Houston, We Now have a Commercial Space Industry

Space is no longer the final frontier for private enterprise.  One major deal and the emergence of some private operators is an indication that this nascent industry will finally take off (pardon the pun) in 2010. 

For the first time, two commercial operators, SpaceX and Orbital Sciences, will begin providing delivery services for NASA as part of a large multi million dollar contract to transport cargo into space.  One of the deal’s triggers was NASA’s recognition that the US will face a 6-7 year launch gap beginning next year when the Space Shuttle program is retired.   Since the Space Shuttle has essentially been a delivery vehicle for cargo and astronauts, a replacement will be needed to fill the void.  A new NASA-developed shuttle replacement program is planned by 2017.   However, this timing could be in doubt as the choice of vehicle has yet to be made and the public funding environment remains murky.

Though there are cargo delivery options with non-US space agencies, one of NASA’s major issues is with the cost and reliability of transporting astronauts.  After this year, NASA will be dependent on the availability and kindness of Russia’s Soyuz space craft, which carries a $50M per seat tariff.  However, many pundits believe a US private industry solution could launch astronauts into space at a fraction of the Soyuz rate.  Futron, a research firm, pegs the potential 2021 orbital (read: astronaut transport) market for commercial providers at 60 passengers and $300M in revenue. 

Importantly, the SpaceX/Orbital contract may not be the only deal done between NASA and commercial operators.  A new generation of suborbital vehicles currently under development could open up new market opportunities for other services such as microgravity science research, astronaut training and remote sensing.  For perspective, NASA spends $300M (according to Virgin Galactic) conducting its own suborbital work.

Other than the pending delivery gap, other factors will likely increase the appeal of private sector offerings.  Widespread technological advances in computing power, materials and miniaturization are bringing down the cost of blasting objects into space; tight government budgets are restricting the amount of suborbital R&D that NASA can conduct and; there is grudging acceptance in many parts of the US governement that commercial operators could deliver solutions as good if not better than NASA and other government agencies.

Interestingly, 2010 could finally witness the emergence of space tourism.  A number of players including Virgin Galactic and XCOR will use their proprietary launch vehicles to begin suborbital trips for the well-heeled.  Although the pricey customer experience will likely be no more comfortable than being squeezed into a plane’s cockpit, there has been extensive, global interest.   In February 2009, Virgin Galactic claimed they received $39M in deposits from 300 customers.  Many developments may facilitate greater consumer demand including: declining payload costs that will help reduce seat fees well below the million dollar threshold; enhanced capsule comfort and; improvements in perception around safety and reliability. Estimates on the size of the space tourism market vary widely.  Futron forecasts the 2021 suborbital tourist market at 15,000 passengers and $700M in revenue.

It’s too early to tell whether cargo transport and tourism will be the “killer apps” that kick starts a commercial space industry.  Many challenges remain in areas like investment finance, technology and regulations that will need to be addressed.  However, it’s a promising start and its happening in 2010.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.


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