Virgin Orbit – Approaching Pole Position?


Over the past five years, the launch sector has (improbably?) become one of the hottest startup sectors, with more than 100 companies announcing plans to enter the market. To date, however, only one of these new entrants (Rocket Lab) has yet reached orbit.

Could Virgin Orbit be number two? In our minds, Virgin Orbit’s air-launched system is one of the more differentiated and attractive options on the horizon. While somewhat payload-constrained, an air-launch system offers the ultimate in launch flexibility (location, timing, and orbital inclination). Furthermore, the company’s idea of using a Boeing 747 as a launch platform is practical and economical, especially when compared to Stratolaunch’s massively complex/expensive carbon fiber creation. Boeing 747’s are a known quantity. A person probably doesn’t have to throw a stone too far in any airport to hit a 747 mechanic or engineer. That’s just one example of the many good reasons to believe Virgin Orbit might be successful.

There are, however, some reasons for concern, primarily surrounding smallsat launch pricing. SpaceX’s recently announced “Smallsat Rideshare Program” offers to deploy up to 200 kilograms into low Earth orbit for $1 million. This price is lower than Rocket Lab’s offer of about $5 million to deploy a 150-225-kilogram satellite and significantly lower than the estimated $10-12 million for Virgin Orbit to deploy a 500-kilogram satellite.

In dollars per kilogram, there is a shift in order, but SpaceX still offers the cheapest ride at $5,000 per kilogram, with Virgin Orbit at $20,000 per kg, and Rocket Lab at $33,333. In reality, however, the realized pricing for a given smallsat customer depends on the configuration of the payload, which is both more nuanced and more complex than a simple price-per-kilogram calculation would suggest.

And, fortunately for Virgin Orbit and Rocket Lab, there are more considerations than price (although it is a substantial consideration for many companies). Focusing on Virgin Orbit, its success will depend on how quickly the company can deploy and scale its operations. Both the speed of implementation and scale are aspects in which SpaceX is exceptionally adept. Competition will also occur as a function of schedule reliability, against which Virgin Orbit has some potential advantages.

But in the smallsat-dedicated launch vehicle market, there doesn’t appear to be that same sense of urgency. A recent press release from Kepler Communications potentially highlights this problem, choosing Russia’s GK Launch Services to launch its satellites on a Soyuz 2. And India’s Polar Satellite Launch Vehicle (PSLV) also has been snaring smallsat contracts (as well as the yet-to-be-launched SSLV).

Closer to Virgin Orbit’s territory, Northrop Grumman’s Pegasus (the only other air-launched rocket for smallsats) hasn’t performed a commercial launch since 2003 due to its steadily growing launch price. Of the other smallsat launch competitors, Rocket Lab has yet to achieve its ambitious “once per month” launch cadence, launching just 3 Electrons in 2018 and 4 this year (so far). Firefly has gone through ups and downs, appearing on an upslope currently (but still has no rocket to launch). And Vector seems to have ended with a whimper.

Based on the numbers of satellites deployed in the past few years alone, there is a nascent market for launching smallsats. Despite higher launch prices, Virgin Orbit’s business could take a chunk of that market.

It just needs to be quicker and more responsive than its competition.