Double Indemnity

Commercial human space flight is in its infancy.  It has been suggested that NASA could do much to encourage or enable the fledgling industry.  Supporters cite the historical analogy of US government contracts for air mail delivery in the 1920s as a model for how to kick start the industry.  A rosy hued and much abbreviated history of that era suggests that once the government started contract airmail service, modern aviation as we know it inevitably and quickly followed.


It may be worthwhile to remind ourselves of a slightly more detailed version of history.


 The US Post Office Department started scheduled airmail service while the Great War was still raging in May 1918.  Government aircraft and government pilots delivered air mail in aircraft that were built to detailed government specifications for the next eight years.  Twelve government pilots were killed in the first two years of this service.  The US Post Office added regularly scheduled transcontinental airmail service in 1920, again with government owned aircraft and government pilots.  Following the Kelly Air Mail Act of 1925, the first commercial contract air mail operations started.  These were mostly flown by small start-up airlines which were frequently under-capitalized using old government surplus aircraft.  By late 1926 all air mail delivery was turned over to these contracts and the government service was discontinued.  Fatal accidents were still common among air mail pilots.  To an even greater extent than today, the government to industry “revolving door” phenomenon was present in those days.  In 1934 the great air mail scandal erupted.  There were charges that government officials had colluded with industry officials (some of whom were former government officials) to fraudulently award air mail contracts to favored companies.  FDR cancelled all commercial air mail contracts and called on the US Army Air Service to deliver the mail.  Inexperienced military pilots and bad weather resulted in twelve pilot deaths in less than a month.  WWI aviation hero Eddie Rickenbacker called the Army Air Service program “legalized murder.”  Within a few months, Congress passed new air mail legislation and a more closely regulated commercial air mail service was restarted.  Among the features of the legislation was the provision that banned all former airline executives from further contracts.  All the old air line companies were reorganized.  Air mail contracts were much less lucrative and the nascent airline companies had to rely increasingly on passenger fares rather than air mail revenues to make their operations profitable.  Air craft accidents continued to be frequent and in 1938 the Civil Aviation Administration was formed.  The CAA started an era of tight regulations reigned over the air line industry which continued for nearly forty years. 


Is this the model that people have in mind for commercial space transportation? 


Of course, a paragraph or two doesn’t do justice to the rich and complex history of aviation in the 1920s and 1930s.   Go read the biography of  Dutch Kindelberger, for example.  Some airlines, like Pan Am, became profitable carrying passengers without the subsidy of air mail.  The transportation of equipment and goods for purely commercial reasons apart from government contracts was a significant business.  Air races stimulated technical advances.  And what happened in the USA was only part of the story as airlines sprang up crossing the globe from Europe to Africa or Australia or South America.  It wasn’t just the air mail contracts that spurred aviation in its “golden years”.


Changing focus slightly, it is often noted that the Air Force does not build its own airplane; the Army does not build its own tanks, why should NASA build its own spacecraft? 


NASA, of course, does not build human spacecraft.   Never has.  Commercial companies have built all human spacecraft and their launch vehicles.  McDonnell built Mercury and Gemini, North American Aviation and Grumman built the Apollo CSM and LM respectively.  Chrysler built the Redstone rocket and the first stage of the Saturn 1B launch vehicle, and so forth.  The renamed North American Rockwell built the Space Shuttle orbiter.  When I became NASA’s Shuttle Program Manager, I was surprised to find that the detailed design and production drawings for the Space Shuttle orbiter were the intellectual property of Rockwell International Space Division which has since become part of Boeing.  The government, while definitely involved with the design, did not do the detailed part of the design and does not own the “intellectual property” for the shuttle.  Many boxes and piece parts remain “proprietary” and not under the detailed purview of the government.  That seems commercial at some level, doesn’t it?


Thinking more about the military services, a recent speaker at NASA was from the Navy ship bureau in charge of building aircraft carriers.  The Navy doesn’t build aircraft carriers, a commercial company does that; but the Navy is intimately involved in the detailed design of every part of a new aircraft carrier.  And the Air Force is intimately involved in the design of new jet fighters like the F-22 and the F-35.  Sometimes this backfires on a company; ask about the presidential helicopter program.  There is a real lesson there.


So what is being proposed for commercial human spacecraft for government use?  A contract that merely asks a “provider” to transport our 4-ish person ISS crew from some place on the earth’s surface to the ISS for a fee?  No other questions asked?  Somehow I think that is not really what is going to happen.  Even the airlines and aircraft builders have to pass FAA certification for flight worthiness.  So if the government contracts for transportation service there is going to be some government involvement.  Oh, and don’t even ask about federal procurement regulations.  Remember the 1934 air mail scandal?  There are a slew of laws and regulations intended to prevent something like that from happening again. 


So the real question is how much or how little the government will be involved in the design/certification/operation of commercially contracted human space vehicles.  Neither the current model of intimate and controlling design authority nor a totally hands off approach is realistic.


Like almost all of life, there is going to be a compromise.  The devil is in the details.  It seems to me that we need to spend a serious amount of thought and discussion on how best to do this.  Far more than a couple of paragraphs in an essay or a report. 


Indemnification.  I have heard a lot about that word lately.  Had to look it up.  Currently the US government indemnifies the companies that build and operate our current space vehicles.  If they crash, the government, not the companies, is held liable.  That is not the way the airlines work; if an airliner crashes, the airline company or sometimes the aircraft manufacturer are held responsibility and are subject to civil legal action.  Some of the putative commercial human space flight providers want the government to indemnify them, take the responsibility if they crash.  The original airmail contracts didn’t do that in 1925. 


Seems like we have a lot to think about as we move commercial human space flight.


We might even learn from history. 


William C. “Will Bill” Hopson was an early government airmail pilot earning 5 cents a mile.  He helped pioneer the transcontinental route in 1920 flying the Omaha to Chicago leg in an open cockpit De Haviland DH-4 modified WWI bomber.  He is shown here in his government gear, ready to fly in any weather.  After the airmail was commercialized, Hopson went to work flying CAM-17 from New York to Chicago.  He died in 1928, in a crash, flying his daily run for a commercial air mail company.

6 thoughts on “Double Indemnity”

  1. Mr Hale,

    Another extremely interesting read. Thank-you for the history lesson; we can learn a lot from history, if we are exposed to it.


  2. In most respects I see your point, but where I separate is the notion that companies like Boeing, Lockheed, etc. are genuinely considered “private” companies. They are government contractors, nothing more. They don’t build and sell products or services to the general public, at least not that I’m aware of. Their entire business model relies on the American tax payer, not the global consumer.

    The New Space (Commercial) movement has one main goal in mind, to make space available to almost everyone, much like the airline industry makes travel around the world available to almost everyone. With this initiative, the target market is not the government, but average everyday people who deserve the opportunity to go into space, something that is currently restricted to specially appointed people as so deemed worthy by the government, or those with significantly deep pockets to pay for a space tourist ride on their own (and that’s Russia doing it, not us).

    The history lesson of air mail is justifiable and worthy if we don’t learn from past mistakes and repeat the idiocy that was rampant then. I find it hard to believe we’d let the Commercial Space Industry fall on its face, because too many dollars and too much is at stake. Proper regulation, mixed with proper incentives and growth capability, is what will allow the private sector to assume control of the space from LEO to the Moon.

    Let NASA and other governments focus on beyond, until the private industry catches and passes them of course.

  3. Mr Hale, you need to visit the government (NASA and USAF) (E)ELV mission assurance organizations at KSC and LA AFB. It’s really just a purchase of orbital elements and demonstrated reliability – and the policies, processes and procedures of the contractor that can achieve them with targeted customer approval and complete customer insight.

    As Dr Griffin stated in May 2003, “What, precisely, are the precautions that we would take to safeguard a human crew that we would deliberately omit when launching, say, a billion-dollar Mars Exploration Rover (MER) mission? The answer is, of course, ‘none’.”

  4. A great history lesson!!!

    It has taken the airline industry 80 years to learn, understand and regulate its way to its current safety level.

    While a space ‘airline’ industry has a lot of history and experience to draw on from both the space and airline industries, current space transport vehicles do not enjoy anywhere near the safety record of western airlines.

    Climbing out of earth’s gravity well to LEO is a far more exacting task as Wayne has shown with his energy calculations.

    It is worth spending a few years working through simulations of regulation creation and space ‘airline’ industry response, before the first space ‘airlines’ launch humans in their craft.

    No doubt known unknowns and unknown unknowns will still cause major issues for space ‘airlines’ during their initial years of operation and much rewriting of regulations will be required.

  5. Commercial aviation was also greatly assisted by the government surplus sales on aircraft following the War. Many aircraft that were built for the Army for the war, but never flown, were bought up by pilots for stuntwork, air mail, etc.

    The Government has been understandably reluctant to sell surplus rockets on the open market.

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