaller satellites, shoehorning their satellites into the remaining space before liftoff.
Spaceflight called the concept "rideshare," and it was a booming business for a while. SpaceX focused on what it did best (space launch); Spaceflight played to its own competitive advantage -- logistics -- and both companies profited thereby.
Business boomed -- that is to say, until SpaceX decided this business was so good that it would start organizing some rideshares of its own in 2019. It only took Spaceflight Industries six months to read the writing on the wall, and decide that its partnership with SpaceX had a fatal flaw -- that one day, SpaceX might decide to keep all of the profits from rideshare for itself, and jettison its partner.
And so, in 2020, Spaceflight Industries sold Spaceflight Inc. to a consortium of Japan's Mitsui & Co. and Yamasa Co, and exited the business.
Fast forward to today
Fast forward to 2022. On Friday, April 1, SpaceX launched its fourth-ever Falcon 9 rocket mission dedicated entirely to putting large numbers of various companies' small satellites into orbit -- "Transporter-4." In one single launch, SpaceX sent up "40 spacecraft, including CubeSats, microsats, picosats, non-deploying hosted payloads, and an orbital transfer vehicle carrying spacecraft to be deployed at a later time." Among these three dozen-odd satellites were four Kleos Space Patrol Mission Earth imaging satellites, whose passage had been arranged by Spaceflight.
But as it turns out, this was to be Spaceflight's final mission in cooperation with SpaceX. On March 21, 10 days before Transporter-4 lifted off, SpaceNews.com reported that "SpaceX is severing ties with launch services company Spaceflight Inc. after years of working closely together."
What it means to SpaceX
Commenting on the announcement -- which SpaceX sent it by text! -- Spaceflight VP Jodi Sorensen exclaimed that "we were surprised to learn of it" and "were not given any insight into the reasoning behind the decision." But it's not hard to figure out what happened here.
Over three years, multiple "Starlink" launches incorporating rideshare satellites, and four dedicated "Transporter" missions, SpaceX got the hang of how rideshares work -- and no longer needed Spaceflight's help to resell its extra payload room. What's more, as SpaceNews points out, Spaceflight generally charges less to integrate a customer's satellite than the $1 million base price (recently raised to $1.1 million) that SpaceX charges when signing up a rideshare customer directly -- and then takes a cut of that lower price.
By cutting Spaceflight out of the loop, therefore, SpaceX found a way to do the same rideshare work, charge more for it -- and then keep the whole price for itself. And granted, charging $1.1 million for a tiny satellite launch may not sound like much. But at a nominal $67 million price tag for launching a Falcon 9's main cargo, each extra $1.1 million SpaceX can charge for a rideshare adds 1.6% to the company's revenues, almost all of which falls to SpaceX's bottom line.
But what does this mean for Spaceflight? The loss of SpaceX as a customer will definitely hurt, but Spaceflight still has lots of other customers-not-named-SpaceX to work with to get its customers' satellites into orbit -- Rocket Lab, Arianespace, and the Indian Space Research Organization ("India's NASA") just to name a few.
Ultimately, I expect that this split between SpaceX and Spaceflight will end up helping the former, without necessarily putting the latter out of business just yet.
