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Before the year is out, SpaceX will likely have conducted the first orbital demonstration of the Dragon capsule, which is intended to transport cargo, and ultimately humans, to the International Space Station (ISS). Next year, Orbital Sciences is expected to launch its cargo vessel, Cygnus. By 2014, two more spacecraft, the Dream Chaser and CST-100 are on track to have maiden voyages, launched by the Sierra Nevada Corporation and Boeing, respectively. And even more spacecraft are being developed by companies such as Blue Origin and PlanetSpace, as well as suborbital vehicles being built by Virgin Galactic, XCOR, and others.

On the ground, there are seven federal and eight nonfederal launch sites licensed by the U.S. Federal Aviation Administration; most of the latter are new and owned by a combination of private enterprise and state and local governments. Additional applications for even more spaceports are likely.

When these developments were reviewed at last week’s American Institute of Aeronautics and Astronautics Space 2010 conference, some attendees began asking: is the space industry building too much capacity?

It’s happened before. In the 1990s, the satellite launch industry went through a boom-and-bust cycle when investors projected that phones connected via constellations of satellites would be the immediate future of mobile communications. Believing that there would be enough demand to send about 1,000 satellites into orbit over 10 years, new space ventures sprang up, such as California-based SeaLaunch, which used a floating platform in the Pacific as a pad for Russian rockets. But the growth of terrestrial cellular networks left few customers for satellite phones, and by the turn of the century, the market collapsed. Phone operators and launch providers alike went bankrupt after only about 150 satellites had been launched.

A habit of thinking about the engineering first and the customers second is a perennial problem in the space industry, says Jim Baker, director of the commercial-sector efforts of the Houston-based aerospace firm MEI Technologies. The industry has many times been guilty of “pushing our solutions onto a market that doesn’t quite exist yet,” Baker says.

NASA has helped to fuel the current space boom by providing financial and technical assistance and making the ISS an anchor customer for space services through its Commercial Crew and Cargo Program Office, or C3PO. As well as paying out $500 million in rewards for reaching various technical milestones, NASA has agreed to pay $1.6 billion to SpaceX for the delivery of 20,000 kilograms of cargo to the ISS between 2011 and 2015, and $1.9 billion to Orbital for delivery of the same amount. Should NASA want to send more cargo aloft, each contract could be worth over $3 billion. The C3PO is also investing $50 million in firms that are developing systems for commercial human spaceflight. However, NASA is responsible for supporting half of the six-person crew on the ISS, and the astronauts are exchanged only every six months, potentially creating a ceiling for growth.

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Credit: Virgin Galactic

Tagged: Business, space, SpaceX, commercial space, Boeing, human space exploration, orbit, Orbital Sciences

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