Airbus Safran Launchers, Europe's biggest space company, and Airbus Group, Europe's biggest aerospace company, have merged to gang-up on SpaceX in the low-cost rocket launch business.

Both firms headquartered in France sealed the deal to combine their space launch services on June 30 and pledged to make the new firm -- Airbus Safran Launchers -- a serious competitor to SpaceX. The deal will integrate the industrial assets of both firms.

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"With the closing of this agreement, Airbus Safran Launchers becomes fully operational and will focus all its efforts on delivering more competitive solutions to its customers," said Airbus CEO Tom Enders. 

The business model of the American "space taxi" company founded by Elon Musk is to provide rocket launches significantly cheaper than that offered by legacy launch firms such as Arianespace (owners of the Ariane rocket) and United Launch Alliance (maker of the Delta IV Heavy).

The heads of Airbus Safran Launchers and Airbus Group promised to focus on making the new venture competitive after Europe's share of the commercial launch market was threatened by SpaceX and its cheaper launch services.

The two aerospace groups said the deal paves the way for building the next generation of European rocket, the Ariane 6, to be made by Airbus Safran Launchers. First flight for Ariane 6, which will be used to loft commercial and military satellites into orbit, is set for 2020. 

The reusable version of Ariane 6, however, might take more years to perfect. A reusable Europe-made first-stage rocket will allow Europe to remain one of the biggest players in the $6 billion market for launch services. This market is expected to expand to $8.4 billion in 2023.

Experts said SpaceX's success in landing the first stage of its Falcon 9 rocket means the price of launches might plummet by 50 percent or more. Arianespace said prices for Ariane 6 will be pegged closer to those of SpaceX. 

"SpaceX is like a giant wake up call," said Jean-Yves Le Gall, head of CNES, the French space agency. "But he showed he was able to do it, to potentially reuse rockets one day. He's clearly shaking things up."

SpaceX plans to fly 18 missions this year, triple the number in 2015. Re-using the first stage of Falcon 9 will allow the company to slash prices below the $61 million it charges for commercial payloads.

TagsAirbus Safran Launchers, Airbus Group, SpaceX, Ariane 6