Space companies forced to compete with fast-moving rocket start-up SpaceX are fond of complaining about the company.

Before exiting the international launch market as a consequence of its Ukrainian war, Russia used to accuse SpaceX of "price dumping" to win contracts that its own Roscosmos coveted. Airbus (EADSY -4.02%) subsidiary Arianespace daydreams of "getting rid of" low-cost SpaceX so that it doesn't have to compete on price. And here in America, Blue Origin went so far as to sue the U.S. government, after losing a moon lander contract to SpaceX.

But when the chips are down, and a space company absolutely, positively has to get a payload into space -- but can't do it on its own -- who do they call? SpaceX.

Falcon 9 rocket launch with SpaceX hangar in the foreground.

Image source: SpaceX.

SpaceX and its frenemies

Case in point: Northrop Grumman (NOC 2.84%) is one of just two U.S. companies currently servicing the International Space Station (ISS) with periodic supply runs by rocketship -- the other company being SpaceX. When Russia's invasion of Ukraine cut off Northrop's supply of new rocket engines, however, the company was put in a bind. On the one hand, Northrop put together a plan to have space start-up Firefly build it some alternative engines it could use to continue performing its supply contract. On the other hand, those engines wouldn't be ready until late 2024, or even 2025.

So what solution did Northrop come up with? They yelped for help, and asked SpaceX for a lift. In short order, SpaceX -- which has built up a ready supply of "flight proven" used Falcon 9 rockets -- signed a contract to provide three Falcon 9 rockets to carry Northrop's Cygnus cargo vessels to ISS between 2023 and 2024.  

Nor is Northrop the only competitor willing to partner with SpaceX...when there's no other choice.

Already this year, Russia's reneging on a contract to launch satellites for OneWeb (itself a competitor to SpaceX's Starlink service) forced OneWeb to turn to SpaceX to provide a stopgap launch. Sanctions levied against Russia similarly deprived the European Space Agency (ESA), and its favored contractor Arianespace, of access to the Soyuz rockets they had been using for medium-lift missions.

You can probably guess what happened next.

ESA's first choice for a Soyuz replacement was the Ariane 6 rocket that Arianespace is building -- but that one won't be ready until sometime next year. Casting about for an alternative, ESA said it might order rocket rides from India or Japan ... or it might come to the same conclusion that so many others have come to -- that SpaceX and its low-price, reusable Falcon 9 rockets are the most obvious solution to its problems.

As ESA Director General Josef Aschbacher told Reuters, SpaceX is "certainly one of the back-up launches we are looking at," and if this is the solution ESA settles upon, SpaceX could win "a good handful of launches" from Europe.  

What it means for investors

SpaceX has come a long way since its first, unsuccessful launch of a Falcon 1 rocket back in March 2006. Over the last 16 years, the company has perfected its upgraded Falcon 9 design, offered cut-rate launch prices, introduced reusability, and built up an established base of customers -- everyone from NASA and the U.S. military, to U.S. and international commercial companies, to SpaceX itself. (In fact, eight of SpaceX's last 10 launches were missions carrying the company's own Starlink satellites to orbit).

With 39 launches under its belt this year already, SpaceX is on pace to launch as many as 55 to 60 times before the calendar flips to 2023. It's launching slightly more than one rocket per week at present -- and accelerating. In fact, according to owner Elon Musk, the company could hit as many as 100 launches in 2023.

In theory, this huge base of business should help SpaceX keep its launch costs low by spreading the cost of rocket development out over a huge number of spaceflights, enabling the company to keep prices low and undercut the competition. In turn, these low prices should help SpaceX to win even more business -- lowering its costs even more. And now we've reached the point where these low costs are causing even SpaceX's competitors to consider using their rival's rocketships (at least, when they have no other choice).

The end result of all this is that SpaceX has become the space company to beat -- and the more money SpaceX's competitors spend buying rocket rides from their rival, the less money they'll have left to invest in improving their own rockets to compete with SpaceX. The end result: Northrop will still have its military business, and Airbus its commercial airplanes. Neither of these companies is going away entirely. But their respective space businesses will shrivel, hurting both companies' chances of profiting from future revenue growth in the space arena.

For investors, the day SpaceX IPOs can't come soon enough -- because the alternatives to investing in SpaceX are only getting less and less attractive.