Posted: Mon, Jun 18, 2001, 5:03 PM ET (2103 GMT)
The head of the French space agency CNES said Sunday that the cost per kilogram of the heavy-lift Ariane 5 should drop significantly in the near future. CNES director general Gerard Brachet said at the Paris Air Show that Arianespace -- of which CNES owns 32 percent -- had negotiated a 33 percent reduction in the cost of its second batch of Ariane 5 boosters, and that "further reductions" are being negotiated for the next batch of launchers. Those savings are being realized in the form of increased capacity of the booster, which will allow the Ariane 5 to launch larger payloads without increasing the cost of the vehicle. Stiff competition in the launch vehicle industry has hurt Arianespace, who lost $200 million last year, its first loss since the company's formation in the early 1980s. That competition is caused by an oversupply of launch vehicles in a soft market according to a recent report by Booz-Allen and Hamilton mentioned in Spacelift Washington. That report notes that the "excess capacity" in the launch vehicle market is currently at 35 percent of the market and growing, creating a downward pressure on prices. That excess capacity may not deter new entrants into the launch vehicle market, such as Japan's H-2A and India's GSLV, but it will prevent them from gaining more than a small piece of the overall market.

Related Links:

•  Reuters article about Ariane 5
•  Spacelift Washington report on Booz-Allen and Hamilton study