Will Sir Richard Branson’s Virgin Galactic Getaway Boost Space Tourism?


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“IT WILL humiliation. It will be spiritual. This is how Virgin Galactic wowed customers with the prospect of a moment in space in 2004. In five years, the space tourism company said, it would take a total of more than 3,000 passengers for escapades. that will change life in its spaceships. On July 11, after a final 90-minute delay, Virgin Galactic finally began to deliver on its promise. His VSS unit The rocket plane was freed from a support plane, triggered an engine that accelerated it to three times the speed of sound, and soared 85 km above the Earth’s surface. From there, for four minutes, its six temporarily weightless passengers, including the company’s British co-founder, Sir Richard Branson, observed the planet’s curvature against the darkness of space, before returning to a spaceport in New Mexico.

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It is not known if Sir Richard, little known for his humility, felt any up there. Back on the ground, he called the experience “magical”. On the inside, he might have gotten a little jubilant, having stung Jeff Bezos, another (much richer) billionaire from the skies. On July 20, the recently retired Amazon boss plans to go a little higher, for a little less time, in the New Shepard, a vertical launch vehicle built by his own space company, Blue Origin.

The tycoons are part of a growing group of enthusiasts who believe the time for space tourism has come. A handful of paying customers have flown in Russian government-issued spacecraft. Virgin Galactic and Blue Origin, on the other hand, designed and built their own ships with the goal of projecting passengers beyond the upper parts of Earth’s atmosphere. “For the first time, we have large, well-funded companies dedicated to developing large-scale space tourism,” says Matthew Weinzierl of Harvard Business School.

Suborbital tourism is part of a larger space economy that has exploded over the past decade thanks to advancements in rocket and satellite technology. Entrepreneurs and financiers are invading what was once the prerogative of governments. In 2020, investors invested $ 28 billion in space companies, hoping to emulate the success of SpaceX, which has lowered the cost of orbital launches with its ingenious reusable rockets and is valued at $ 74 billion. . Banking analysts see vast wealth in the stars. Those at Morgan Stanley expect the entire space economy to generate $ 1 billion in revenue by 2040, up from $ 350 billion today. Their counterparts at UBS predict $ 800 billion by the end of the decade.

Space tourism, UBS believes, will make “a big contribution” to this total if it proves to be a stepping stone to replace long-haul mass aviation with hypersonic travel. It is highly improbable. For now, Blue Origin and Virgin Galactic will be offering brief suborbital flights. Sir Richard was floating slightly below the Kármán Line, generally defined 100 km (62 miles) above the Earth’s surface, where the air becomes too thin to support unmanned flight. If all goes according to plan, Mr Bezos will float a bit above it (a distinction that Blue Origin has, unsportsmanlike, repeatedly pointed out on Twitter).

Suborbital space tourism isn’t even Blue Origin’s primary focus. The company focuses on developing a new large rocket, the New Glenn, for launching satellites, selling advanced rocket engines to other companies, and tendering for NASA contracts. such as that of a system for landing humans on the moon. In the long term, Mr. Bezos sees Blue Origin as promoting the development of a large-scale space economy rather than offering services to thrill seekers.

That’s not to say that Blue Origin’s bigger rockets won’t one day take paying customers who want to go into orbit for the fun of it. SpaceX, while not being driven by the tourism market, is starting to make money out of it. It puts seats on the Crew Dragon capsules that it uses to deliver astronauts to the International Space Station (ISS) available to individuals through a company called Axiom Space, which has an agreement with NASA to send its first tourist to the ISS next year. Prior to that, the Inspiration4 mission, paid for by Jared Isaacman, who runs a payment company, will see Mr. Isaacman and three companions orbit Earth in a Crew Dragon without visiting the ISS.

Even suborbital escapades seemingly have an appeal. Almost 7,600 people offered to accompany Mr. Bezos on his flight. The winner (still anonymous) spat out $ 28 million. Virgin Galactic says it has a waiting list of several hundred volunteer travelers (including, according to Sir Richard, Elon Musk, the boss of SpaceX). A survey by Cowen, an investment bank, found that nearly two in five people with net worth over $ 5 million would consider paying $ 250,000, Virgin Galactic’s current price, for a ticket. Considering some 2 million Earthlings, according to Capgemini, a consultancy firm, this represents a decent-sized market.

At current prices, the business could also be lucrative, once scheduled flights begin to offset the costs of rocket development. Chamath Palihapitiya, a venture capitalist and chairman of Virgin Galactic, said he expects the industry’s operating profit margins to reach nearly 70% at scale, comparable to a company of software.

Aside from the claims of its proponents, don’t expect space tourism to be a big part of the space business or the tourism industry, at least for the next ten or twenty years. New technology and frequent travel could help keep costs down, but the speed and quantity are uncertain, says Douglas Harned of Bernstein, a broker. Morgan Stanley recently cut Virgin Galactic’s projected annual revenue by 2030 from $ 1.8 billion to $ 1.3 billion, less than half of what Sir Richard’s Virgin Atlantic airline was doing before Covid-19 doesn’t tie up most air travel. Without tourist destinations to visit (the capacity of the ISS is strictly limited), orbital tourism, with its much higher ticket prices, will not be a greater source of income.

Investors are not scrambling to get into the industry. Several space tourism startups, such as Rocketplane, Armadillo Aerospace and XCOR Aerospace, have thrown in the towel. This year, the popular space-themed exchange-traded fund managed by ARK Invest, a tech investment firm, ditched most of its shares in Virgin Galactic, which went public in 2019. Sir Richard and M Palihapitiya have both sold much of their stakes in the business to free up money in recent months. Retail traders on the WallStreetBets Reddit forum are talking about selling the stock short. Its stock price skyrocketed after the successful theft and then fell when it announced it would issue new shares to fund its expansion.

Another challenge, and the greatest uncertainty, concerns security. History has shown that a disaster, especially in the early stages of an industry, can delay progress for years and cause demand to decline. NASA suspended its program to send untrained civilians to orbit in 1986 after a teacher died along with the rest of the crew in the Challenger tragedy. It took another civilian 15 years to brave the journey (on a Russian craft).

The risk is lower for suborbital missions, which place fewer demands on life support systems and are increasingly equipped with emergency shutdown technology, says Jonathan McDowell, astrophysicist at Harvard University. The US Congress instituted a “learning period” for commercial spaceflight in 2004, leaving medical and safety standards to private companies, provided customers are clearly warned of the risks. These are not negligible for passengers who rush at Mach 3 or more attached to a pile of explosives. As Mr McDowell said, “being more certain than orbital flight doesn’t make it safe.” VSS unitthe sister vessel of was killed in an accident in 2014.

Even in the absence of accidents, problems can arise when the learning period expires in 2023. Strict top-down regulation in the design, construction and operation of commercial human spaceflight could mean that the industry “n ‘will have more freedom to pursue new approaches to improve safety,’ says Karina Drees, president of the Commercial Spaceflight Federation, a trading group. Add in more mundane annoyances such as launch delays, which are common and often longer than an hour and a half, and space tourism can remain a hobby for a few super-rich with a daredevil streak and a lot of time to spend. to lose. Not exactly a mass market, therefore, at the moment.â– 

This article appeared in the Business section of the print edition under the headline “The Finished Frontier”

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