Proton’s Competitiveness Threatened by High Insurance Costs

A Proton takes a nose dive at Baikonur. (Credit: Tsenki TV)

The Proton rocket’s’s string of failures and its year-long grounding following a 2016 launch anomaly have raised payload insurance rates so high  for the booster that its commercial viability is threatened.

Insurance premiums for launches of International Launch Services’ Russian Proton rocket, which satellite operators and insurers say is a necessary third leg for the commercial market — the SpaceX Falcon 9 and the ArianeGroup Ariane 5 being the other two — total about 12% of the insured value.

That compares with 3-4% for Ariane 5 and 4-5% for the Falcon 9.

In dollar terms, that means that ILS customers seeking a $200 million policy covering the the value of the satellite, the launch and the satellite’s first year in orbit, would pay a $24 million premium.

The same customer launching the same satellite on Falcon 9 or the Ariane 5 would pay no more than $10 million, and possibly less.

The spread has been exacerbated by Proton’s recent history, by the adoption of SpaceX’s Falcon 9 by satellite fleet operator SES, whose market influence is considerable, and by the overall collapse in premium rates in the last few years.

The threat comes as International Launch Services (ILS), which markets the Khrunichev-built booster, is looking to compete directly with SpaceX’s low-cost Falcon 9 with a scaled-down variant called the Proton Medium.

Kirk Pysher, president of ILS, said the company is banking on Proton Medium as the company’s next step — a vehicle more important to the commercial sector than Angara 5, Russia’s modular, next-generation launcher, which ILS has commercial rights to like Proton. Angara 5 is optimized for heavyweight spacecraft as a direct replacement for Proton-M starting in 2025, but would likely be applicable for just one to two missions per year, Pysher said, and that launch rate would not be enough to constitute a steady business.

“We need to target something between $65 [million] and $55 million as the price point, and the Angara 5 vehicle will not be able to do that,” Pysher told SpaceNews. “That is why it is not really the right fit for the current commercial market as we see it today. We need that family of vehicles that the variants address.”

SpaceX advertises $62 million for a Falcon 9 launch to geostationary transfer orbit.

Proton Medium is a variant of Proton-M that lacks a third stage, swapping out the engines for a support structure to keep the rocket relatively similar in size. Compared to Proton-M, which can carry up to 7 metric tons to geostationary transfer orbit, Proton Medium lifts 5 to 5.7 metric tons. ILS also has plans for a smaller variant called Proton Light, but its development is on hold pending Proton Medium’s completion in late 2018…

“It fits that sweet spot where we see the medium-class satellite is today, and it competes directly with Falcon 9,” Pysher said.

  • roflplatypus

    Insurers sometimes talk of the cult of Elon as being a factor. How about having a cult of your own?

    Favorite part of the linked article

  • Mr Snarky Answer

    Dead company walking. No amount of Russian vodka (or deck chair re-arrangement) gets that pig looking good.

    In other news look who is ready to get back on the horse (A flight proven horse none the less). If SpaceX can sell AMOS mulligan on used cores they can sell the idea to anyone.

    https://www.reddit.com/r/spacex/comments/77730s/according_to_this_press_release_in_hebrew/

  • Zed_WEASEL

    The Falcon 9 is still the cheapest ride up. Also a flight proven vehicle might move your spacecraft up on the launch manofest.

  • Andrew Tubbiolo

    A cult effecting the judgment of the actuaries at major insurance agencies? No. NO!! That’s un nu-capitolistic! No way that ever happens 🙂 Actually I’ll bet the Russians have had their premiums kept low by their own reputation built up over the decades. A cult I might add that I was a member of. It’s an easy trap to fall into, but business is supposed to be better than that.

  • Andrew Tubbiolo

    The Russians have been banking on their history, the fact that they are a nation that can cover problems up, combined with their low prices for a long time. Just as you say, it’s over.

  • Jimmy S. Overly

    “Proton’s Competitiveness Threatened by Occasional Tendency to do a 180 and Fly Itself Into the Ground”

  • That’s always my question: why can’t you use the system to YOUR OWN advantage? (be it cult status, government subsidies, preferential treatment, etc.)

    As an example of how to out-innovate the problem, this seems like a clear case where the Russian gov’t could set up a competing insurance company that puts favorable terms on Russian vehicles.

  • Lee

    How long before one of them repeats their old saw “We’re just a poor country surrounded by enemies…”

  • MrFriendly B

    Well, they couldn’t even develop the Proton Medium. It had to be done by a foreign (US!) company.

  • I thought ILS just marketed the Proton and Krunichev did the design and construction. That would be the first that I’ve heard a US company doing the design.

  • MrFriendly B

    I’m not talking about doing the design, I’m talking about planning and paying for all of this. There wouldn’t be any Proton Medium without ILS.

  • publiusr

    That wasn’t the rocket’s fault–some boob put an electronics box upside down.

    Here was another failure:

    “The reason for the Proton failure was that the larger DM-03 tanks had been filled with propellants as if was the smaller version. In other words, they did not carefully measure the amount of propellants being pumped into the stage but instead just filled it up, leading to a stage that was much heavier than it should have been for that mission. Even that probably would have been okay if the trajectory had been shaped to make use of the additional propellant properly. If the Proton had flown a lofted trajectory, such as typically is done with the Atlas V and Delta IV boosters, then with aerodynamic drag and gravity losses reduced at the higher altitude the DM-03 could have done a longer burn up where it would have done some good. But the trajectory was not shaped to match the available upper stage propellant and thus, while everything ran just fine, the payload did not attain orbit.”

    From: http://www.thespacereview.com/article/3170/1

    That Proton was able to fly AT ALL what with the stupid kids messing with it today shows how great the Chief Designers were.