ILS and Khrunichev sharpen Proton’s commercial edge

International Launch Services’  September announcement that its owner, Khrunichev Space Center, would develop two Proton rocket variants dedicated to the commercial market was perhaps the clearest-yet proof that Russia is serious about the commercial launch business.

It took Reston, Virginia-based ILS just a few weeks to line up its first customer for the two-stage Proton Medium vehicle. Paris-based Eutelsat, which had already signed a multi-launch agreement with ILS, will use the new Proton version for a 3,000-5,000-kilogram satellite in 2019 or 2020.

Kirk Pysher. Credit: International Launch Services

Kirk Pysher. Credit: International Launch Services

Eutelsat also announced that its Eutelsat 5 West B telecommunications satellite would share a ride to orbit in 2018 aboard the current Proton Breeze M vehicle with a satellite in-orbit servicing demonstrator that shares the same basic Orbital ATK-built skeletal structure as the Eutelsat satellite.

For ILS President Kirk Pysher, the new Proton vehicles are part of a renewed commitment to commercial business by Moscow-based Khrunichev, now run by former executives from Russia’s Sukhoi jet program.

Pysher addressed the pro-business thinking at Khrunichev, and inside the Russian government, with SpaceNews’ Peter B. de Selding at the recent Asia-Pacific Satellite Communications Council conference in Kuala Lumpur, Malaysia.

How can Khrunichev fund two new Proton variants for commercial-only use given its financial challenges? The Russian president and the head of Roscosmos have discussed this publicly.

The two variants are indeed being designed for commercial-only use and they are being procured with commercial specifications to establish a way for Proton to be viable and competitive going forward. That allows us to gain more access and more insight and helps us with the production cost of those vehicles.

By “us,” you mean ILS?

Yes, ILS. That is the philosophy at Khrunichev today. Once these vehicles are on line and launching, the Russian government may decide that it wants to use them. But today commercial-only is the plan. The whole development of these vehicles has been done on a cost-conscious basis. There is a challenge in the Russian space industry today for dollars and rubles. Khrunichev does have debt and that is publicly known. I don’t have a lot of insight into it to comment on it, but the investment required for the development of these vehicles is extremely minimal.

In order for Khrunichev to be viable in the future from a commercial perspective, for them to maintain revenue, we have to develop these vehicles, and to broaden and diversify the satellite market we provide launches for.

This investment will help solve some of Khrunichev’s debt problems by expanding our market capabilities and bringing in more commercial revenue.

Was it ILS that sold Khrunichev on these new Proton variants?

It was a joint initiative that started last year. We sat down and talked about what we needed to do to be viable over the next 10 or 15 years before  the Angara rocket [now in development] shows up. So it became a joint project where we were working with Khrunichev management to figure that out.

Will ILS have the pricing freedom needed to make the new variants a commercial success? Given the Russian ruble’s value on foreign-exchange markets, this should help you.

We don’t really include the exchange rate as one of our primary drivers because it changes so frequently. Today the exchange rate is an advantage. Next year it may not be. We don’t know.

But yes, I believe we have enough leverage that the pricing will be competitive.

Will ILS have more pricing leverage with the Proton variants than with the current Proton Breeze M?

Yes, that’s a fair statement. That’s why we are procuring them commercially, because it does allow us that leverage.

Have you placed an order for a set number of these vehicles from Khrunichev?

Not yet.

But that will happen in 2016?

Yes.

Are you still developing the 5-meter fairing for Proton?

Right now our focus is on development of the two new launch vehicles. But we expect to have a 5-meter fairing in the 2020 time frame.

And the June anomaly on the second stage? What happened there?

First, it was an entirely successful mission. There was an in-flight anomaly when one of the four second-stage engines shut down nine seconds early. In the past, that investigation would have been done internally, by Khrunichev on its own.

But because of the new dedication to reliability, that anomaly investigation was turned over to a Russian State commission — much in the same way as would have happened if the launch had been a failure. It’s the same process. That process has taken a little longer than we might have expected originally. But the investigation has been completed. I don’t have the details yet, but it was isolated to a second-stage plumbing attachment.

Proton in the past has returned from failures more quickly than it has returned to flight this time after an anomaly that did not result in a failure. Why is that?

It’s a combination of a couple of things. First of all, the quality assurance people at Khrunichev today come from the Sukhoi superjet program. They have a different viewpoint — I would say a more detailed viewpoint — on quality and investigations. And the Russian space agency, Roscosmos, is more involved in this whole process.

The Khrunichev team conducted the investigation and went to the Russian State Commission with their findings and the commission asked them to go back and do more work. That happened a couple of times.

So overall, the process I is more involved and more detailed than it would have been in the past, and this is because there’s a new dedication to creating a reliable Proton for our customers.

So the fact that Proton has been grounded for six months after the anomaly is a good sign?

That’s right. I think this is a positive step.

When do you expect to return to flight?

We are looking at November or December.