Skip to Content

We May be Heading for a Space Bubble

The supply of new spacecraft, launchers, and spaceports could soon exceed the demand.
September 14, 2010

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.

Space oasis: An artist’s impression of the spaceport terminal that Virgin Galactic is planning to build in the Mojave Desert.

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.

Both SpaceX and Orbital Sciences plan to tap into additional markets by offering the new rockets used to launch their spacecraft, the Falcon 9 and Taurus II respectively, to satellite customers. But NASA could also create extra demand by rotating its ISS crews faster. “A lot of the researchers looking at the effects of long-term exposure to a weightless environment say that at about 120 days, they’re at the point of diminishing returns, and they would really like to see a new crew brought on,” says Valin Thorn, C3PO deputy program manager. “If funding permits, it might be an attractive option that would increase the annual flight rate to help enhance the market.” NASA also has the option of adding a fourth astronaut to its crew complement. Coupled with more frequent rotations, this would double the number of astronauts needing transport each year, from six to 12.

Thorn believes the space companies will find paying customers other than NASA. One such category of customers could be nations interested in spaceflight for prestige or technological and scientific projects, but who don’t want to be tagalongs on U.S. or Russian missions. “We’re hearing that many nations are interested in something that’s more autonomous. In a world where they could buy a spacecraft that was their spacecraft and have all their own crew … that’s a substantial market, possibly larger annually than the NASA market,” Thorn says. “And then, of course, there’s space tourism.”

The lure of space tourism is what’s driving interest in spaceports, most of which are intended to support suborbital vehicles giving passengers brief trips above the atmosphere. Often with the support of state governments, plans for new spaceports are underway, not just in traditional aerospace hot spots such as New Mexico or Florida, but also in places like Hawaii, Indiana, and Wisconsin. However, there are only a handful of operators, such as Virgin Galactic or Blue Origin, who have progressed even as far as technology demonstration flights.

John Gedmark, executive director of the Commercial Spaceflight Federation, a Washington, D.C.-based trade association, admits that it could be another five to 10 years before suborbital operations expand to some of these new locations. But he says that “shouldn’t dissuade spaceports from beginning now to plan how they would take that on. That kind of infrastructure takes time and planning to come together.”

Ultimately, a shakeout in the coming years may not be a bad thing. “In time, there will be a market to support [as many players as now exist]. But in the near term, there probably won’t be enough, so right now it is kind of a horse race,” says NASA’s Thorn. “That’s why we want to bring along several; then we can afford to have some fail. The model doesn’t work if we’re trying to rely on free market commercial practices, and then if somebody has problems, we come along and rescue them.”

Keep Reading

Most Popular

DeepMind’s cofounder: Generative AI is just a phase. What’s next is interactive AI.

“This is a profound moment in the history of technology,” says Mustafa Suleyman.

What to know about this autumn’s covid vaccines

New variants will pose a challenge, but early signs suggest the shots will still boost antibody responses.

Human-plus-AI solutions mitigate security threats

With the right human oversight, emerging technologies like artificial intelligence can help keep business and customer data secure

Next slide, please: A brief history of the corporate presentation

From million-dollar slide shows to Steve Jobs’s introduction of the iPhone, a bit of show business never hurt plain old business.

Stay connected

Illustration by Rose Wong

Get the latest updates from
MIT Technology Review

Discover special offers, top stories, upcoming events, and more.

Thank you for submitting your email!

Explore more newsletters

It looks like something went wrong.

We’re having trouble saving your preferences. Try refreshing this page and updating them one more time. If you continue to get this message, reach out to us at with a list of newsletters you’d like to receive.