ASPEN,
Colorado – Public space travel is a going and growing industry, but with a number
of hurdles to overcome before becoming a sustainable and profitable marketplace.
There is
already over $1.5 billion invested in new air transportation ventures and an
estimated $1 billion in new
commercial space ventures. But in the blossoming tourist-class, passenger
spaceflyer market, much needs to happen: from harnessing the technology and
dealing with regulations to financing and satisfying customer needs and
desires.
Public
space travel experts gathered here at Flight School 2007 – Flying: Beyond A to
B, a workshop for commercial space and private aviation ventures, held June
20-22 at the Aspen Institute. The unique gathering was hosted by computer and
entrepreneurial investment imaginer, Esther Dyson.
Trial
and error
"On the one
hand," Dyson told the Flight School audience, "there is the optimization of air
travel. Then there's private space travel on the other. You have many, many
problems in common starting with financing, finding customers, running your
businesses, marketing...defining what your business is," she said.
That being
the case, while public air transportation and space travel businesses cater to
different customers, there's room to learn from one another, Dyson said.
Moreover, there are opportunities to overcome the obstacles, she added.
"Ironically, it is precisely because space travel is defined as not
transportation that it can escape the heavy regulation that governs air
transportation...and that it can be tried at all, and be practiced enough to
become safe enough," Dyson told SPACE.com.
"In other
words, if it [space travel] were defined as useful, it would have to be much
safer. But the only way it can get safer is through trial and
error. In fact, we need a little more trial and error in aviation, not on the
safety side, but on the business model side," Dyson emphasized.
More
routine, more common, more accessible
There is a
need to go beyond sitting around crunching numbers and carrying out viewgraph
rocket engineering. To get safe, you've got to fly, said Jeff Greason,
President and Chief Executive Officer of XCOR Aerospace in Mojave, California.
"You have
to find out what the problems are. And you have to fix them to drive them out
of the system," Greason said. "XCOR people turn wrenches and make rocket
engines. That's almost a deliberate choice on our part. We don't want to take
the specialness of the space experience away. But if it doesn't get to be more
routine, more common, and more accessible, then there's no business there."
The space
travel business model is evolving, observed Rich Pournelle, XCOR's director of
business development. "As an industry, we're very much in a transitionary
period in that some people have flown demonstration vehicles and shown that
this kind of stuff can be done. But not a single one has flown a revenue
flight, in terms of transporting people into space."
For the
last 40 to 50 years, there's been a dumbing down of the aviation enterprise,
suggested Peter Diamandis, Chairman and co-founder of the X Prize Foundation.
It has moved methodically onward over those decades.
What is
happening now, Diamandis said, is that there's been a vacuum created where
regulation has been reduced, or where new technology has come in. Furthermore,
there's a third dimension in that dotcom capitalists have come in and are
willing to take risks.
"The Very
Light Jet market and the private aviation market are being born almost at
the exact same time...and for many of the same reasons as the personal
spaceflight industry," Diamandis said. "People want the chance to personalize
aviation and personalize space. There are people demanding it."
Angel
investors
"Funding is
a critical issue," said Kevin Leclaire, Managing Director of ISDR Consulting of
Reston, Virginia. Venture capitalists (VCs) raise their own funds based on an
investment focus that they have. If they have a communications focus, they
could invest in satellite communications ventures - and have, he said.
However,
Leclaire said that certain space businesses such as space travel, are almost
always outside the scope of VC investment focal points.
"A VC firm
will get penalized if they invest in a business outside their focus if it
doesn't perform well. Even if the investment does well, the VC's limited
partners will usually not give the VC credit for the success because it
happened outside of the VC's investment focus - a lose-lose scenario."
And that
leaves a few VCs whose investment focus includes travel or space-related
investments, or possibly those with regional or even "opportunistic" categories
for investments that they consider, Leclaire explained in a post Flight School
email to SPACE.com. "Thus, instead of VCs, angel investors tend to be
the primary recourse for early space travel companies."
Unproven
market
Leclaire
said that space businesses that are not already well-funded and are approaching
new markets -- like public space travel -- need to gradually expand their
"business envelope" in much the same way as one might expand their test
envelopes for a new aircraft or spacecraft.
"Most
investors like to invest in proven markets. Suborbital space travel is a
new, unproven market, so companies in the sector have to rely on the best
surrogates for market data in the absence of actual revenues," Leclaire said.
"The best of these market indicators are the deposits that have been taken by
some of the prospective suborbital operators."
Additionally,
Leclaire pointed out, there is market data on the paying passengers sent to the
International Space Station by Space Adventures, as well as the Zero-G flights
and high altitude fighter jet flights sold/operated by companies such as
Zero-G, Incredible Adventures, as well as Space Adventures.
"Ultimately
though, at the end of the day, the only way to make the suborbital travel
market 'real' is to have an operator begin to start sending paying passengers
up, bring them back safely, and book the revenues," Leclaire concluded.
Wanted:
Smiling customers
Keeping the
customer satisfied -- not only in terms of space travel safety -- but also
making the spaceflight experience enjoyable is a high priority.
"People
that I've come across that want to consider spending a big part of their net
worth to go to orbit...they want to know that they are coming back," said Eric
Anderson, President and Chief Executive Officer of Space Adventures,
headquartered in Vienna, Virginia. That firm has handled five
private space trips to the International Space Station, with each client
shelling out in the range of $20 million to $25 million for their flight.
"Whether
or not the windows are 18-inches or 20-inches across is of secondary importance
to being secure in the system," Anderson said. "Safety first and, of course,
great customer service," he added.
Paying
attention to those "little details" is part of good customer relations, said
Jane Reifert, President of Incredible Adventures, based in Sarasota, Florida.
While spotlighting the risk associated with adventure tourism, she added that
operators can't forget that they are in the business of making dreams come true
..."and that's a huge responsibility."
Waiting
for the "Netscape moment"
Work
is underway in building the SpaceShipTwo – a passenger-carrying vehicle now
under construction at Scaled Composites in Mojave, California.
"Safety
is our number one priority," said Alex Tai, Chief Operating Officer for the Sir Richard
Branson-bankrolled Virgin Galactic, the spaceline operator that will
utilize a SpaceShipTwo fleet to boost paying tourists on suborbital flings in
the near future – initially at $200,000 a seat. "We're not here to do this for
free, but we are here to react to our customers," he said.
Tai said
he's looking for that "Netscape moment" when the public space travel business
rockets to stardom – just like the internet browser did when it kicked-started
the dotcom boom of the mid-1990s.
"We have
taken in $25 million from an interest of 80,000 people...with our tiny sales
force," Tai told SPACE.com. "There's a huge appetite for this offering
once we get out there...once we prove that it's something that's going to be
safe, really fun to do, and is repeatable. What will happen then is that,
suddenly, everyone will see Virgin Galactic making an awful lot of money. And
that is the next 'go' moment."
Tai
speculated that when Richard Branson decides to fund his next big venture, and
he sells 10 percent of Virgin Galactic for $100 million, people will hunger to
be part of the public space travel business.
"But at the
moment, these guys don't want to invest because there hasn't been that Netscape
moment," Tai continued. "It is being held up because Virgin Galactic is the gorilla
in the room. Who is going to take Virgin on? That's a shame because I believe
it's a massive market. I would much rather there's competition getting ready
now," Tai concluded.
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