Space industry: Bubble or a significant revival of activity?

During the morning research session organized by TBS on last 21 September, Professor Victor Dos Santos Paulino presented his work on the evolution of the satellite market. The remarks of the TBS researcher underline a far-reaching movement impacting activities dedicated to the entire space sector, not only this particular market segment.

 

“Fifty years ago leasing did not exist in the field of air transport. Twenty years ago, it represented 20% of the market. Today the two biggest global manufacturers, Airbus and Boeing, estimate that lease sales are close to 50%,” Sylvain Bourjade says. The professor’s article on the determinants of economic performance in air transport has just been published in a top-tier academic international journal Transportation Research PART A, under the title « Leasing and profitability: Empirical evidence from the airline industry ». Sylvain Bourjade and his co-authors Régis Huc and Catherine Müller-Vibes studied the impact of leasing on the performance of airlines, based on data collected since 1996 from 73 airlines around the world.

Victor Dos Santos Paulino, your analysis focuses on the evolution of the communication, observation and navigation satellite markets, and you decipher certain phenomena in these markets. How would you summarize your work?

In my research, I project the evolution of satellite markets using a combination of several tools: a diffusion of innovations curve which describes the life cycle of products, identification of consumer types – from early “adopters” to the majority of consumers, and the sales time gap between two targets, called the “chasm”. Once applied to the satellite market, these tools hold valuable lessons.

What is the most significant information to consider?

I studied a timescale for the space sector from 1960 to 2013. Between 1960 and 1990, the early buyers in the satellite market are essentially, at an international level, space agencies and ministries of defense. From the 1990s the majority of buyers were satellite operators who substantially increased until a market collapse at the end of the 1990s. Since 2013, we perceive a new development, although the chasm period doesn’t seem to have ended.

In each of these three segments, the products must evolve significantly to find prospective buyers. This entails taking into account new developments, the digital economy which constitutes a significant component in the domain of Earth observation. Moreover, the arrival of new actors such as China or Korea have also changed the game.

Certain specialists predict exponential growth in this market. What do you think?

I entirely stand behind the vision of SIRIUS Chair, international chair of research dedicated to law and business management of the activities of the space sector: the space sector has dormant potential, which has not yet been activated. It represents much more than what we know today. The segments of activity are plentiful: mineral exploration of asteroids, cleaning of debris, Earth observations, space tourism, satellite launches, etc. The dynamic is burgeoning admittedly, but well underway: out of 400 businesses created in the domain since the early 2000s, nearly 150 have attracted financial partners who invest increasingly each year. The question is : when will this potential awaken?

According to you, what is the role of traditional actors in this new landscape?

As in other sectors, public actors have played and continue to play an essential role in the emergence phase; subsequently it is the private actors who drive growth in the sector. We are able to distinguish two types of traditional actors: space agencies and manufacturers. With regard to the agencies, their role is questionable, and no consensual position has been reached. As for manufacturers, the question is different. Their role and place in the sector today provides them with possibilities in new markets with new services; they should be considered among the actors of the “new space”.

About Sirius Chair

SIRIUS is a business chair, based on an original type of public-private partnership between three leading operators in the global space sector (CNES, Airbus and Thales Alenia Space) and two respected higher education institutions: the Toulouse 1 Capitol University and Toulouse Business School.

The SIRIUS Chair’s science managers bring together and direct researchers (PhD and post-doctoral students) or well-known international experts. It is also prepared to work with any the other French or European research teams.

It produces reference studies that are eligible for publication in the best (peer-reviewed) international scientific journals. It carries out studies on behalf of the French space industry and helps train and inform the personnel concerned, through seminars or specialized workshops.

SIRIUS serves the interests of the industries in the European space sector, as well as European space policy-makers and Europe’s space powers.

Next event : October 12, 2017 : Emerging risks and opportunities in the space industry

More information  : http://chaire-sirius.eu/

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