Space Tourism: Starry or Not?

 

Fly me to the moon

Let me play among the stars

Let me see what spring is like

On a-Jupiter and Mars

– Bart Howard

 

Elon Musk recently announced that Japanese billionaire, Yusaku Maezawa, will be SpaceX’s first passenger to the moon. Earlier this year, Blue Origin, Jeff Bezos’ play in commercial spaceflight, also declared its plans for sending private citizens to space in late 2019. These announcements mark significant milestones in the journey of private entities, like SpaceX, Blue Origin and Virgin Galactic undertaking private spaceflight. While these entities are engaging in a gamut of space related activities, including satellite launches and cargo delivery to the ISS, these announcements point particularly to space tourism. Space tourism, in essence, is taking paying private citizens to space for the purpose of recreation rather than exploration.

While recent developments seem encouraging, they still do not take away from the fact that till now only 7 private citizens, each paying between $20-40 million, have been able to be visit space. High launch costs have been highly prohibitive in scaling this sector. By some estimates, it takes $27,000 per pound to be launched into space, meaning it would take roughly $400,000 just to launch an average adult into space. Rocket launches themselves have a high turnaround time between consequent launches because of the slow manufacturing and assembling of rocket ships. Added to that is the  high risk of failure (read: death for tourists) and the sector’s prospects fail to look particularly starry, especially with the current state of technology.

The solution, indicated by Messrs Musk and Bezos’ investments, lies in significantly lowering the per pound cost and the lead time of each launch and increasing the safety of the launch vehicle. This is being enabled by launch vehicles like the Falcon 9, Falcon Heavy and New Shephard which can be reused multiple times, similar to a commercial aircraft, and have low turnaround periods. By using a combination of both, experts aim at lowering the launch cost to a twentieth, that is $100 per pound. The target ticket price then becomes $100,000 or lower. Seeing as climbing the Mt. Everest costs $50,000, space tourism looks increasingly viable for the ultra rich adventure junkie. Experts have pegged the size of the space tourism market to be anywhere from 200,000 – 400,000 customers, provided the ticket prices stay in the range of $100,000 – $250,000[1].

Let’s assume that the technological innovations under development today materialise per plans and the market for space tourists expands to several thousand individuals within the next decade. It is at this stage that space tourism shall start resembling the conventional tourism industry. This is because space tourism involves many functions like training the tourists for the harsh environment of space, preparing and launching the spaceship, hosting tourists in space (in spacecrafts, stations or lunar/Martian bases), bringing them back to Earth and turning around the rocket for the next launch. Driven by demand-side forces, the market can expect many private firms specialising in each functionality. After all, it would be unfair to expect a corporation that builds rockets to be training tourists or assembling space stations. Akin to orthodox tourism, you can expect a rise of space faring firms parallel to airlines which specialise in transporting customers to the holiday locations and hotel chains which specialise in lodging them.

Enabling private firms to compete within each functionality shall also have an order of magnitude effect on the entire industry. They will innovate and drive down costs for each step. This means that overall access to space shall become cheaper, faster and safer. Scale also generates positive externalities which enables entrepreneurs to seize opportunities which simply did not exist before. For instance, given that space travel remains a slightly risky proposition, one may expect the emergence of insurers who are willing to underwrite technical equipment and tourists.

To enable this degree of competition in the space industry, the right mix of incentives need to be created for private firms to enter. Governments across the world need to set up a base for technological innovation and let private enterprises take off from there. This base has already been created by long running national space programs of USA, EU, China and India. Encouragingly, USA and China have allowed a great degree of freedom to private entities to develop and operate space programs.

While it is hard to predict, recent developments augur well for the industry and indicate another giant leap for humanity may already be underway.

Co-authored by Adwitiya Dawn and Raghav Katyal

 

 

[1] For the sake of clarity, innovators are not being driven to lower cost solely to share a slice of the space tourism pie but the larger space market, in general. Launches are fundamental to any space program, be it commercial or otherwise, but cost reductions can vastly improve the scale of the space tourism market, as compared to the satellite launching industry. This is simply because private individuals, as compared to corporations, have smaller purses to expend on space faring activities.

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Adwitiya is a sophomore studying Economics and Finance at Ashoka University. Born and raised in Calcutta, she swears by her mishti doi. She envisions her writing to be a reflection of her interest in analyzing trends in the financial market and thriving global businesses along with being inspired by innovation in the field of design and technology. Outside of the ABR, she captains the college Ultimate Frisbee team, Ashoka Hawks and is the President of the Rotaract Club. With a penchant for travelling the world and meticulousness when it comes to work ethic, she seeks to be a creative problem-solver and to learn something new every day. Raghav, the Co-Author, is our guest writer. He’s a senior at Ashoka University studying Political Science and Economics. He keeps an eye out for businesses that make people's lives easier with great products. Reach him at: raghav.katyal_ug19@ashoka.edu.in

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