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.