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Will Customers Boldly Go?

February 22, 2011

When NASA announced the Commercial Orbital Transportation Services (COTS) program in 2005, the agency was hoping for a way to send cargo—and, ultimately, crew—to the International Space Station less expensively than a government-built system could do. It also hoped it could kick-start a competitive market for these services among buyers other than itself, creating an orbital economy not solely dependent on federal funds. However, a question looms over this effort: how many customers besides NASA can be found?

It’s unlikely that many new customers will come from existing markets, such as operators of satellites used for commercial communications or to monitor happenings on Earth. Global demand for satellite launches is forecast to be relatively flat for the next decade, according to a report published last year by an industry advisory group and the FAA. That market is well served by existing providers. The introduction of new rockets being developed for COTS, like SpaceX’s Falcon 9 and Orbital Sciences’ Taurus II, is unlikely to spur additional demand in the near term, although these vehicles may be able to capture business that has previously gone to the soon-to-be-retired Delta II rocket from United Launch Alliance, a joint venture of Boeing and Lockheed Martin.

Instead, vehicle developers are looking to new markets, notably space tourism. Over the last decade Space Adventures has flown seven commercial passengers to the ISS (one flew twice) at prices of up to $40 million each, taking advantage of extra seats on Russian Soyuz spacecraft. Last fall Space Adventures announced a similar agreement to sell additional seats on Boeing’s proposed CST-100 commercial spacecraft.

Another potential customer is Bigelow Aerospace, the Las Vegas-based developer of commercial space-station modules. That company has focused not on space tourism but on facilitating research by industrial concerns such as biotech companies and by “sovereign clients”: countries without large space programs that could buy or lease a Bigelow station. Last fall the company announced memoranda of understanding with Australia, Japan, the Netherlands, Singapore, Sweden, and the United Kingdom. Sovereign clients may also be willing to buy flights directly from companies like SpaceX or Sierra Nevada, in part so that they can conduct their own missions without being a guest of the United States or Russia.

Yet it’s been difficult to gauge the size of these potential markets. A 2002 study that I contributed to at the Futron Corporation (where I still work) forecast that demand for orbital space tourism would reach 60 passengers a year by 2021, but that assumed a ticket price of $5 million, well below current Soyuz prices. Similarly, though Bigelow Aerospace founder Robert Bigelow said last fall that he anticipates a demand of six flights a year for his first space station, he has announced no customers beyond the six countries that signed the memoranda.

The lack of details has fueled some skepticism about the prospects for commercial orbital human spaceflight. “The short-term prospects are miserable,” says Henry ­Hertzfeld, a research professor at George Washington University’s Space Policy Institute, who studies the economics of the launch industry. He believes that some companies will eventually find success in human spaceflight, primarily serving governments, but not anytime soon. “It doesn’t add up to making a fortune on this stuff overnight,” he says.

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