Move Over, Toulouse: Munich Is Becoming Europe’s New Aerospace Hotspot
- UCL Law for All Society
- Jan 23
- 4 min read
By Stephane Duponcheele
For decades, Toulouse has been at the center of Europe’s aerospace industry. But as the Space sector hurtles towards the new frontier of commercialisation, another star is rising on the horizon: Munich. Known for its beer halls and BMWs, Bavaria’s capital has been making a concerted effort to become a European tech hub, extending its generous funding to the Aerospace industry. Fueled by a potent mix of cutting-edge research, bold startups, and industrial know-how, Munich is quickly becoming a centre of gravity in its own right.
For half a century, Toulouse has been the heart of European aerospace thanks to its unmatched concentration of industrial primes, government agencies, and deep supply-chain roots. Home to Airbus’s global headquarters, the city’s skyline is dotted with the assembly lines of the A320, A350, and A380. Beyond Airbus, Toulouse also hosts: Thales Alenia Space, a joint venture between Italian defense giant Leonardo and France’s Thales, specializing in satellites and space infrastructure; ArianeGroup the producer of Europe’s “workhorse” Ariane 5 and 6 rockets; and Safran’s aerospace divisions, creating a vertically integrated ecosystem where design, manufacturing, and testing are all within a thirty-minute drive from each other. Proximity between these companies and ESA headquarters, as well as the headquarters of France’s space agency CNES which operates the Toulouse Space Center — a nerve center for satellite operations and Earth observation, ensure the city retains a desirable concentration of human capital. Nearby, ONERA, France’s leading aerospace lab, and ISAE-SUPAERO, Europe’s top aerospace engineering school, ensure a steady pipeline of talented engineers eager for a job in the local space industry. This public-private synergy has made Toulouse the outstanding go-to for large-scale aerospace infrastructure, design, and institutional space missions; a reputation that has been cemented by decades of ESA contracts, collaborations, and Airbus-led consortia.
Yet Toulouse’s model is inherently capital-intensive and risk-averse, optimized for flagship programs like the A380 or Ariane 6, where timelines stretch over years and budgets run into billions, supported and sometimes hindered by complex bureaucratic structures. Munich, by contrast, is benefitting from the agility, ambition, and innovativeness of its startup scene; a trend that could redefine Europe’s space economy.
At the forefront of this trend is Isar Aerospace, the city’s poster child for commercial space ambition. Founded in 2018 by alumni of the Technical University of Munich (TUM) and Airbus, the company has racked up €180 million in funding to develop its Spectrum launch vehicle, designed to slash the cost of deploying small satellites. With a test site in Norway and a manufacturing hub near Munich, the company hopes to launch the vehicle for its second test in the coming days. Just 60 kilometers west, Rocket Factory Augsburg, though technically based in Augsburg, is inextricably tied to Munich’s ecosystem, thanks to shared investors and talent pipelines. Closer to home, Mynaric is pioneering laser communication terminals for satellites, a critical technology for next-gen data relay used by large satellite constellations like SpaceX’s Starlink or Eutelsat’s OneWeb. Listed on the NASDAQ, Mynaric’s Munich HQ benefits from the city’s optics and photonics clusters, a spillover from its automotive and industrial laser heritage.
But the startup scene extends beyond launchers and comms. The Exploration Company (TEC), though younger, is tackling in-space transportation and refueling, a niche that could redefine satellite longevity, with a rarely seen ambition. “We want to build TEC as a global company,” the company’s founder Hélène Huby told the Financial Times. TEC is currently in talks to acquire Orbex, a struggling UK rocket start-up, which, if approved by the relevant regulatory authorities, would contribute to a significant increase in the company’s technical expertise and potential. Meanwhile, Kineo Space, spun out of TUM, is developing AI-driven satellite operations software, a nod to Munich’s strength in automation and “Industry 4.0”. These ventures aren’t operating in isolation, in fact many of them are nurtured by ESA BIC Bavaria, which has incubated over 100 space startups since 2009, and UnternehmerTUM, Europe’s largest startup center, which offers aerospace-specific accelerators. Bavaria has, to date, invested more than €245 million in regionally based space projects, including a planned lunar operations center and several high-innovation startups.
By contrast, Toulouse’s aerospace juggernauts, once synonymous with European dominance, are now grappling with structural challenges that Munich’s startups are poised to exploit. The most glaring example is ArianeGroup’s Ariane 6, a program plagued by delays, cost overruns, and existential questions about competitiveness. Originally slated for a 2020 debut, the rocket’s maiden flight was pushed to July 2024, a four-year delay that left Europe without sovereign launch capacity after the Ariane 5’s retirement. With SpaceX’s reusable Falcon 9 offering launches at a fraction of the cost thanks to the economy of scale provided by using the same rocket more than once, Ariane 6’s €4.5 billion development price tag looks increasingly hard to justify.
The contrast between the two hubs is stark: Toulouse excels in legacy aerospace, hosting serious primes which, in conjunction with national and international agencies carry out institutionalised rocket and aircraft projects, and launch state backed satellite industries. Munich on the other hand is carving a niche in “New Space”, with a focus leveraging the minimising of electronic components in smallsats, in-space infrastructure and an ambitious cohort of entrepreneurs. This does not render Toulouse obsolete. Airbus, ArianeGroup, and Thales will still dominate in areas requiring scale, certification, and long-term institutional partnerships. However, Munich’s rise introduces competition where there was once monopoly, particularly in segments where speed, cost efficiency, and innovation. The long-term implication of this is a rebalancing of Europe’s aerospace economy. Toulouse’s primes will likely maintain dominance in civil aviation and heavy-launch systems, but Munich’s startups are positioned to lead in commercial space, New Space applications, and disruptive technologies. The next phase may see greater collaboration, with Toulouse’s industrial capacity supporting Munich’s innovation, or increased rivalry as startups challenge incumbents for ESA contracts and private capital. Either way, Munich’s trajectory suggests that Europe’s aerospace future will be more distributed, more commercial, and more competitive than its past.
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Edited by Artyom Timofeev
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