Suborbital Space Tourism

What does it mean to be an astronaut?

Is it defined by going to the International Space Station and performing a space walk? Does it mean that you travelled to the moon and planted a flag? By definition, an astronaut is someone who has crossed the boundary between Earth’s atmosphere and the edge of space.

Where does that boundary exist? Well the atmosphere falls off gradually as you leave the planet’s surface so there isn’t an obvious line. However, there are two widely accepted benchmarks. The first, and most internationally recognized border, is the Karman line which exists 100 kilometers (62 miles) above the Earth’s surface. The second, used mostly within the US by the US Air Force, FAA, and NASA, is at 50 miles above the Earth’s surface.

So if someone offered to charge you for a ride to cross that line and endow you with the title of astronaut, would you take it? Well private companies Virgin Galactic and Blue Origin are betting a lot of money that a good chunk of the population will say yes.

This post will explore that idea further by considering the below topics on this subject of suborbital tourism

• Why would customers pay for this ride?

• What approaches are the competitors taking to offer these rides?

• How big is the market for this opportunity?

Why Pay for a Ride to Space?

In detailing why anyone would pay for a suborbital ride to space, its important to describe what you’re not getting from the trip. Although its obvious from the name, a suborbital ride to space is not an orbital one. Suborbital flights go up to the edge of space and come back down, taking a parabolic trajectory on the path

An orbital flight path goes beyond the boundary of space but then also picks up enough velocity going sideways that it never falls back down to the Earth, it just keeps rotating around the planet.

Why would a company provide a suborbital flight service, why not just offer orbital rides to space? Well it’s significantly harder to get to orbit than just to reach space. In the space industry, a common unit for measuring the amount of speed you need to get somewhere is called delta-v. It simply means how much change (delta) in velocity (v) required to achieve a mission. A suborbital trajectory to the edge of space demands a delta-v of 1,400 meters/sec (3,132 mph) but to reach an orbital velocity you need a delta-v of around 7,800 m/s (17,400 mph), a much bigger challenge. Consequently, some organizations have decided to offer suborbital rides with the belief that demand exists for such a service.

There are two primary reasons why someone or some organization would pay for a suborbital trip to space, scientific research and space tourism.

With respect to the scientific value, some research organizations like NASA or university laboratories are interested in sending payloads up into reduced gravity or beyond the edges of our atmosphere. Since a suborbital trip can be as short as 10 minutes long, these experiments are intended to quickly take measurements under the conditions of weightlessness or reduced atmospheric density in order to learn from these experiences.

The second reason for suborbital rides to space, space tourism, exists because there is demand to join the small, elite group of individuals that call themselves astronauts. In addition, traveling to space is widely understood to have a profound impact on the passenger. As Astronaut Bob Behnken described looking back on the Earth from space “You see that it's a single planet with a shared atmosphere. It's our shared place in this universe. So I think that perspective, as we go through things like the pandemic or we see the challenges across our nation or across the world, we recognize that we all face them together.” Many are driven to space travel because of the sense of adventure, others want to live out their childhood dreams, and some are motivated by the exclusivity.

Who’s Offering The Rides?

At the moment there are two competitors in the race toward suborbital space tourism, Virgin Galactic and Blue Origin.

Virgin Galactic

Virgin Galactic is a publicly traded company ($SPCE) that for nearly two decades was primarily privately funded by Richard Branson and in 2019 became available to public investors through a Special Purpose Acquisition Company (SPAC)

Virgin’s technical approach involves two separate vehicles, its spacecraft named SpaceShipTwo that goes to space and its carrier airplane named White Knight Two that carries SpaceShipTwo for the first part of the ride.

The ride involves White Knight Two taking off from a runway with SpaceShipTwo attached below. White Knight Two then climbs to 50,000 ft under jet engine power before dropping SpaceShipTwo.

Seconds later, SpaceShipTwo ignites its rocket motor and accelerates up towards the edge of space. After the motor cuts off, SpaceShipTwo glides back down to a runway for landing. The below 2018 promotional video demonstrates the first successful suborbital flight for Virgin Galactic from start to finish.

Virgin chose this air-launched spaceplane approach to suborbital launch because it was theoretically simpler than a more traditional vertical rocket launch that is typically used for orbital launch. That being said, it has been a highly unique approach and for that reason Virgin has had to solve a number of problems for the first time rather than utilizing more well-understood rocketry methodologies. The road has been undeniably long and rocky for Virgin, with original predictions for the first commercial customers in the early 2010’s. Virgin is nearing that milestone and now aims to launch its first commercial customers in 2021.

Blue Origin

Blue Origin is a private company, entirely funded and owned by Amazon founder Jeff Bezos.

Blue has taken a more traditional approach to suborbital flight, launching a rocket straight up and then having it fall right back down. Blue utilizes their New Shepard launch vehicle to accomplish this task. The vehicle is named after Alan Shepard, who became the first American to go to space which took place on a suborbital flight in 1961.

The vehicle has two major components, the booster stage carrying the engines and propellents for lifting the vehicle into space and the crew capsule which holds the passengers. Just before the rocket nears the Karman Line, the capsule separates from the booster stage and experiences a few minutes of weightlessness and free fall before deploying its parachutes that slow the descent back to Earth. After capsule separation the booster then falls to the Earth before relighting its engines and landing vertically. This highly impressive feat makes Blue Origin one of only two companies (the other being SpaceX) capable of landing a rocket after reaching space. A video of a recent New Shepard test flight is shown below.

Market Sizing for Suborbital Space Tourism

How big is the market? This is a challenging question to ask for a service that hasn’t yet been offered. Virgin Galactic has already reserved seats at a cost of $250,000 per ticket, with indications that the price will rise closer to $400,000 in the future. Virgin Galactic’s next generation vehicle (SpaceShip III) will have room for six passengers per flight, meaning that at $250K per seat they are anticipating revenues of approximately $1.5 million per launch. Virgin Galactic has stated that they have limited their waitlist to 600 individuals, so that they have a $150M backlog of passengers.

If that $150M backlog quickly expands once the waitlist is opened, then its understandable why so many are excited about Virgin Galactic’s ambitions. The CEO Michael Colgazer has stated plans for $1B in revenue per year at scale and hopes to fly 400 times per year per spaceport, with plans for multiple spaceports across the globe. However a key question is, how long will it take for Virgin to get up to that launch cadence? Currently, Virgin has yet to launch their first commercial passengers and their shortest time between test flights has been about four months. Four months between launches would mean three launches per year, corresponding to $4.5M in annual revenue. Some analysts are very skeptical of the launch rates suggested by the company.

Given Virgin’s current market cap of over $6B, investors are clearly anticipating the launch rate to ramp up quickly, but only time will tell how long this takes.

Blue Origin is in a similar situation where they are emerging from a development program over a decade long with plans to launch their first commercial customers on July 20th of this year. The first seat on that flight is currently being auctioned off, however, Blue has yet to announce their price per seat for regular flights. Blue has also not demonstrated a flight cadence of more than a few test launches a year at most. However, just as with Virgin, it is unclear what rate Blue is capable of achieving as they move toward more commercial launches. Bezos has invested billions of dollars into Blue, which is tackling multiple projects beyond just New Shepard. As a result it is unclear how many dozens or hundreds of launches would be necessary to provide a positive return on that investment.

Another factor impacting the market available to these competitors is that they are potentially both trying to serve the same pool of customers. For that reason, whoever makes it to market last or is unable to scale their launch rates quickly enough may find their list of potential customers decreasing as the other suborbital provider fulfills the market demand.

One more critical consideration to this market is that orbital tourism is coming to fruition in the near future as well. SpaceX has already matured flying astronauts to the International Space Station (ISS) for government customers including NASA and Japan’s Space Agency. They’ve recently signed on their first few private flights with the earliest currently planned for September 2021. While orbital space tourism will be significantly more expensive than suborbital, its also true that the experience will likely be more substantial. A suborbital trip lasts a few minutes while an orbital visit to the ISS could last days or weeks.

At the moment it’s impossible to say how these markets materialize short term but investors agree that in the long term, taking private citizens to space will be a key component of the space industry.