The 400,000 wealthy people are interested. Will the Branson lift-off trip promote space tourism?

Virgin Galactic claimed at the time that within five years, the company will help more than 3,000 passengers carry its suborbital spacecraft for life-changing space travel.

The 400,000 wealthy people are interested. Will the Branson lift-off trip promote space tourism?

It was reported on July 12 that as early as 2004, the space tourism company Virgin Galactic, which had just sent its founder Sir Richard Branson to the edge of space, advertised to attract tourists. Go to the edge of space to experience the feeling of weightlessness for a few minutes. Virgin Galactic claimed at the time that within five years, the company will help more than 3,000 passengers carry its suborbital spacecraft for life-changing space travel.

On July 11th, US local time, after a 90-minute delay, Virgin Galactic finally fulfilled this promise. The company’s suborbital spacecraft VSS Unity was released from the aircraft carrier, activated the rocket engine to accelerate to three times the speed of sound, and soared 85 kilometers above the surface of the earth. Since then, six passengers (including Branson) who were temporarily weightless, watched the curvature of the earth against the backdrop of the dark outer space for 4 minutes, and then returned to the spaceport in New Mexico.

Branson, who has always been ignorant of humility, has no idea how he feels about this, but after returning to the ground, he called this experience “magical”. At the same time, he may also be a little overjoyed, because he just defeated Jeff Bezos (Jeff Bezos). On July 20th, the recently retired Amazon CEO planned to take the New Shepard, a vertical launch vehicle manufactured by its Blue Origin company, to fly slightly higher in less time than Branson.

These two technology tycoons are among the growing number of space flight enthusiasts who believe that the era of space tourism has finally arrived. A small number of paying passengers have taken Russian spacecraft into space, but this is part of the government’s space program. In contrast, Virgin Galactic and Blue Origin have designed and built their own spacecraft to send paying passengers out of the Earth’s atmosphere. Matthew Weinzierl of Harvard Business School said: “For the first time in history, we have large, well-funded companies dedicated to the large-scale development of the space tourism industry.”

Suborbital tourism is part of the broader space economy, and this emerging economy has flourished in the past decade due to rapid advances in rocket and satellite technology. Entrepreneurs and financiers are rapidly pouring into this area that once belonged to the government. In 2020, investors invested 28 billion U.S. dollars in space companies in the hope that they can emulate SpaceX’s success. Because of its clever reusable rockets, SpaceX has significantly reduced orbital launch costs, with a current valuation of $74 billion.

Bank analysts also see huge wealth potential in the space tourism industry. Morgan Stanley analysts predict that by 2040, the entire space economy will generate $1 trillion in revenue, which is currently $350 billion. UBS (UBS) analysts believe that by around 2030, this number will reach 800 billion US dollars.

UBS believes that if space tourism proves to be a stepping stone to replace large-scale long-distance aviation with hypersonic travel, it will make a “great contribution” to the space economy. However, this is extremely unlikely. Currently, Blue Origin and Virgin Galactic will only provide short-term suborbital flights. Branson floated below the Káramán line, 100 kilometers above the ground, where the air became too thin to maintain unpowered flight. If everything goes according to plan, Bezos will fly higher than Branson.

But suborbital space travel is not the main goal of Blue Origin. The company focuses on developing a large new rocket, the New Glenn, for launching satellites, selling advanced rocket engines to other companies, and bidding for NASA contracts, such as the development of a manned moon landing system. In the long run, Bezos believes that Blue Origin will promote the development of a large-scale space economy, rather than simply providing services to those seeking stimulus.

This is not to say that Blue Origin’s larger rocket will not accept paying customers who want to go orbit. Although SpaceX is not driven by the space tourism market, as a sideline, it has already begun to make profits from it. SpaceX is providing ordinary people with seats on the Crew Dragon spacecraft through a company called Axiom Space, which is used to transport astronauts to the International Space Station (ISS).

Axiom Space also reached an agreement with NASA to send its first batch of civilian tourists to the International Space Station next year. Prior to this, the Inspiration4 mission paid for by billionaire Jared Isaacman who runs a payment company will see Isaacman and three companions flying around the earth in a manned dragon spacecraft. It will not visit the International Space Station.

Obviously, even short-distance suborbital travel is very attractive. Nearly 7,600 people competed for the opportunity to accompany Bezos to the edge of space. The still unnamed bid winner offered $28 million. A survey by investment bank Cowen found that nearly two-fifths of people with a net worth of more than $5 million are willing to pay $250,000 for air tickets for space travel, which is the price currently set by Virgin Galactic. According to data from Capgemini Consulting, given that there are about 2 million such people on the planet, this sounds like a fairly large market.

Virgin Galactic said the company has a waiting list of hundreds of volunteer travelers, including SpaceX founder and CEO Elon Musk. At current prices, when regular flights begin to offset the cost of rocket development, this business may become profitable. Venture capitalist and chairman of Virgin Galactic Chaath Palihapitiya (Chaath Palihapitiya) once said that he expects the industry’s operating profit margin to reach nearly 70%, which is comparable to the operating profit margin of software companies. Comparable.

However, space tourism is unlikely to become an important part of the space business or tourism industry, at least in the next ten or twenty years. This is mainly due to two reasons:

First of all, Bernstein’s agent Douglas Harned (Douglas Harned) said that new technology and frequent travel can help reduce costs, but it is uncertain how fast and how wide.

Morgan Stanley recently lowered Virgin Galactic’s expected annual revenue by 2030 from US$1.8 billion to US$1.3 billion, which is less than the majority of Branson’s Virgin Atlantic’s suspension of flights during the COVID-19 pandemic. Half of the revenue before air travel. There are no tourist-friendly destinations to visit (the capacity of the International Space Station is severely restricted), and orbital tours with much higher fares are unlikely to earn more.

Investors will not scramble to enter the space field. Several space tourism startups, such as RocketPlane, Armadillo AerSpace and XCOR AerSpace, have given up. This year, the space-themed exchange-traded fund (ETF) operated by the technology investment company Ark Invest sold off most of its holdings in Virgin Galactic, which went public in 2019. In the past few months, Branson and Pali Ha Petey Asia have sold their majority stake in the company to free up cash. Retail traders on the WallStreetBets Reddit forum are talking about shorting the stock.

The second challenge, and the biggest uncertainty, is related to safety. History shows that a disaster, especially in the early stages of an industry, may set the industry back several years and cause demand to shrink. In 1986, after a teacher and other crew were killed in the disintegration of the Challenger space shuttle, NASA suspended plans to send untrained civilians into orbit. It took another civilian 15 years to bravely embark on this journey (aboard a Russian spacecraft).

Jonathan McDowell, an astrophysicist at Harvard University, explained that suborbital missions have low risks, low requirements for life support systems, and are increasingly equipped with emergency stop technology. The US Congress established a “learning period” for the commercial space industry in 2004, leaving medical and safety standards to private companies as long as customers are clearly warned of the risks.

But for passengers flying at 3 times the speed of sound or higher, these are not trivial risks, in fact they are tied to a pile of high explosives. As McDowell said: “Safer than orbital flight does not mean real safety.” The sister spacecraft of Virgin Galactic VSS Unity was destroyed in an accident in 2014.

Even if there are no accidents, when the “learning period” ends in 2023, new problems may arise. Karina Drees, chairman of the Commercial Space Federation, an industry group, said that strict top-down supervision in the design, manufacture and operation of commercial manned aviation may mean that the field “will no longer have The freedom to pursue new methods to improve safety”. Coupled with more common troubles, such as launch delays, space tourism may still be one of the few rich, bold, and time-rich super-rich patents. For now, this is not exactly a mass market. 

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Like (0)
Donate Buy me a coffee Buy me a coffee
Previous 2021-07-12 01:59
Next 2021-07-12 02:04

Related articles