X-Treme Ports June 18, 2006Posted by Thomas Olson in Uncategorized.
I usually think of an “extreme sport” as anything that will kill you if either you or your equipment (or both) screw up at a really inopportune moment. Ergo, I consider white water rafting, skydiving, ultralight aircraft, rock climbing, and scuba diving in that genre – the low-end of it, at least. I used to rock climb in my younger days (when there was less of me to have to pull up the rock), and still enjoy to this day an occasional coral reef dive down to 80 feet or so. If you get good training, develop some skills, know your limits, and maintain your equipment, the risks inherent in these activities can be well managed.
Millions of people throughout the world indulge in these hobbies every year, with low rates of injury or loss of life. They come back to do it again, year after year. One reason, in addition to the adrenaline rush, is the managed risk. Another is that these sports are relatively economical to engage in, all things considered, well within reach of the middle classes of most industrialized nations.
But then we go up the “risk spectrum”. There are other extreme activities that are often far more expensive to do, come with far greater risks, and are generally engaged in only a few times in one’s life, perhaps only once. One example of this is high-end mountaineering. One may train climbing smaller peaks in Colorado and Alaska for many years at great expense, before ultimately committing a significant portion of one’s income/savings on a one-time shot at Everest. These people will spend tens of thousands to achieve this goal, at the real risk of nasty death, or falling and simply being left for dead by one’s companions.
Other expensive “extremes” would include things like riding a supersonic jet fighter into the stratosphere, high altitude balloon rides, Formula One race driving, or taking a submersible over a mile under the ocean. These activities cost a lot of money, and most people who do them generally only get to do them once, perhaps more if they’re wealthier. As such, the available pool of customers for such experiences is only a small fraction of that for scuba or kayaking.
So when I see governments and private consortiums working hand in glove to commit hundreds of millions of dollars, all over the world, to build commercial “spaceports” in support of space tourism, I get a bit confused. At the current ticket prices being discussed, it is clear to me that “early adopter” space tourists fall in the high-end of the risk spectrum, and have only the fiscal resources for a once-in-a-lifetime shot at it. There will be no repeat business. The supply of customers at that level are far from infinite, and a quick look at the numbers indicates there may not be high enough a flight rate to justify the construction of a single spaceport at this fragile stage of the game, let alone four – two in the US, and one each in Dubai and Singapore. As near as I can estimate, the initial combined price tags for these facilities will be US$ 705 million, the funding being provided by a combination of governments and a “consortium of investors”. Thus far, the actual cash commitments are in the low tens of $ millions, mostly from governments – the “consortium” dollars have been few, to date, although much more is promised by year’s end.
Commercial airports today – a well established mature industry – are usually run under a “port authority” model. Not quite private, not quite government, they’re an independent chartered authority which can levy ticket taxes, take out bond issues, and get federal and state funding for key infrastructure development or repair via their respective Departments of Transportation. They also charge landing and gate fees to individual airlines. They stay ahead of the game fiscally because of high volume.
For any spaceport to be economically viable, it’s going to need lots of competing spacelines with significant flight rates and passenger throughput that pay the taxes and fees. In the airline business, the high flight rates are a result of lots of repeat business, as commercial air travel is on the same cost and safety level as low-end extreme sports. I would posit that, due to the risk factors and the high price tag, space tourism is more akin to climbing Everest. Ergo, potential future spaceports are going to have to find a different operational model in order to stay afloat. Let’s look at some numbers…
The 2004 Futron study is generally one that the alt.space community likes to hang its hat on, so I’m content to go with that.
Right off the bat, however, we have a problem, because the study predicted commercial flights commencing in 2006. Oops…OK, things happen – so we’ll just move that hockey stick back a couple of years. Ah, but then again, I don’t want to fall into the same trap as many alt.spacers do (I was even guilty of it once, myself!), so I’ll just say “Year 1″, or “Year 15″ as opposed to “2006″ or “2021″.
The Futron study projects that in Year 1, there will be 356 suborbital space tourists at an average ticket price of $100k, for a gross revenue of $36 million. They claim that the flight curve will grow such that, by Year 15, there will be 15,712 passengers at an average ticket price of $50k, for a total industry gross revenue of $786 million. That sounds great, except that everybody needs to get paid, and on the surface, there doesn’t seem to be enough revenue to go around.
If you build a $225 million spaceport, there are going to be significant operational costs, including traffic control, security, and especially the cost of insurance, which will be quite high the first decade or so of operation. These costs will run into the millions, annually, and will only be partially passed on to the spacelines and their passengers with standard fee and ticket tax structures, at first. There will also be special facilities needed for the spaceflight participants themselves, as they will be subject to last minute preflight medical checks per FAA regs – this is not a “show your boarding pass and take your seat” affair. Those facilities and the high-end technical staff also cost money to maintain. There will have to be emergency services made available in the event of a launch failure/abort, as well as more elaborate flight safety systems, due to the potentially exotic nature of the fuels used. $36 million in gross revenue, spread across four spaceports, won’t begin to cut it – ergo, we’re looking at subsidies or sustainable private capital losses for “consortia” the first few years.
According to an MIT study, airline ticket taxes were an average of 16.1% in 2004. So that $100k ride now costs $116,100. At $9 million in gross revenue per spaceport, that’s only $1.45 million in tax for the port. Landing fees have traditionally been assessed as a function of Gross Take-Of Weight (GTOW), and gate fees are charged based on the passenger carrying capacity of the airplane. For sub-orbital space tourism, the spacecraft will be at or less than the weight of a small business jet, and will probably not seat more than six passengers and two crew. So there will not be a lot of operational revenue for the spaceport there, under traditional models.
Out of the gross revenues, spacelines also have to meet their own expenses and pay the costs of their own capitalizations. But if port fees and ticket taxes become prohibitive, due to the spaceport’s unique maintenance requirements, it could slow potential tourist traffic, thus hurting revenues.
$36 million in ticket revenues means, at $100k per ticket, only 15 flights the first year, carrying an average of six passengers each, by a single local spaceline operating out of each spaceport. That averages only one flight every 3.5 weeks. Revenues aren’t projected to double until Year 4. They double again in Year 6, but then we’re still only talking $40 million per year per spaceport, and $6.44 million in ticket tax collection. Now we’re up to one flight per day per spaceport – still, hardly the stuff caviar dreams are made of, if you are the SpacePort Authority of Dubai. That’s also a significant time for private consortia or port authority bondholders to hang on for a return.
So lets push ahead to Year 15, where there are 15,712 projected passengers generating $786 million in gross revenue at a ticket price of $50k. That still only generates $31.6 million in ticket tax revenue per spaceport, and a flight rate of 18 every ten days at each port. Being forced to wait 15 years for even those numbers, it hardly seems to justify a $225 million investment in a spaceport for its own sake. This is why the current spaceport plans being offered have more of a theme park quality to them, offering a “complete space experience”, including parabolic flights, training facilities, full-scale pay-to-play simulators, hotels, etc. (Perhaps they’ll add casinos!) The revenues from these sideline operations could actually provide some sort of payback to investors.
I am accepting, for the sake of argument, the projected Futron flight rates from whole cloth, although there is little hard evidence in support of this. Also, those passenger levels assumed the tourist would be in their seat the entire time. The numbers were far more generous if the tourists were allowed to leave their seats during the flight to have a more complete experience of microgravity. Even so, they only project around 25,000 paying passengers at Year 15, as again, straight up and down sub-orbital tourism, at even $50k a pop, is going to be a one-time shot for high-rollers. Plus, the jury is still out regarding safety issues over the notion of allowing the passengers to float around the cabin.
What could be a revenue machine, however, in 15-20 year’s time, is directed point-to-point suborbital travel, be it package delivery or high-end business travelers. But presumably another zero is going to have to be dropped from the price to make such passenger travel popular enough to demand high flight rates in and out of busy spaceports. Private investor consortia in such facilities are going to have to wait a long time for their returns, unless the theme park model becomes sufficiently successful to drive profits on its own, in which case they stick the host governments with the tab for the annual operations shortfall. But those governments may pony up, just to enjoy the “prestige value” of having a spaceport.
In the meantime, spacecraft capable of sustaining even these minimal flight rates, regularly and in safety, have yet to be demonstrated. This whole thing, to me, is akin to the Wright Brothers at Kitty Hawk, saying at the end of the day, “OK, we’ve had four successful flights. Now, lets go build O’Hare!”
PT Barnum is smiling.
A "Space" Business Gets Launched June 12, 2006Posted by shubber in Uncategorized.
Apologies for the slight delay in posting recently – i’ve been busy helping* a new exciting startup company get through their initial launch this weekend with their first customer, and they are already generating revenue!
The company, comprised mainly of young smart space tragics, is only tangentially related to space, in that one of the key components of their system is taken from the free signals being provided by the GPS constellation. The rest of the technology comes from the internet and wireless world, and combines some great bits of clever engineering/integration to go after a wide open, multi-billion dollar market.
So, without further ado, I’d just like to offer a huge congratulations to the team at SnowSports Interactive and the launch of their whispar service at Mt. Buller in Victoria (that’s in Australia). Special congratulations to Steve Kenny, the Managing Director/CEO, for taking them from idea to implementation in 7 short months.
* “helping” – v. normally means to assist, but mostly i just stood by the sidelines and cheered them on.
The Problem with SSP June 1, 2006Posted by shubber in Uncategorized.
I was asked to write up some thoughts on Space Solar Power, so here they are – stream of conscious and all that. I wrote this even though the last time I had the gall to say such things (in Space News) i was excoriated by members of alt.space for attacking one of the holy grails of space development.
In the sure to be immortalised words of our current War President – “Bring ‘em on!”
SSP advocates point to the ability geostationary based SSP stations to provide clean abundant energy by harnessing solar power and retransmitting to Earth in the form of microwave energy, to be converted at ground-based stations into cheap energy for terrestrial uses.
There are a large number of factors which, at this time, call into question the feasibility of SSP – these can be grouped into two primary categories: economic and technological.
As I am not an engineer by trade, i will refrain from getting into power efficiency, conversion ratios, or other factors which others have pointed to when comparing SSP to existing terrestrial-based power systems (such as nuclear and wind). These tradeoffs in efficiency and the economics of the power generated by SSP vis a vis terrestrial means are fairly well argued out by others. There is one glaring unknown which also forms the basis for my position against the viability of SSP at this point in time.
Simply put – with today’s space technology, we are supremely unprepared for the task of building a SSP generating station. Current designs that have been put out to the masses call for a facility at geostationary orbit which is many times the size & mass of the ISS. There are significant major problems that immediately come to mind:
1) we’ve never designed and built even a prototype SSP. So even if we wanted to, we couldn’t just “build” one today from scratch without first going through numerous teething pains designing, building, and testing prototypes until we finally had it working correctly. And that includes building and testing IN SPACE, not just on the ground.
2) which leads to the second issue – R&D and Operations are two very different things. These are often confused by true believers, or the difference is knowingly trivialised as “just an engineering problem”. But work I did studying commercialisation of ISS highlights the same problem. The ISS was touted as a great R&D facility – as was the Wake Shield Facility before it. However, what was never examined was the practicality of production of a material that was first discovered during zero-G research. A practical example: WSF demonstrated that it was possible to create an ultra-pure vacuum environment, which could be used for making better raw materials for computer chips. However, there is a huge gap between making a few test raw material articles in basic R&D and building a zero-G chip fabrication facility in space…
3) so let’s assume for a moment that we can actually design and fly a few prototype power stations (big assumption). There do not exist today any launch vehicles capable of lifting a complete item to GEO that is as large or larger than ISS. Which means that we’d need MANY large launch vehicles (likely hundreds) to put the components of this hypothetical SSP into GEO. Then we’d have to assemble it. Except that this assembly would have to be automated, as the last time we had an astronaut at GEO or beyond was in 1972. Which means developing brand new capabilities, as the assembly and ongoing construction of ISS continues to demonstrate just how difficult it is to build a relatively small facility only a couple hundred miles up.
Some day, when we have solved the single most important aspect that is critical to all long term space development – that is cheap, realiable, reusable, access to space (under $100/lb to orbit), THEN things like SSP (and space elevators, and L5 colonies, and insert your favourite space development idea here) will be possible. But for now, it is just another bit of science fiction — because of economics and existing engineering know how.