Can space tourism be a business?

Jhe race between private space companies is getting intense. Clearly there will be a substantial amount of economic value in the private space industry. Starlink is a perfect example. Stellar Link[1] is owned by SpaceX and is a promising satellite constellation that will provide low-cost global high-speed internet access to rural areas. The enabling technology for this company is reusable rockets; however, to have an economic advantage, SpaceX needs to use bigger rockets, which is why they are building Starship. This larger launcher (Starship) will dramatically accelerate and scale up satellite deployment, keeping Starlink ahead of the competition.

The business case for space tourism is less real. It is still early for such experiments. However, in 2022 the world has seen some flashy events with Sir Richard Branson flying to “space”[2] on the Virgin Galactic VSS Unity spacecraft then grounded by the FFA[3] and the company having to go into debt to finance its operations[4]. The reason we highlighted ‘space’ is that many pointed out that Branson’s journey had reached the NASA and FAA definition of space (80 km above ground)[5] but failed to cross the Karman Line[6] which is internationally recognized as the edge of space (100 km above the ground). Later that year, on June 7, Jeff Bezos flew on the Blue Origin New Shepard rocket.[7]. And, on September 16, the impressive Inspiration 4 mission[8] took Jared Isaacman deeper into space (590 km above ground), well beyond the orbit of the International Space Station (408 km above ground). The common theme of the three aforementioned events is high net worth individuals. The missions were sponsored by people with significant wealth that allowed them to have this experience. There are a limited number of humans who have sufficient net worth, which raises the question of whether this space tourism business is viable?

Branson’s journey met the NASA and FAA definition of space but failed to cross the Karman Line which is internationally recognized as the edge of space.

Several factors would be considered in order to answer this question; first of all is there even a desire to travel in space? We believe there would be a significant demand for space tourism experiences. To put that into perspective, less than 600 humans have ever been in space. More than 85% of these people are of three nationalities, and more than half of them are American. The global demand for such experiences could be significant, with millions of people interested in space experiences. But as we mentioned, there is a catch: Costs.

Achieve a cost that evolves and generates profits

An average experience in zero gravity (Zero Gravity) costs around $6,700[9]the cost to put 1 kg into orbit is approximately $22,500. While a Disney experience can cost anywhere from a few hundred to a thousand dollars, many would say the thrill of space travel would be far more life-changing than a Disney experience. People are willing to pay more for a space experience, but the thing is, there are a limited number of people signing up to experience Zero G for $7,600. Price discovery is a challenge for this industry, while Virgin Galactic has priced its trips at $250,000[10] and indicated that they have thousands of reservations, it is obvious that there will be a limit to the number of people who want to fly with Virgin Galactic at this price. Moreover, these journeys are very short (7~8 minutes in zero G) and do not take people beyond the Karman line (100 KM above the surface of the earth).

If there is an appetite for much longer space travel (hours to days), we will consider NASA’s benchmark cost to enter orbit. For example, an average human weighing 62 kg[11] would need around $1.4 million to get such an experience, which makes the Virgin Galactic experience look like good value for money. For a day-in-space experience to be mainstream, we believe it would require reducing costs by 10 to 20 times. This would mean that a multi-day trip to space would cost between $69,000 and $140,000. In this scenario, the value-for-money Virgin Galactic experience would cost between $12,500 and $25,000.

For a day-in-space experience to be mainstream, we believe it would require reducing costs by 10 to 20 times.

Such substantial cost improvements are only possible if private companies continue to deliver exponential improvements over the next few years. It might be possible given recent progress with new SpaceX rocket engine designs.[12] and other designs from companies like Rocketlab that are working on new low-cost reusable rockets to orbit[13].

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References

[1] “Star Link”. https://www.starlink.com/.

[2] “Virgin Galactic: Sir Richard Branson Explodes at the Edge of Space.” 11 Jul 2021, https://www.bbc.com/news/science-environment-57797297.

[3] “FAA Justifies Virgin Galactic Branson Spacecraft Launch Investigation.” Sep 2, 2021, https://www.cnbc.com/2021/09/02/faa-grounds-virgin-galactic-spacecraft-branson-launch-investigation.html.

[4] “Virgin Galactic Holdings, Inc. Announces Convertible Project….” https://www.businesswire.com/news/home/20220112006070/en/Virgin-Galactic-Holdings-Inc.-Announces-Proposed-Convertible-Senior-Notes-Offering.

[5] “Why does the FAA use 50 miles to define outer space?” 24 Nov 2019, https://www.spacelegalissues.com/why-does-the-faa-uses-50-miles-for-defining-outer-space/.

[6] “What is the Kármán line, and where is the edge of space? – National….” 20 Dec. 2018, https://www.nationalgeographic.com/science/article/where-is-the-edge-of-space-and-what-is-the-karman-line.

[7] “Jeff Bezos launches into space on Blue Origin’s first astronaut flight.” Jul 20, 2021, https://www.space.com/jeff-bezos-blue-origin-first-astronaut-launch.

[8] “Inspiration4 – Home.” https://inspiration4.com/.

[9] “Zero-G: Home.” https://www.gozerog.com/.

[10] “What Space Tourists Will Get For Their $250,000 Ticket – Voyage +….” Sep 29, 2018, https://www.travelandleisure.com/trip-ideas/space-astronomy/space-tourism-virgin-galactic-blue-origin.

[11] “Human body weight – Wikipedia.” https://en.wikipedia.org/wiki/Human_body_weight.

[12] “SpaceX will build the world’s most advanced rocket engine factory in….” Jul 14, 2021, https://www.teslarati.com/spacex-starship-raptor-2-factory-details/.

[13] “Rocket Lab Reveals Details of New Reusable Neutron Launcher.” 2 Dec. 2021, https://www.theverge.com/2021/12/2/22813819/rocket-lab-neutron-launch-satellite-reusable-mega-constellations.

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