Can Space Tourism be a Business?

3 min read

The race between private space companies is becoming intense. It is clear that there will be a substantial amount of economic value within the private space industry. Starlink is a perfect example of this. Starlink[1] is owned by SpaceX and is an up and coming satellite constellation that will provide low cost global high speed internet to rural areas. The enabling technology for this business is reusable rockets; however, to have an economic edge SpaceX must use larger rockets, that is why they are building Starship. This larger launch vehicle (Starship) will greatly accelerate and scale up satellite deployment, which will make Starlink stay ahead of any competition.

The business case for space tourism is less real. It is early days for such experiences. However, in 2022 the world has seen a few flashy events with Sir Richard Branson flying to “space”[2] on the Virgin Galactic VSS Unity spacecraft then being grounded by the FFA[3] and the company having to raise debt to fund operations[4]. The reason we highlighted “space” is that many pointed out that Branson’s trip reached NASA’s and FAA’s 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 ground). Later in the year, on June 7th Jeff Bezos flew on the Blue Origin New Shepard rocket[7]. And, on September 16th, the impressive Inspiration 4 mission[8] took Jared Isaacman deeper into space (590 km above ground), this is far beyond the international space station’s orbit (408 km above ground). The common theme for the three aforementioned events is high net worth individuals. The missions were sponsored by people who have a significant amount of wealth which enabled them to have this experience. There is a limited number of humans who have enough net worth, which then- begs the question if this space tourism business is viable?

Branson’s trip reached NASA’s and FAA’s definition of space but failed to cross the Karman line which is internationally recognized as the edge of space.

One would consider multiple factors to be able to answer this question; first is there even appetite to travel to space? We believe that there would be significant demand for space tourism experiences. To put this in perspective, less than 600 humans have ever been to space. More than 85% of these people are from three nationalities, and more than half of them are Americans. 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.

Getting to a cost that scales and generates profit

An average Zero Gravity (weightless) experience costs around $6,700[9], the cost to get 1 kg to orbit is around $22,500. While a Disney experience can be a few hundred to a thousand dollars, many would argue that the thrill of a space trip would be significantly more life changing than a disney experience. People are willing to pay more for a space experience, but the fact is that there are a limited number of people who are signing up to experience Zero G for $7,600. Price discovery is a challenge for this industry, while Virgin Galactic priced their trips at $250,000[10] and indicated that they have thousands of reservations, it is obvious that there will be a limit to how many people would want to fly with Virgin Galactic at this price. In addition, these trips are very short (7~8 minutes in zero G) and do not take people beyond the Karman line (100 KM above earth’s surface).

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

For a day experience in space to be mainstream, we believe that this would require costs to decrease 10 to 20 times.

Such substantial improvements in costs are only possible if private companies keep delivering exponential improvements over the next few years. This could be possible given the recent advancements with SpaceX new rocket engine designs[12] and other designs from companies like Rocketlab which are working on new low cost to orbit reusable rockets[13].

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References

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

[2] “Virgin Galactic: Sir Richard Branson rockets to the edge of space.” 11 Jul. 2021, https://www.bbc.com/news/science-environment-57797297.

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

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

[5] “Why does the FAA uses 50 miles for defining 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 1st astronaut flight.” 20 Jul. 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 $250000 Ticket — Travel + ….” 29 Sep. 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 to build world’s most advanced rocket engine factory in ….” 14 Jul. 2021, https://www.teslarati.com/spacex-starship-raptor-2-factory-details/.

[13] “Rocket Lab unveils 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.

Mike Hassaballa Mike earned a master’s degree in applied science in 2013, then he launched his career in the data centre industry. In 2015, he shifted gears and took on a Lead Engineer role in a company developing emission reductions technology. He then moved in 2018 into energy consulting. Mike focuses on most critical issues and opportunities in business: strategy, operations, technology, transformation, advanced analytics, and sustainability. Mike writes fascinating stories meant to be read by anyone. He excels in simplifying complex subjects and bringing a fresh new perspective to pressing issues.

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