Undercutting the Competition

In 2014, the Government Accountability Office (GAO) released a report on the costs to launch spacecraft. In it, they criticized the lack of transparency that characterizes the prices and processes of the United Launch Alliance (ULA), a joint venture between Boeing and Lockheed Martin. However, until recently, the government didn’t really have any other options for launches, so the ULA had neither an incentive to increase pricing transparency nor a motivation to lower prices.

SpaceX is changing that in a major way.

The U.S. Air Force recently released their 2018 budget estimates, which include numbers through the early 2020s. The budget combines the entire launch price into a single per launch “unit cost.” For fiscal year 2020, that very high unit cost is $422 million, and it increases to $424 million one year later. In contrast, the SpaceX cost for basic commercial launches of the Falcon 9 rocket is around $65 million, a difference CEO Elon Musk was happy to point out via a tweet.

$300M cost diff between SpaceX and Boeing/Lockheed exceeds avg value of satellite, so flying with SpaceX means satellite is basically free https://t.co/CaOulCf7ot — Elon Musk (@elonmusk) June 16, 2017

Cheaper Space Travel

ULA lost its monopoly on launches when SpaceX entered the competition for national security payloads and won the chance to launch them. A side-by-side comparison reveals that SpaceX’s costs are considerably lower.

For example, in 2016, SpaceX launched a GPS 3 satellite for $83 million. Roughly one year later, SpaceX won another GPS 3 launch contract for $96.5 million. These contracts are higher than the $65 million basic price and represent the government’s “all-in, fully burdened costs,” including things like service contracts and additional range costs that are unique to government contracts.

This means two things. First, the $83 million and $96.5 million price tags are comparable to the $422 million ULA cost in the 2020 Air Force budget. Second, SpaceX may be offering its services for $65 million to undercut the competition and gain traction in the market.

Either way, this dramatic decrease in cost is great news for space travel, whether it be for a government, commercial entity, or even a private citizen.

Even better news is the fact that SpaceX isn’t the only private company making cheaper space travel happen. Bigelow Airspace, Blue Origin, Virgin Galactic, and both Boeing and Lockheed Martin (outside their ULA partnership) are all competing for space travel contracts now, and ultimately, hopeful passengers like us will be the beneficiaries of this competition.