European Space CEOs Call for Overhaul of Fragmented Sector

A new report from Europe's main space industry trade association reveals widespread CEO dissatisfaction with the region's fragmented and inefficient space sector. The ASD Eurospace GALAXY report, based on anonymized interviews with 15 CEOs from major primes and newer scale-ups, calls for a fundamental overhaul to boost global competitiveness.

According to the report, the core problem is a structure that prioritizes national interests over collective European efficiency. The European Space Agency's 23 member states each pursue their own priorities, leading procurement decisions to often protect local industrial capacity rather than promote market-wide efficiencies. Policies like geo-return, where countries get back from ESA what they put in, exacerbate the issue.

This results in duplicated capabilities and smaller-scale systems that fail to interoperate effectively. While Europe has proven it can collaborate on major projects like Galileo and Copernicus, the report notes these large programs are often overly expensive and slow to develop.

A Market Forced Toward Consolidation

The persistent fragmentation is pushing the market toward consolidation, the CEOs argue. They point to Project Bromo, the proposed merger of the space units of Leonardo, Airbus, and Thales, as an attempt to create a unified structure. However, the report warns that without a corresponding rise in overall demand, such a merger could compound problems by concentrating the majority of Europe's space development within a single organization.

This tension between collective calls for coordination and practical adherence to national funding is a key hurdle. The report states, "While companies collectively call for greater European coordination, in practice they often abide to national priorities when opportunities arise."

The Institutional Demand Problem

Europe's space sector is largely driven by institutional demand from civil and defense contracts. The GALAXY report identifies a critical flaw in this model: a lack of predictable revenue. The industry secures many one-off contracts but lacks guarantees of longer-term demand.

This uncertainty prevents suppliers from building quickly and at scale. It also makes it difficult for startups to raise sufficient capital to support long-term growth, stifling innovation and new market entrants.

CEO Recommendations for Reform

The report concludes with a series of direct recommendations from the CEOs to remake the European space economy. They propose a multi-pronged approach to create a more competitive and efficient industrial model.

• Aggregate demand: A region-wide pact is needed to define long-term priorities, use proven subsystems, and commit to minimum volume orders to support supply chain efficiency.
• Ensure European preference: Public buyers should select European systems wherever possible to shield local industry from international competition.
• Create continuity: Institutional contracts must be reformed to provide the scale and longevity of demand required to support a growing sector.
• Focus on performance: Buyers should reward performance to speed up delivery and reduce top-down micromanagement that has stifled past programs.
• Accelerate investment: Political leaders must lubricate capital flows to support new entrants and strategic consolidation, linking cooperation to funding.

ASD Eurospace President Marco Fuchs summarized the needed shift, calling for "strong and determined European institutional customers to anchor a strong European market" and "demanding and creative space agencies to challenge industry to innovate." One anonymous CEO captured the core challenge succinctly, telling Eurospace, "Europe has the capabilities, but not the industrial model to exploit them."