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Sub-orbital flights, a starting point for space tourism
~
Pergamon
www.elsevier.com/locate/actaastro
Acta Astronautica Vol. 51, No. 1-9, pp. 647-666, 2002
Plh S0094-5765(02)00091-7
© 2002 Published by Elsevier Science Ltd Printed in Great Britain 0094-5765/02 $ - see front matter
Title:
Sub-orbital Flights, A Starting Point for Space Tourism
Author:
Dr. William A. Gaubatz*, SpaceAvailable, LLC Newport Beach, CA - USA
Abstract: While there is a growing awareness and interest by the general public in space travel neither the market nor the infrastructure exist to make a commercial space tourism business an attractive risk venture. In addition there is much to be learned about how the general public will respond to space flights and what physiological and psychological needs must be met to ensure a pleasurable as well as adventurous experience. Sub-orbital flights offer an incremental approach to develop the market and the infrastructure, demonstrate the safety of space flight, obtain real flight information regarding the needs of general pubLic passengers and demonstrate the profitability of space tourism. This paper will summarize some of the system, operations, and f'mancial aspects of creating a sub-orbital space tourism business as a stepping-stone to public space travel. A sample business case will be reviewed and impacts of markets, operations and vehicle costs and lifetimes will be assessed. © 2 0 0 2 P u b l i s h e d b y E l s e v i e r S c i e n c e Ltd.
Background: A growing number of studies and analyses has shown the potential for public space travel and space tourism to be a large enough to constitute an elastic market for a reusable space transportation business.(1,2,3,4) Andrews, reporting on a recent study carried out for * Dr. William A. Gaubatz. President, SpaceAvatlable, LLC, Chairman Space Tourism
Society, Member IAA, Member IISL, Associate FeUow AIAA, Honorary Member YRS
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NASA, observed that, "The LEO Passenger Travel market is real and erdaibiting a growing demand for LEO passenger services. Unlike many other s-business [space-business] opportunities, this market is exerting a "pull" for products to supply LEO Passenger transportation and infrastructure services."(1) Another study carried out for NASA by Kelly, which included a survey of some 2000 people in the U.S., figured the demand for orbital trips could be 10,000 tourists per year at a ticket price of US $400,000.(1) At that price point annual revenues of US $4 billion could be realized. This same study noted that at US $2,000,000 per trip the demand is reduced to about 400 per year for annual revenues of US $0.8 billion. Davis reporting at the Space Transportation Association's annual meeting of its Space Travel and Tourism Division noted that a substantial sub-orbital tourism market exists with approximately 10,000 passengers over a ten year period willing to pay up to US $100,000 per trip and 4,000 passengers willing to pay US $2,000,000 for a orbital flight. For 180-pound passengers this is about US $550/pound. Other estimates over the last several years have placed the orbital market at over 4,000,000 passengers per year at US $100,000 per flight and a total suborbital market at over 500,000 passengers willing to pay up to US $100,000 per ticket. (5) Andrews also offers a conclusion that the analyses conducted to date support, "the general conclusions put forth by the CSTS: that the space launch market is in-elastic above a certain launch price point (approximately $600 per pound) and elastic for prices below."(1) Other studies have concluded that space tourism offers the best (if not the only) commercially feasible market that can generate the revenues and the profits that will enable the cost of space transportation to be driven down below the "elastic" barrier. (5,6) Gaubatz has noted that developments and operations of this new space transportation must consider the total infrastructure, including the vehicles, ground support systems, flight support systems and an international regulatory environment that defines the processes and governs their developments and operations to ensure the safety of the traveling public. (7) A key element of this development will be developing requirements and processes that lead to an operational safety record comparable to that achieved by today's air transportation. Hence, spaceport facilities and operations need to be considered as an integral part of the infrastructure development. The time and costs of these parts of the infrastructure must be accounted for in planning the business as well as the system developments. Andrews points out, ".... the space infrastructure required to address the needs of the future markets is very different than what is operating today . . . . . As a result, any space transportation service provider who expects to address future markets can not, must not, rely on a "build it and they will come" philosophy."(1)
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The market uncertainties together with the costs in time and money for the new infrastructure development, including the regulatory environment, and the operational uncertainties associated with "fielding" any new system strongly suggest the new space transportation business be developed in a series of steps. Each step should develop and increase market confidence, develop and improve designs and manufacturability, validate operational costs and profitability, and increase public confidence in the safety of space travel and flight operations. This paper addresses sub-orbital space tourism as a first step and examines some of the financial aspects of the business.
Approach: $ m c d m i l a l l IIC (SAL) is a new company dedicated to public space travel and tourism. Recognizing the enormity of this business development, SAL has begun a focused effort to commercially develop a vehicle system and supporting infrastructure to enter and profitably develop the sub-orbital tourism market. Success in opening this niche market could lead to future expansions and eventually development of a SpaceClipper family of vehicles, supporting the of new space business.
f
Mach 15
SC-I D e r i v a f i v e ~
Separation, Altitude ~ 250Kft.
2ridStage
• S~nceTrans
~
Downrange
~700-1300 Launch
~.~
-
nm 1st Stage
' Landin~ j
Figure 1: Two-stage-to-orbit SpaceClipperConcept of Operation
The SpaceClipper ultimately would be a a two-stage-to-orbit reusable space transportation system with liquid oxygen and jet fuel propulsion, capable of carrying 10 to 12 passengers to and from low earth orbit (LEO). It would takeoff vertically and both stages would land vertically. OperationaLly the mated configuration would takeoff from one spaceport, the booster and orbiter would separate at high altitude, the booster would land at a second spaceport and the orbiter would return to its originating spaceport or another, Figure 1.
SpaceClipper is planned as an evolution of a family of vehicles and capabilities starting with a small, experimental demonstrator, ClipperDawn, that leads to a 2-passenger, commercial suborbital vehicle, the ClipperStormer, MS-1. With successful operational experiences and positive market
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reactions a larger, 12-passenger suborbital ve~cle, the SC-1, ClipperSkimmer, could be developed. Further success could lead to the orbital SpaceRider, SC-2. MS-1 is approximately a one third scale prototype of the SC-1 and would become the fast operational member of the family. Figure 2 is an illustration of the SpaceClipper family.
Earn
Learn (MS-X)
(MS-l)
Grow (SC-1)
Expand (SC.2)
Figure 2: Evolution of the SpaceClipperFamily The ClipperStormer (MS-l) would initiate sub-orbital adventure flights and would be the first system certified, including initial spaceport commercial licensing. The ClipperStormer concept is illustrated in Figure 3 together with its salient flight characteristics. It is the starting focus for our system and business development and would initiate revenue operations. The MS-1 concept would have substantial weight margins, in excess of 30%, and would make use of available "fit-for-use" subsystems and components. The MS-1 design and operations would ClipperStormer also directly contribute to the A d v e n t u r e Flights operations database that Flight C h a r a c t e r i s t i c s would expand and support the certification program 3-4 min plan (CPP) for follow-on ~. Altitude 100 I ~ g's !Up 3 SpaceCIipper systems. The | ID°wn 3 7 MS-1 would be developed as an operational and business precursor for the SC-1 and Figure 3: ClippetStormerFlight Characteristics
c•engers
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SC-2 systems. From a business perspective.this step by step approach matches investment risks with revenue potentials. Each evolutionary step provides the opportunity to mature operational processes, and validate system safety andreliability. In addition there is much to be learned about how the general public will respond to space flights and what physiological and psychological needs must be met to ensure a pleasurable as well as adventurous experience. Sub-orbital flights offer an incremental approach to develop the market, develop the infrastructure, demonstrate the safety of space flight, obtain real flight information regarding the needs of general public passengers and demonstrate the profitability of space tourism. To help set business as well as system requirements, a business design tool, SpaceB/ZSIZE, was developed that enables market, system and operations factors to be assessed in the context of business profitability and affordability. SpaceBIZSIZE considers the impacts and interaction of factors such as markets and revenues, resource acquisitions, including vehicles and spaceports, system first unit costs, number of spaceports and vehicles per spaceport, vehicle flight rates, vehicle availability, operational costs of service, including fixed and variable operations, system rehab and replacements, system lifetimes, flight insurance, sales and marketing and R&D. In the following sections the potential of a 10-year reference business case (using the ClipperStormer as the reference vehicle) is assessed and the impacts of key market/revenue, resources and cost of services factors are evaluated.
The Case for Sub-orbital Business: For the reference case a total market size of 250,000 passengers world-wide was assumed with ticket prices starting at $100,000. A four-year system development was projected, including system certification and spaceport licensing; revenue flights started in the last quarter of year five at a single spaceport. A second spaceport was added in year six, with expansion in the number of spaceports continuing through year ten. In the first years of operation a minimum of two vehicles was assumed for each spaceport, growing to five by year-eight. Each vehicle is capable of carrying four passengers with a starting availability of 0.7, increasing to to 0.85 by year-eight (based on four years of flight operations). The expansions and equipment acquisitions have major impacts on capital requirements and financing needs, which might limit the rate of expansion. Summary results from the reference case are shown in Figures 4, 5 and 6. An overall tenyear financial summary is presented in Figure 4; there is a potential for generation of a multi-billion dollar revenue stream with earnings m a t i n s well over 60%. Capital and
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1G Year Financial Summary 1.0
Reference
Case
| Q
-1
Years
Figure 4: Reference Case Ten-year Financial S.mmary RnanciaJ Performance 1.0 R e f e r e n c e C a s e 90% 80% 70% 60% ,;o% b.
e
40% 3O% 2O% 10% 0% 1
2
3
4
S
6
7
0
Ysar8
Figure 5: Reference Case In~rnaJ Rate of Return ~ )
10
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R&D requix~ments are approximately 10% of'earnings. The internal rate of return (IRR) grows to over 80% in ten years, Figure 5. Cumulative net income becomes greater than zero and exceeds investments in year-eight, Figure 6. Also cumulative gross income exceeds cumulative R&D in year eight and income tax begins that year. The last major I n v e s t m e n t s and I n c o m e 1.0 R e f e r e n c e C a s e 3.5 3.0
2.5 2.0
!
Q Q
1.5 1.0 0.5 0 -0.5 -1.0
Figure 6: Reference
Time
Case Cumulative Income and Investments
investment is required in year seven to support the rapid expansion in the number of participating spaceports and vehicle systems. Profits are used to off-set R&D and acquisition costs and continuing expansion is funded from profits. Vehicle development and continuing R&D as well as the costs for spaceports are considered as part of the business capital and operating expenses. Capital expenditures continue to grow from expansion and equipment replacement. Results from this case study show the potential for an attractive business aproach to initiating space tourism. It provides potential for significant profits as a stand-alone business or for investing in the next major investments for orbital capable systems and ~trucmre. It would provide a significant data base for vehicle and spaceport design and operation as the number of fights per year per vehicle grows from 10 to over 150 and the number of flights per year at each spaceport grows from around 20 to close to 800. The
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resulting number of vehicles and replacements also opens a "new" business for the manufacture of these vehicles and establishes an operator-manufacturer relationship akin to today's aircraft industry. Similadly, a "new" spaceport industry with their suppotmding collateral businesses will develop akin to today's airport industry. The large number of flights, allbethey suborbital, will require the establishment of a new regulatory environment for reusable space transportation systems. This provides a collaborative opportunity and a focus for the government regulators, operators (both vehicle and spaceports) and manufacturers to develop the processes and regulations. The sub-orbital space tourism business is not, however, an attractive investment for those looking for low risk, short term returns. Even though the investments are relatively modest (significantly less than those required for orbital systems) and the technologies required are well established, the payback time is long, the market is yet to be established and the supporting infrastructure must be developed along the regulatory environment.
Impact of Changes: A number of study cases were run using the SpaceB/ZSIZE model to evaluate the impact that changes and uncertainties might have on the reference business case. Table 1 is a list of the factors included in these study cases and Table 2 lists the Business and Operations Factors that were used to evaluate impacts. The Study Factors are divided into those effecting Market and Revenues, Location Resources, and Cost of services. The costs associated with the Group management team is separated from costs associated with revenue generating flights. Table I also lists the areas impacted by each factor. For example, in addition to revenue the number of flights per day flown at each spaceport effects vehicle rehab and replacement costs and the unit costs of replacement vehicles. The number of passengers per flight on each vehicle directly impacts revenue and if number of flights are increased to make-up for revenue reductions the impact of flights per day must be assessed. The R&D cost impacts evaluated are for the both the initial development and sustaining. SpaceBIZSIZEhas a a number of additional factors that can be evaluated to help guide both design and business decisions. For example the design lifetime of the vehicle directly impacts operational factors of replacement costs and unit replacement costs and development costs or R&D and first uit costs associated with achieving longer life vehicles.
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Psesengers/Fiight Flights/day/Spaceport Number of Spaceports
Impacts revenue; reference value is 4 impacts revenue and vehicle rehab and replecement Impacts revenue and expenses
Flight Price/Pessenger X-Prize
Impacts revenue Impacts one time revenue
Number of Spaceports Impactsrevenues and acquisition coats ceport Impacts acquisition costs, rehsbs and replacements Acquisition Cost First Unit Cost Mercbendize Expenses
Impacts costs of vehicles and spaceports impacts acquisition and replacement impacts cost of sales
Fixed and Variable Ops Iflsurarlce Rehlb Replacement Costs R&D Sales & Marketing :actor
Impacts combined operating expenses and spares costs impacts costs per passenger Impacts rahab rates and % cost of new vehicle unit impacts cost of vehicle replacement Impacts estimate for development costs Impacts sales and marketing percentage of revenue Impacts operations uncertainty factor
Cost of Services
Impacts operations costs of the home support group
Table 1: SpaceBIZSIZEFactors Considered for Case Studies
Table 2: Business and Operations Factors Evaluated
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SpaceB/ZS/ZE provides an evaluation of a broad se~ of Business Factors of which only the impacts on revenues, gross profits and profit margins, earnings before tax and depreciation, and internal rate of return are shown in this paper, as noted in Table 2. Table 2 also lists the the various operations that were assessed in the various study cases. Table 3 provides a list of the four case studies reported in this paper.
Study Cases ~,.
Large
Market
-:~1~,: ~ : M a r k e l : / R e v e n u e
3.
Baselin{ ~: . ~ C h a n g e s
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~-:~,~;:~:~, ~, ~.... : .
1.1 1.1.1 1.2 1.2.1 1.3 1.3.1 1.4 1.4.1
Decrease Passengers/flight : 3; Factor: .75 Increase flight rate to make up revenue loss; factor = 1.25 Decrease Passengers/flight = 2; Factor= .5 Increase flight rate to make up revenue loss; factor = 2 Reduce Price/Flight Reduction; Factor : .95/year Increase Flight Rate to make up revenue loss; Factor 1.21 Reduce Price/Flight Redction; Factor = .9/year Increase Flight Rate to make up revenue loss; Factor 1.5
2.1 2.1.1 2.2 2.3 2.4
Reduce Vehicle unite/spaceport; Factor = .5 Adjust ops and rehab to make up profit increase; Factor = 2 Reduce Acquisition Cost; Factor = .9 Reduce First Unit Cost; Factor = .9 Reduce First Unit Cost; Factor = .8
3.1 3.2 3.2.1 3.3 3.4 3.5 3.6 3.7
Decrease Combined Operations Costs; Factor : Increase Flight Insurance; Factor 2 Decrease Flight Insurance; Factor .5 Decrease Rehab Costs; Factor = .9 Decrease Replacement Cost; Factor = .9 Increase R&D Costs; Factor = 1.25 IncreaseSales and Marketing; Factor = 1.25 Zero R&D; Factor = 0
Reduced
4.1 4.1.1 4.2 4.3 4.4 4.4.1 4.5
.9
Marke~ B a s e l i n ~
Reduce revenues through Price/Flight; Factor : .9 Adjust Flight Rate to make-up revenue loss; Factor = 1.21 Reduce Acquisition Cost; Factor = .9 Reduce First Unit Cost; Factor = .9 Reduce Vehicle units/spaceport; Factor = .5 (See case 2.1) Adjust ops and rehab to make-up profit increase; Factor = 2 increase R&D Costs; Factor = 1.25
Table 3: Sub-Orbital Reference Business Study Cases
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The first case evaluates impacts of factors directly effecting Markets and Revenues. The second case evaluates impacts of changes in operational resources. Case ttLree addresses the factors impacting cost of services, including R&D, and Case four considers impacts in response to a market reduction.
Case I Market/Revenue Changes Case1.1 Consider reduction in number of number of passengers carried by ClipperStormer from 4 to 3. (25% reduction in revenue) Impact on Business Factors 20%
0% -20%
-40%
i
-60%
-80%
-100%
-120%
Figure 7: Reduce Number of Passengers/Revenue by 25% As shown in Figure 7, the resulting 25% reduction in revenue significantly impacts profits and profit mar~n~, particularly during the expansion phase. By year-ten the 25% reduction in revenue leads to a 38% reduction in gross profits. This also results in the break-even point between cumulative profits and cumulative investments being extended by a year to year-nine. This is still a potential multi-billion a year business with IRR potential in excess of 60%. C a s e 1.1.1 In thi; case the revenue loss due a 25% reduction in passengers per flight is recovered by increasing the flight rate by 33%. As shown in Figure 8, while revenue is restored profits are reduced due to increased replacement and rehab costs resulting from
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more vehicle flights. Gross profits potential is still high with profit margins in excess of 55% and IRR greater than 75%. Impact of Increased Flight Rate
Figure 8: Increase Flight Rate by 33% to Recover 25% Loss in Passenger Rate Case 1.2 In this case the number of passengers per flight are reduced to two. This is not an attractivebusiness case, as indicated by the lack of closure shown in Figure 9. Investments and Case 1.2
Income
I.S
1.0
0.5
ao 0
-0.5
1.0 Time
Figure 9: Passengers per Flight Reduced by 50%
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C a s e 1.2.1 The impact of reducing the number of passenger per flight by 50% can be
Case 1.2.1 20%
0%
-20%
-40%
40%
40%
-100%
-12o% Tim
(Y~m)
Figure 1O: Doubling Flight Rate Restores Revenue and Half of Profits Impact
of Increased
Flight
Rate
2.5
2.0
1.5
1.0 Q o 0.5
-0.5
.1.0 Time
Figure 11: Impact of Doubling Flight Rate
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ameliorated by doubling the flight rate, Figure 10 However, there is a resultant si~ificant increase in replacement arid rehab costs that reduce profits and increase investment requi.rements, Figure 11. As shown in Figure 11, investment costs increase by nearly 70% but the breakeven point now occurs about the same as for case 1.1.1. Impact of increased Wight Rate, Increased Times Between ib and Replacements and Reduced Number of vehicles 4S 40 3$ 30 2$ m20 O Q 1$ 10
-$
Time
Figure 12: Impactof N-mber
of Vehicles and Rehab and RepLacement Times
Further improvements in this case can be made by decreasing the number of vehicles deployed at each spaceport and increasing the time between rehabs and replacements, Figure 12. However, the impacts of a new set of system requirements to meet these operations capabilities need to be assessed in terms of development costs and schedule. Such capabilities requirements would set very aggressive development and manufacturing goals. The ability to assess performance and operability goals in context of system requirements and business impacts is one of the real values of the SpaceB/ZS/ZE tool.
Flight Price Impacts Flight Rates C a s e 1.3 This case evaluated the impact of a 5% per year decrease in flight price. C a s e 1.3.1 This case evaluated the impact of increasing the fright rate to make-up for revenue loss due to reduced ticket price considered in Case 1.3. C a s e 1.4 This case evaluated the impact of a 10% per year decrease in flight price. C a s e 1.4.1 This case evaluated the impact of increasing the fright rate to make-up for revenue loss due to reduced ticket price considered in Case 1.4.
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The top level impacts for these cases is summarized in Table 4, which lists the changes in revenue and profits for year-ten of the business venture with respect to the reference business case. Even with the 10% annual decrease in ticket price which may be required, it is still has the potential for being a multi-billion dollar revenue venture with gross profit margins greater than 50%.
(1)
1.3
0.95
1
-1 4
-22
1.3.1
0.95
1.2
4
0
Relative
to Baseline
Case
in Year-10
Table 4: Impacts of Reduced Price per Flight Case 2 Resources Changes C a s e 2.1 This case evaluated the impact on profitability of reducing the number of vehicle units at each spaceport. The spaceports started with a minimum number of two vehicles and grew to a fleet of five. With increased availability and reduced ram-around time between flights this number could be reduced. The result of decreasing the average number of vehicles by a factor of two is shown in Figure 13. One of the most significant factors is the reduction in investments and capital equipment. This reduced cost, particularly during the start-up of the flight operations could make the venture more attractive to an investor. The gross profits increase by 18%; the gross profit margins increase to over 70% and IRR is in excess of 75%. As discussed for Case 1.2.1, the vehicle and infrastructure must be able to accommodate an increased flight rate per vehicle and maintain an availability of 0.8 or greater.
C a s e 2.4 One of the ways to impact profitability is through the reduction of the first unit cost of the vehicle. This directly effects the acquisition and the rehab costs. Figure 14 shows the results of being able to reduce the In'st unit cost by a factor of 0.8, as compared to the reference business case.
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Reduced
Number
of V e h i c l e s
Case 2.1 4.5 4.0 3.5 3.0 2.5 m o
2.0
Q
1.5 1.0 0.5 0 -0.S Time
Figure 13: Impact of Reduced Number of Vehicles Reduced
First Unit C o s t
Case 2.4 4.0 3.s 3.0 2.5 m
2.0
o m
1.S 1.0 O.S 0
.~l..q Time
Figure 14: F ~ t Unit Cost T,,,pacts
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Case 3 Cost of Services In general it was determined that there is a ratio of about 1:10 in impacts of operations cost factors on profitability. The greatest impacts result from the time between rehabs and the lifetime of the vehicles. R&D money and effort spent up-front to extend these two factors will have have major benefits on both operations and profitability. R&D costs are primarly a barrier for starting the business and have relatively little impact (except as they direcdy effect the capabilities of the design) on the long term profits.
Case 3.5 This case provides an assessment of the impact of R&D costs. Figure 15 shows the result for a 25% increase in the R&D. Other than the increase in investments the basic characteristics of the business are slm;lar to that shown in Figure 6 for the Reference Case.
Investments and Income Case 3.5 3.5 3.0 2.5 2.0 1.5 o
a
1.0
0.5
-0.5
Time
Figure 15: Impact of Increased R&D Case 3.7 This case examines the reduction of R & D costs to zero, as might be the case when a government program formtiously funds this part of the development. As can be seen from Figure 16, eliminating the up-front R & D costs have a major impact on the initial financing of the venture both in terms of real costs and impact on development risk reduction. On the other hand, there remain si~ificant funding requirements and overall the net reduction ison the order of 10%.
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of
Zero
Initial
$
6 (Yews)
R&D
ir
i 1
2
3
4
7
8
9
10
Figure 16: Impact of Zero R&D Costs Case 4 Revenue/Resources/Service Imacts in a Reduced Market A new reference case was evaluated for a reduced total market of 50,000 passengers. To service this market the number of spaceports and vehicles were reduced to establish a flight rate consistent with servicing thi.~ market over a ten year period. The impact on Revenues and Profits is persented in Figure 17 and the cumulative investments and earnings is presented in Figure 18. Although revenues are not as great it still has the potential for multi-billionannual revenues with gross profit margins in excess of 60% and IRR over ten years of 60%. Up-front investment costs are very similar to the reference case since the same basic vehicle is used. Acquisition costs are lower due the reduction in the number of vehicles and spaceports required. Impact studies, similar to the cases I, 2 and 3 were carried-out to assess the sensitivities of thi.¢ reference market to reductions in revenues, changes in acquisition costs and first unit costs, vehicle flight rates, R & D costs and operations costs. Results were all similar in terms of percentage impacts.
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100%
So%
|,I
o. -S0%
-100% 1"line (YMm)
Figure 17: Impacts of Reduced Market Investments and Income Case 4.0 14
12
10
8
6
0 0
4
2
0 -2 -4 Time
Figure 18: Investments and Income for Reduced Market
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Summary Observations: 1) 2) 3) 4) 5) 6) 7) 8)
9)
I0) 11)
Sub-orbital space tourism can provide a business basis fdr being a starting point for space tourism, assnml-g the forecast market develops. Sub-orbital space tourism offers the potential for developing into a business capable of generating very large a,,ual revenues. Sub-orbital space tourism could be initiated with relatively small vehicles. The relatively low development, infrastructure and operating costs for sub-orbital tourism offer the potential for large profit margins and ROI. Profits generated could be used for developing an orbital space tourism business. Major impacts on business performance come from vehicle rehab and replacement rates, vehicle flight rates and first unit costs. In the long term profit mar~n.~ and returns on investment are relatively insensitive to reasonable changes in markets, operating and development costs. The sub-orbital space tourism business could create a large demand for the vehicle systems and new spaceports. The development times for the vehicle systems and infrastructure required to provide a safe, pleasurable sub-orbital adventure ride for the general public results in long (> 5-years) "break-even" points for the business. Uncertainties in the regulatory requirements could result in longer times required for first revenue flights. An investment in a suborbital space tourism business venture must be entered into with great patience.
References 1. Andrews, Dana, NRA 8-27 TA 1. Future Space Transportation Study, Phase 1 (FSTS-1) AS&T Media Nnmber: AS&T-P.01-01-FSTSS"P, Phl.DOC (January 2001) 2. Daniel O~Niel, "General Public Space Travel and Tourism - Volume 1, Executive Summary", NASA Marshall Space Flight Center, NP-1998-03-11-MFSC (March 1998) 3. Collin.%Patrick, K Isozaki, R Wakamatsu, "Progress Towards Space Tourism in Japan", 49 ~ International Astronautical Congress, IAA-98olAA. 1.5.04 (October 1998) 4. Davis, Robert, "Validating the Space Travel and Tourism Market", STA Space Travel and Tourism Division Meeting, Washington D.C., (June 2001) 5. Rodgers, Tom, Private communication, (March 2000) 6. Commercial Space Transportation Study (CSTS) Final Report (May 1994) 7. Gaubatz, William A., Design for Space Tourism, AIAA-2001-4736 (ST-09) (August 2001)
Pergamon
www.elsevier.com/locate/actaastro
Acta Astronautica Vol. 51, No. 1-9, pp. 647-666, 2002
Plh S0094-5765(02)00091-7
© 2002 Published by Elsevier Science Ltd Printed in Great Britain 0094-5765/02 $ - see front matter
Title:
Sub-orbital Flights, A Starting Point for Space Tourism
Author:
Dr. William A. Gaubatz*, SpaceAvailable, LLC Newport Beach, CA - USA
Abstract: While there is a growing awareness and interest by the general public in space travel neither the market nor the infrastructure exist to make a commercial space tourism business an attractive risk venture. In addition there is much to be learned about how the general public will respond to space flights and what physiological and psychological needs must be met to ensure a pleasurable as well as adventurous experience. Sub-orbital flights offer an incremental approach to develop the market and the infrastructure, demonstrate the safety of space flight, obtain real flight information regarding the needs of general pubLic passengers and demonstrate the profitability of space tourism. This paper will summarize some of the system, operations, and f'mancial aspects of creating a sub-orbital space tourism business as a stepping-stone to public space travel. A sample business case will be reviewed and impacts of markets, operations and vehicle costs and lifetimes will be assessed. © 2 0 0 2 P u b l i s h e d b y E l s e v i e r S c i e n c e Ltd.
Background: A growing number of studies and analyses has shown the potential for public space travel and space tourism to be a large enough to constitute an elastic market for a reusable space transportation business.(1,2,3,4) Andrews, reporting on a recent study carried out for * Dr. William A. Gaubatz. President, SpaceAvatlable, LLC, Chairman Space Tourism
Society, Member IAA, Member IISL, Associate FeUow AIAA, Honorary Member YRS
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NASA, observed that, "The LEO Passenger Travel market is real and erdaibiting a growing demand for LEO passenger services. Unlike many other s-business [space-business] opportunities, this market is exerting a "pull" for products to supply LEO Passenger transportation and infrastructure services."(1) Another study carried out for NASA by Kelly, which included a survey of some 2000 people in the U.S., figured the demand for orbital trips could be 10,000 tourists per year at a ticket price of US $400,000.(1) At that price point annual revenues of US $4 billion could be realized. This same study noted that at US $2,000,000 per trip the demand is reduced to about 400 per year for annual revenues of US $0.8 billion. Davis reporting at the Space Transportation Association's annual meeting of its Space Travel and Tourism Division noted that a substantial sub-orbital tourism market exists with approximately 10,000 passengers over a ten year period willing to pay up to US $100,000 per trip and 4,000 passengers willing to pay US $2,000,000 for a orbital flight. For 180-pound passengers this is about US $550/pound. Other estimates over the last several years have placed the orbital market at over 4,000,000 passengers per year at US $100,000 per flight and a total suborbital market at over 500,000 passengers willing to pay up to US $100,000 per ticket. (5) Andrews also offers a conclusion that the analyses conducted to date support, "the general conclusions put forth by the CSTS: that the space launch market is in-elastic above a certain launch price point (approximately $600 per pound) and elastic for prices below."(1) Other studies have concluded that space tourism offers the best (if not the only) commercially feasible market that can generate the revenues and the profits that will enable the cost of space transportation to be driven down below the "elastic" barrier. (5,6) Gaubatz has noted that developments and operations of this new space transportation must consider the total infrastructure, including the vehicles, ground support systems, flight support systems and an international regulatory environment that defines the processes and governs their developments and operations to ensure the safety of the traveling public. (7) A key element of this development will be developing requirements and processes that lead to an operational safety record comparable to that achieved by today's air transportation. Hence, spaceport facilities and operations need to be considered as an integral part of the infrastructure development. The time and costs of these parts of the infrastructure must be accounted for in planning the business as well as the system developments. Andrews points out, ".... the space infrastructure required to address the needs of the future markets is very different than what is operating today . . . . . As a result, any space transportation service provider who expects to address future markets can not, must not, rely on a "build it and they will come" philosophy."(1)
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The market uncertainties together with the costs in time and money for the new infrastructure development, including the regulatory environment, and the operational uncertainties associated with "fielding" any new system strongly suggest the new space transportation business be developed in a series of steps. Each step should develop and increase market confidence, develop and improve designs and manufacturability, validate operational costs and profitability, and increase public confidence in the safety of space travel and flight operations. This paper addresses sub-orbital space tourism as a first step and examines some of the financial aspects of the business.
Approach: $ m c d m i l a l l IIC (SAL) is a new company dedicated to public space travel and tourism. Recognizing the enormity of this business development, SAL has begun a focused effort to commercially develop a vehicle system and supporting infrastructure to enter and profitably develop the sub-orbital tourism market. Success in opening this niche market could lead to future expansions and eventually development of a SpaceClipper family of vehicles, supporting the of new space business.
f
Mach 15
SC-I D e r i v a f i v e ~
Separation, Altitude ~ 250Kft.
2ridStage
• S~nceTrans
~
Downrange
~700-1300 Launch
~.~
-
nm 1st Stage
' Landin~ j
Figure 1: Two-stage-to-orbit SpaceClipperConcept of Operation
The SpaceClipper ultimately would be a a two-stage-to-orbit reusable space transportation system with liquid oxygen and jet fuel propulsion, capable of carrying 10 to 12 passengers to and from low earth orbit (LEO). It would takeoff vertically and both stages would land vertically. OperationaLly the mated configuration would takeoff from one spaceport, the booster and orbiter would separate at high altitude, the booster would land at a second spaceport and the orbiter would return to its originating spaceport or another, Figure 1.
SpaceClipper is planned as an evolution of a family of vehicles and capabilities starting with a small, experimental demonstrator, ClipperDawn, that leads to a 2-passenger, commercial suborbital vehicle, the ClipperStormer, MS-1. With successful operational experiences and positive market
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reactions a larger, 12-passenger suborbital ve~cle, the SC-1, ClipperSkimmer, could be developed. Further success could lead to the orbital SpaceRider, SC-2. MS-1 is approximately a one third scale prototype of the SC-1 and would become the fast operational member of the family. Figure 2 is an illustration of the SpaceClipper family.
Earn
Learn (MS-X)
(MS-l)
Grow (SC-1)
Expand (SC.2)
Figure 2: Evolution of the SpaceClipperFamily The ClipperStormer (MS-l) would initiate sub-orbital adventure flights and would be the first system certified, including initial spaceport commercial licensing. The ClipperStormer concept is illustrated in Figure 3 together with its salient flight characteristics. It is the starting focus for our system and business development and would initiate revenue operations. The MS-1 concept would have substantial weight margins, in excess of 30%, and would make use of available "fit-for-use" subsystems and components. The MS-1 design and operations would ClipperStormer also directly contribute to the A d v e n t u r e Flights operations database that Flight C h a r a c t e r i s t i c s would expand and support the certification program 3-4 min plan (CPP) for follow-on ~. Altitude 100 I ~ g's !Up 3 SpaceCIipper systems. The | ID°wn 3 7 MS-1 would be developed as an operational and business precursor for the SC-1 and Figure 3: ClippetStormerFlight Characteristics
c•engers
i
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SC-2 systems. From a business perspective.this step by step approach matches investment risks with revenue potentials. Each evolutionary step provides the opportunity to mature operational processes, and validate system safety andreliability. In addition there is much to be learned about how the general public will respond to space flights and what physiological and psychological needs must be met to ensure a pleasurable as well as adventurous experience. Sub-orbital flights offer an incremental approach to develop the market, develop the infrastructure, demonstrate the safety of space flight, obtain real flight information regarding the needs of general public passengers and demonstrate the profitability of space tourism. To help set business as well as system requirements, a business design tool, SpaceB/ZSIZE, was developed that enables market, system and operations factors to be assessed in the context of business profitability and affordability. SpaceBIZSIZE considers the impacts and interaction of factors such as markets and revenues, resource acquisitions, including vehicles and spaceports, system first unit costs, number of spaceports and vehicles per spaceport, vehicle flight rates, vehicle availability, operational costs of service, including fixed and variable operations, system rehab and replacements, system lifetimes, flight insurance, sales and marketing and R&D. In the following sections the potential of a 10-year reference business case (using the ClipperStormer as the reference vehicle) is assessed and the impacts of key market/revenue, resources and cost of services factors are evaluated.
The Case for Sub-orbital Business: For the reference case a total market size of 250,000 passengers world-wide was assumed with ticket prices starting at $100,000. A four-year system development was projected, including system certification and spaceport licensing; revenue flights started in the last quarter of year five at a single spaceport. A second spaceport was added in year six, with expansion in the number of spaceports continuing through year ten. In the first years of operation a minimum of two vehicles was assumed for each spaceport, growing to five by year-eight. Each vehicle is capable of carrying four passengers with a starting availability of 0.7, increasing to to 0.85 by year-eight (based on four years of flight operations). The expansions and equipment acquisitions have major impacts on capital requirements and financing needs, which might limit the rate of expansion. Summary results from the reference case are shown in Figures 4, 5 and 6. An overall tenyear financial summary is presented in Figure 4; there is a potential for generation of a multi-billion dollar revenue stream with earnings m a t i n s well over 60%. Capital and
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1G Year Financial Summary 1.0
Reference
Case
| Q
-1
Years
Figure 4: Reference Case Ten-year Financial S.mmary RnanciaJ Performance 1.0 R e f e r e n c e C a s e 90% 80% 70% 60% ,;o% b.
e
40% 3O% 2O% 10% 0% 1
2
3
4
S
6
7
0
Ysar8
Figure 5: Reference Case In~rnaJ Rate of Return ~ )
10
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R&D requix~ments are approximately 10% of'earnings. The internal rate of return (IRR) grows to over 80% in ten years, Figure 5. Cumulative net income becomes greater than zero and exceeds investments in year-eight, Figure 6. Also cumulative gross income exceeds cumulative R&D in year eight and income tax begins that year. The last major I n v e s t m e n t s and I n c o m e 1.0 R e f e r e n c e C a s e 3.5 3.0
2.5 2.0
!
Q Q
1.5 1.0 0.5 0 -0.5 -1.0
Figure 6: Reference
Time
Case Cumulative Income and Investments
investment is required in year seven to support the rapid expansion in the number of participating spaceports and vehicle systems. Profits are used to off-set R&D and acquisition costs and continuing expansion is funded from profits. Vehicle development and continuing R&D as well as the costs for spaceports are considered as part of the business capital and operating expenses. Capital expenditures continue to grow from expansion and equipment replacement. Results from this case study show the potential for an attractive business aproach to initiating space tourism. It provides potential for significant profits as a stand-alone business or for investing in the next major investments for orbital capable systems and ~trucmre. It would provide a significant data base for vehicle and spaceport design and operation as the number of fights per year per vehicle grows from 10 to over 150 and the number of flights per year at each spaceport grows from around 20 to close to 800. The
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resulting number of vehicles and replacements also opens a "new" business for the manufacture of these vehicles and establishes an operator-manufacturer relationship akin to today's aircraft industry. Similadly, a "new" spaceport industry with their suppotmding collateral businesses will develop akin to today's airport industry. The large number of flights, allbethey suborbital, will require the establishment of a new regulatory environment for reusable space transportation systems. This provides a collaborative opportunity and a focus for the government regulators, operators (both vehicle and spaceports) and manufacturers to develop the processes and regulations. The sub-orbital space tourism business is not, however, an attractive investment for those looking for low risk, short term returns. Even though the investments are relatively modest (significantly less than those required for orbital systems) and the technologies required are well established, the payback time is long, the market is yet to be established and the supporting infrastructure must be developed along the regulatory environment.
Impact of Changes: A number of study cases were run using the SpaceB/ZSIZE model to evaluate the impact that changes and uncertainties might have on the reference business case. Table 1 is a list of the factors included in these study cases and Table 2 lists the Business and Operations Factors that were used to evaluate impacts. The Study Factors are divided into those effecting Market and Revenues, Location Resources, and Cost of services. The costs associated with the Group management team is separated from costs associated with revenue generating flights. Table I also lists the areas impacted by each factor. For example, in addition to revenue the number of flights per day flown at each spaceport effects vehicle rehab and replacement costs and the unit costs of replacement vehicles. The number of passengers per flight on each vehicle directly impacts revenue and if number of flights are increased to make-up for revenue reductions the impact of flights per day must be assessed. The R&D cost impacts evaluated are for the both the initial development and sustaining. SpaceBIZSIZEhas a a number of additional factors that can be evaluated to help guide both design and business decisions. For example the design lifetime of the vehicle directly impacts operational factors of replacement costs and unit replacement costs and development costs or R&D and first uit costs associated with achieving longer life vehicles.
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Psesengers/Fiight Flights/day/Spaceport Number of Spaceports
Impacts revenue; reference value is 4 impacts revenue and vehicle rehab and replecement Impacts revenue and expenses
Flight Price/Pessenger X-Prize
Impacts revenue Impacts one time revenue
Number of Spaceports Impactsrevenues and acquisition coats ceport Impacts acquisition costs, rehsbs and replacements Acquisition Cost First Unit Cost Mercbendize Expenses
Impacts costs of vehicles and spaceports impacts acquisition and replacement impacts cost of sales
Fixed and Variable Ops Iflsurarlce Rehlb Replacement Costs R&D Sales & Marketing :actor
Impacts combined operating expenses and spares costs impacts costs per passenger Impacts rahab rates and % cost of new vehicle unit impacts cost of vehicle replacement Impacts estimate for development costs Impacts sales and marketing percentage of revenue Impacts operations uncertainty factor
Cost of Services
Impacts operations costs of the home support group
Table 1: SpaceBIZSIZEFactors Considered for Case Studies
Table 2: Business and Operations Factors Evaluated
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SpaceB/ZS/ZE provides an evaluation of a broad se~ of Business Factors of which only the impacts on revenues, gross profits and profit margins, earnings before tax and depreciation, and internal rate of return are shown in this paper, as noted in Table 2. Table 2 also lists the the various operations that were assessed in the various study cases. Table 3 provides a list of the four case studies reported in this paper.
Study Cases ~,.
Large
Market
-:~1~,: ~ : M a r k e l : / R e v e n u e
3.
Baselin{ ~: . ~ C h a n g e s
,::~.~:~:, ~ : ; ~ : ~ : ~ s ~ : ~ : . ~ : ~ . ~ : ~ : ~ : ~ : ~
~-:~,~;:~:~, ~, ~.... : .
1.1 1.1.1 1.2 1.2.1 1.3 1.3.1 1.4 1.4.1
Decrease Passengers/flight : 3; Factor: .75 Increase flight rate to make up revenue loss; factor = 1.25 Decrease Passengers/flight = 2; Factor= .5 Increase flight rate to make up revenue loss; factor = 2 Reduce Price/Flight Reduction; Factor : .95/year Increase Flight Rate to make up revenue loss; Factor 1.21 Reduce Price/Flight Redction; Factor = .9/year Increase Flight Rate to make up revenue loss; Factor 1.5
2.1 2.1.1 2.2 2.3 2.4
Reduce Vehicle unite/spaceport; Factor = .5 Adjust ops and rehab to make up profit increase; Factor = 2 Reduce Acquisition Cost; Factor = .9 Reduce First Unit Cost; Factor = .9 Reduce First Unit Cost; Factor = .8
3.1 3.2 3.2.1 3.3 3.4 3.5 3.6 3.7
Decrease Combined Operations Costs; Factor : Increase Flight Insurance; Factor 2 Decrease Flight Insurance; Factor .5 Decrease Rehab Costs; Factor = .9 Decrease Replacement Cost; Factor = .9 Increase R&D Costs; Factor = 1.25 IncreaseSales and Marketing; Factor = 1.25 Zero R&D; Factor = 0
Reduced
4.1 4.1.1 4.2 4.3 4.4 4.4.1 4.5
.9
Marke~ B a s e l i n ~
Reduce revenues through Price/Flight; Factor : .9 Adjust Flight Rate to make-up revenue loss; Factor = 1.21 Reduce Acquisition Cost; Factor = .9 Reduce First Unit Cost; Factor = .9 Reduce Vehicle units/spaceport; Factor = .5 (See case 2.1) Adjust ops and rehab to make-up profit increase; Factor = 2 increase R&D Costs; Factor = 1.25
Table 3: Sub-Orbital Reference Business Study Cases
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The first case evaluates impacts of factors directly effecting Markets and Revenues. The second case evaluates impacts of changes in operational resources. Case ttLree addresses the factors impacting cost of services, including R&D, and Case four considers impacts in response to a market reduction.
Case I Market/Revenue Changes Case1.1 Consider reduction in number of number of passengers carried by ClipperStormer from 4 to 3. (25% reduction in revenue) Impact on Business Factors 20%
0% -20%
-40%
i
-60%
-80%
-100%
-120%
Figure 7: Reduce Number of Passengers/Revenue by 25% As shown in Figure 7, the resulting 25% reduction in revenue significantly impacts profits and profit mar~n~, particularly during the expansion phase. By year-ten the 25% reduction in revenue leads to a 38% reduction in gross profits. This also results in the break-even point between cumulative profits and cumulative investments being extended by a year to year-nine. This is still a potential multi-billion a year business with IRR potential in excess of 60%. C a s e 1.1.1 In thi; case the revenue loss due a 25% reduction in passengers per flight is recovered by increasing the flight rate by 33%. As shown in Figure 8, while revenue is restored profits are reduced due to increased replacement and rehab costs resulting from
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more vehicle flights. Gross profits potential is still high with profit margins in excess of 55% and IRR greater than 75%. Impact of Increased Flight Rate
Figure 8: Increase Flight Rate by 33% to Recover 25% Loss in Passenger Rate Case 1.2 In this case the number of passengers per flight are reduced to two. This is not an attractivebusiness case, as indicated by the lack of closure shown in Figure 9. Investments and Case 1.2
Income
I.S
1.0
0.5
ao 0
-0.5
1.0 Time
Figure 9: Passengers per Flight Reduced by 50%
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C a s e 1.2.1 The impact of reducing the number of passenger per flight by 50% can be
Case 1.2.1 20%
0%
-20%
-40%
40%
40%
-100%
-12o% Tim
(Y~m)
Figure 1O: Doubling Flight Rate Restores Revenue and Half of Profits Impact
of Increased
Flight
Rate
2.5
2.0
1.5
1.0 Q o 0.5
-0.5
.1.0 Time
Figure 11: Impact of Doubling Flight Rate
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ameliorated by doubling the flight rate, Figure 10 However, there is a resultant si~ificant increase in replacement arid rehab costs that reduce profits and increase investment requi.rements, Figure 11. As shown in Figure 11, investment costs increase by nearly 70% but the breakeven point now occurs about the same as for case 1.1.1. Impact of increased Wight Rate, Increased Times Between ib and Replacements and Reduced Number of vehicles 4S 40 3$ 30 2$ m20 O Q 1$ 10
-$
Time
Figure 12: Impactof N-mber
of Vehicles and Rehab and RepLacement Times
Further improvements in this case can be made by decreasing the number of vehicles deployed at each spaceport and increasing the time between rehabs and replacements, Figure 12. However, the impacts of a new set of system requirements to meet these operations capabilities need to be assessed in terms of development costs and schedule. Such capabilities requirements would set very aggressive development and manufacturing goals. The ability to assess performance and operability goals in context of system requirements and business impacts is one of the real values of the SpaceB/ZS/ZE tool.
Flight Price Impacts Flight Rates C a s e 1.3 This case evaluated the impact of a 5% per year decrease in flight price. C a s e 1.3.1 This case evaluated the impact of increasing the fright rate to make-up for revenue loss due to reduced ticket price considered in Case 1.3. C a s e 1.4 This case evaluated the impact of a 10% per year decrease in flight price. C a s e 1.4.1 This case evaluated the impact of increasing the fright rate to make-up for revenue loss due to reduced ticket price considered in Case 1.4.
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The top level impacts for these cases is summarized in Table 4, which lists the changes in revenue and profits for year-ten of the business venture with respect to the reference business case. Even with the 10% annual decrease in ticket price which may be required, it is still has the potential for being a multi-billion dollar revenue venture with gross profit margins greater than 50%.
(1)
1.3
0.95
1
-1 4
-22
1.3.1
0.95
1.2
4
0
Relative
to Baseline
Case
in Year-10
Table 4: Impacts of Reduced Price per Flight Case 2 Resources Changes C a s e 2.1 This case evaluated the impact on profitability of reducing the number of vehicle units at each spaceport. The spaceports started with a minimum number of two vehicles and grew to a fleet of five. With increased availability and reduced ram-around time between flights this number could be reduced. The result of decreasing the average number of vehicles by a factor of two is shown in Figure 13. One of the most significant factors is the reduction in investments and capital equipment. This reduced cost, particularly during the start-up of the flight operations could make the venture more attractive to an investor. The gross profits increase by 18%; the gross profit margins increase to over 70% and IRR is in excess of 75%. As discussed for Case 1.2.1, the vehicle and infrastructure must be able to accommodate an increased flight rate per vehicle and maintain an availability of 0.8 or greater.
C a s e 2.4 One of the ways to impact profitability is through the reduction of the first unit cost of the vehicle. This directly effects the acquisition and the rehab costs. Figure 14 shows the results of being able to reduce the In'st unit cost by a factor of 0.8, as compared to the reference business case.
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Reduced
Number
of V e h i c l e s
Case 2.1 4.5 4.0 3.5 3.0 2.5 m o
2.0
Q
1.5 1.0 0.5 0 -0.S Time
Figure 13: Impact of Reduced Number of Vehicles Reduced
First Unit C o s t
Case 2.4 4.0 3.s 3.0 2.5 m
2.0
o m
1.S 1.0 O.S 0
.~l..q Time
Figure 14: F ~ t Unit Cost T,,,pacts
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Case 3 Cost of Services In general it was determined that there is a ratio of about 1:10 in impacts of operations cost factors on profitability. The greatest impacts result from the time between rehabs and the lifetime of the vehicles. R&D money and effort spent up-front to extend these two factors will have have major benefits on both operations and profitability. R&D costs are primarly a barrier for starting the business and have relatively little impact (except as they direcdy effect the capabilities of the design) on the long term profits.
Case 3.5 This case provides an assessment of the impact of R&D costs. Figure 15 shows the result for a 25% increase in the R&D. Other than the increase in investments the basic characteristics of the business are slm;lar to that shown in Figure 6 for the Reference Case.
Investments and Income Case 3.5 3.5 3.0 2.5 2.0 1.5 o
a
1.0
0.5
-0.5
Time
Figure 15: Impact of Increased R&D Case 3.7 This case examines the reduction of R & D costs to zero, as might be the case when a government program formtiously funds this part of the development. As can be seen from Figure 16, eliminating the up-front R & D costs have a major impact on the initial financing of the venture both in terms of real costs and impact on development risk reduction. On the other hand, there remain si~ificant funding requirements and overall the net reduction ison the order of 10%.
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of
Zero
Initial
$
6 (Yews)
R&D
ir
i 1
2
3
4
7
8
9
10
Figure 16: Impact of Zero R&D Costs Case 4 Revenue/Resources/Service Imacts in a Reduced Market A new reference case was evaluated for a reduced total market of 50,000 passengers. To service this market the number of spaceports and vehicles were reduced to establish a flight rate consistent with servicing thi.~ market over a ten year period. The impact on Revenues and Profits is persented in Figure 17 and the cumulative investments and earnings is presented in Figure 18. Although revenues are not as great it still has the potential for multi-billionannual revenues with gross profit margins in excess of 60% and IRR over ten years of 60%. Up-front investment costs are very similar to the reference case since the same basic vehicle is used. Acquisition costs are lower due the reduction in the number of vehicles and spaceports required. Impact studies, similar to the cases I, 2 and 3 were carried-out to assess the sensitivities of thi.¢ reference market to reductions in revenues, changes in acquisition costs and first unit costs, vehicle flight rates, R & D costs and operations costs. Results were all similar in terms of percentage impacts.
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100%
So%
|,I
o. -S0%
-100% 1"line (YMm)
Figure 17: Impacts of Reduced Market Investments and Income Case 4.0 14
12
10
8
6
0 0
4
2
0 -2 -4 Time
Figure 18: Investments and Income for Reduced Market
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Summary Observations: 1) 2) 3) 4) 5) 6) 7) 8)
9)
I0) 11)
Sub-orbital space tourism can provide a business basis fdr being a starting point for space tourism, assnml-g the forecast market develops. Sub-orbital space tourism offers the potential for developing into a business capable of generating very large a,,ual revenues. Sub-orbital space tourism could be initiated with relatively small vehicles. The relatively low development, infrastructure and operating costs for sub-orbital tourism offer the potential for large profit margins and ROI. Profits generated could be used for developing an orbital space tourism business. Major impacts on business performance come from vehicle rehab and replacement rates, vehicle flight rates and first unit costs. In the long term profit mar~n.~ and returns on investment are relatively insensitive to reasonable changes in markets, operating and development costs. The sub-orbital space tourism business could create a large demand for the vehicle systems and new spaceports. The development times for the vehicle systems and infrastructure required to provide a safe, pleasurable sub-orbital adventure ride for the general public results in long (> 5-years) "break-even" points for the business. Uncertainties in the regulatory requirements could result in longer times required for first revenue flights. An investment in a suborbital space tourism business venture must be entered into with great patience.
References 1. Andrews, Dana, NRA 8-27 TA 1. Future Space Transportation Study, Phase 1 (FSTS-1) AS&T Media Nnmber: AS&T-P.01-01-FSTSS"P, Phl.DOC (January 2001) 2. Daniel O~Niel, "General Public Space Travel and Tourism - Volume 1, Executive Summary", NASA Marshall Space Flight Center, NP-1998-03-11-MFSC (March 1998) 3. Collin.%Patrick, K Isozaki, R Wakamatsu, "Progress Towards Space Tourism in Japan", 49 ~ International Astronautical Congress, IAA-98olAA. 1.5.04 (October 1998) 4. Davis, Robert, "Validating the Space Travel and Tourism Market", STA Space Travel and Tourism Division Meeting, Washington D.C., (June 2001) 5. Rodgers, Tom, Private communication, (March 2000) 6. Commercial Space Transportation Study (CSTS) Final Report (May 1994) 7. Gaubatz, William A., Design for Space Tourism, AIAA-2001-4736 (ST-09) (August 2001)