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Business trends

Japan rocket launch gives crucial lift to private space business

Epsilon-4 vehicle provides less costly tech to show future customers

The Epsilon-4 rocket takes off from the Uchinoura Space Center in Kagoshima Prefecture, in southern Japan. (Photo by Masamichi Hoshi)
The Epsilon-4 rocket takes off from the Uchinoura Space Center in Kagoshima Prefecture, in southern Japan. (Photo by Masamichi Hoshi)

TOKYO -- Japan's successful liftoff of a more price-competitive rocket Friday carries the country into a new stage of private-sector space development, an industry that has remained mostly grounded due to prohibitive costs.

The Japan Aerospace Exploration Agency, or JAXA, launched the solid-fuel Epsilon-4 from the Uchinoura Space Center in Kagoshima Prefecture. The vehicle carried seven miniature satellites, which all released from the rocket within 70 minutes after the morning liftoff.

Private businesses and universities were among the organizations that developed the satellites. These groups include ALE, a Tokyo-based startup that plans to create artificial meteor showers. Both the Epsilon-4 and the payload are the first approved under legislation that took effect in November to promote Japan's private-sector space activities.

The Epsilon rocket series scored its fourth successful launch since 2013. The Epsilon-4 mission concludes the technology proof-of-concept phase and lets Japan expand efforts to obtain orders for launching satellites.

Japan's capabilities also are illustrated by the larger H-IIA rocket, which has taken off 34 times in a row without a failure.

The Epsilon-4 was developed by JAXA and IHI Aerospace, a subsidiary of aircraft engine maker IHI. Japan's government plans a wholesale transfer of the rocket to the private sector as soon as the early 2020s. IHI has put itself in the running to be the receiving company.

The privatization push comes in response to Japan falling far behind the U.S. in the commercialization of space. Across the Pacific, startups such as Elon Musk's SpaceX have achieved growth status.

One senior JAXA official likens the Epsilon-4 to a "tour bus." But to boost ridership, the bus operator must find ways to lower the ticket price.

Friday's liftoff cost around 5.5 billion yen ($50.5 million), roughly half the budget needed for an H-IIA launch. Using artificial intelligence to perform some inspection work slashed a 42-day preparation process to about a week. JAXA expects to cut costs below 4 billion yen, and aims to limit the price tag to 3 billion yen by fiscal 2020 or later.

About 7,000 miniature satellites at or below 500 kg will launch between 2018 and 2027, space industry monitor Euroconsult says, a sixfold increase from the prior decade. Such growing demand has fueled competition among global developers.

Chinese startup OneSpace launched its first small rocket last year. The company plans 50 missions by next year, with costs in the neighborhood of $5 million.

That is roughly the same price Rocket Lab charges for each liftoff. The U.S. startup also controls a staging area in New Zealand where it can freely manage the launch schedule. That gives Rocket Lab an edge, because profitability depends on maintaining frequent launches.

Japan has similar startups. Interstellar Technologies, based in Hokkaido, is developing the Momo minirocket capable of reaching altitudes of 100 km. Canon Electronics, IHI Aerospace and two other companies established Space One, a Tokyo-based outfit developing a small rocket with the goal of commercialization in 2021. Space One plans to secure its own launch site, with a location near Osaka as a leading candidate.

But technology represents only part of the battle in the space business.

"The issue facing Japanese rocketry is customer development," said Masayasu Ishida, principal at the Tokyo branch of A.T. Kearney, a global management consulting firm. "To raise the launch frequency, it is indispensable to capture demand in the private sector and abroad."

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