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The next stage for private spaceflight

SpaceShipOne's flight instantly transformed private-sector space travel from a rocket geek’s fantasy into reality — but can it turn a profit? MSNBC's Alan Boyle reports.
Sign-carrying spectators watch the rise of the SpaceShipOne rocket plane from a viewing area at the Mojave Airport in California. The airport's director, Stuart Witt, hopes to upgrade the facility to match its new status as a commercial spaceport.Giulio Marcocchi / Sipa Press

SpaceShipOne’s milestone flight last week instantly transformed private-sector space travel from a rocket geek’s fantasy into reality.

One man's flight, however, does not an industry make.  Not even the rocket plane's designer, Burt Rutan, or billionaire backer Paul Allen claim that SpaceShipOne in its current form could be a profit-making venture.

So now it's up a wide spectrum of players in the field to figure out how to make piloted suborbital flights profitable. Although they may differ over the best way to do that, nearly all agree that last week's flight to the 100-kilometer mark eliminated their biggest obstacle.

"Burt Rutan has destroyed the giggle factor in this business forever," said Pat Bahn, who is the Washington director of the Suborbital Institute as well as president of Oklahoma-based TGV Rockets. TGV is developing its own vertical-takeoff, vertical-landing vertical landing for suborbital space flights.

At the Mojave Airport, where SpaceShipOne was developed and flown, eight companies are working on space projects, said Stuart Witt, the airport's general manager. And just days after the airport was designated a commercial spaceport, Witt said a $100 million proposal for yet another Mojave space venture was sitting on his desk.

"They're just looking for the name to put on the check," Witt told

One of the other tenants at the Mojave Airport is XCOR Aerospace, which plans to build a suborbital space plane called the Xerus. XCOR's president, Jeff Greason, and company spokesman Rich Pournelle marveled at how quickly perceptions were changing.

Not that long ago, Pournelle said, potential investors would commonly ask, "Well, if this is such a smart idea, how come other people aren't doing it?"

In the wake of SpaceShipOne's flight, Greason said, the question has become "Now that everybody's doing it, what makes your idea better?"

"That's a welcome question to have," Pournelle said.

Companies cannot live prizes alone
But suborbital spaceflight can still be a hard sell: XCOR hasn't yet come up with the $10 million or so required to build the Xerus. Even Allen, who is reportedly worth more than $20 billion and admits to spending "in excess of $20 million" on SpaceShipOne, said he wouldn't be the sole investor in any space venture — although he might be willing to go in with someone else.

Other millionaires are taking careful, quiet steps into the space business: PayPal founder Elon Musk started up the SpaceX rocket company with the eventual goal of manned spaceflight, but for now he's concentrating on unmanned launch vehicles. founder Jeff Bezos and Virgin founder Richard Branson are both known to be interested in the space business but have yet to spell out their plans publicly.

The $10 million Ansari X Prize has served as a powerful incentive for suborbital start-ups. But XCOR's Greason — who decided against pursuing the prize — said companies cannot live by prizes alone. "No investor seeking an investment opportunity is favorably disposed to a company on the basis that they're going to win a prize," he said.

So how do companies such as XCOR and TGV — and, for that matter, Burt Rutan's Scaled Composites — keep themselves going while they bring in the investors? Most of the players rely on military projects and other contract work to help keep the cash flowing. For example, XCOR and Scaled have done work for the Pentagon's Defense Advanced Research Projects Agency, and TGV has hinted at hush-hush military contracts as well.

In the near term, XCOR sees itself as involved in the rocket propulsion business rather than the space tourism business — but Pournelle said the company is trying to stay focused on the longer-term goal of developing its own space vehicle, rather than just building parts for others.

"We don't take contracts unless they're going to build stuff that is in our critical path, or it pays a ridiculous amount of money for not a lot of work," Pournelle said.

Witt is also following a dual-use strategy for airport/spaceport development in Mojave. His main goal is to increase the Mojave Airport's traffic from 3 percent of capacity to 6 percent, and "see if anyone notices." Part of his plan calls for lengthening the airport's longest runway from 9,600 feet to 12,600 feet to accommodate fully loaded Boeing 747-400 jets.

"That same runway length is required for the Xerus," XCOR's space plane, Witt noted.

If you build it, will they come?
SpaceShipOne proved that a company with only a few dozen employees could indeed build a vehicle capable of flying to outer space, for a few minutes of weightlessness and a view that  pilot Mike Melvill said made him feel like he was touching "the face of God." But even if such flights become available in the range of $10,000 to $100,000, as Rutan hopes, will that be enough of a market to make space tourism profitable?

California millionaire Dennis Tito, who became the first paying space tourist in 2001 when he flew up to the international space station, believes it can be.

"People can't afford to pay for orbital trips like mine," Tito told last week as he waited for SpaceShipOne's rocket ascent. "But with this [type of] vehicle, this provides an opportunity for large numbers of people to experience space, and even three or four minutes of space will give you that feeling."

In contrast, TGV's Bahn wonders if the focus on space joyrides is a case of putting the cart before the horse, to use an analogy from an earlier transportation era.

"They shouldn't be screwing around with space tourism," Bahn said of his colleagues. "Space tourism makes a great sound bite. It's a horrendous business model. They should be talking to the military or they should be talking about hauling the mail. If you look at the history of aviation, it is the history of military reconnaissance and airmail."

For Bahn, "hauling the mail" is a metaphor for low-risk applications that may not yet have become obvious — not necessarily a killer app, but "an app which generates a steady, predictable cash flow while you're fixing up your technology."

Liability waivers sought
Bahn sees the issue of liability and insurance as a huge impediment to space tourism. Even if a multimillionaire ponies up tens of thousands of dollars for a half-hour suborbital flight to see the curvature of Earth and experience weightlessness, "that's a $20 million cargo you've got in the back seat," he said.

"If your insurance costs on the payload are on the order of what you'll be charging, your business model has a big problem," Bahn said.

Legislation currently being considered in Congress is aimed at allowing passengers to waive liability, setting up a "fly at your own risk" arrangement. But if disaster should strike, Bahn is unconvinced that such a waiver would hold up in court.

Some say the pending legislation is key to the suborbital space industry's future development. Tito told that "this whole industry will not go anywhere without this legislation," and Newsweek quoted Allen as saying new regulations were "something you have to have in place for space tourism to become reality."

But Bahn said even the current regulatory arrangement, worked out last year by the Federal Aviation Administration's Office of Commercial Space Transportation, is good enough to keep things going. "At the FAA, they're doing their job," he said. "What's missing is the Commerce Department looking at the insurance barriers and the market incentives, and NASA working on fundamental R&D."

Bahn said the space agency should follow the lead of its predecessor, the National Advisory Committee for Aeronautics, and put more effort into studies that would benefit suborbital spaceflight. "They are not producing the small-scale facilities and services and research that would be useful for this industry," Bahn said. "Instead, they're closing wind tunnels."

Meanwhile, XCOR's Greason said the industry itself had a lot of growing up to do.

'"One of the things that's hard about starting a company here is how immature the industrial base is. There's a lot of stuff which we're having to go build which we'd really much rather buy," he said.

As an example, he cited pressure suits, which are currently sold for nearly $1 million each. "At $1 million a suit, I could probably find a way to do better," he said.

Right now, more than 20 teams are all working on "the fun parts" of suborbital spaceflight, Greason said. But eventually, some of those teams will come up with solutions to the not-so-fun technical problems — and start selling those solutions to each other.

"So the tip from a vertically integrated model to a more horizontal model, where different companies specialize in different pieces, is going to be a sign of the forward progress and maturity of the industry," Greason said.

Bahn agreed that the suborbital space travel industry was just in its infancy, with a huge learning curve ahead.

"This is going to be disruptive innovation, and disruptors live on small margins," he said. "If this was going to make a phenomenal return, Boeing would be doing this."