Burgeoning commercial space industry

The Human Spaceflight Plans Committee (aka “Augustine Committee”) has finalized its report and it is no surprise that the proposals and alternatives offered there have been the subject of much review and evaluation by NASA leadership and space policy makers.


Re-reading the report last week I was struck by an early sentence in the executive summary which was repeated in the body of the report:


“. . . there is now a burgeoning commercial space industry.”


OK, I’m an Engineer, not an English major so I had to look it up:


burgeon  [bur-juh n]  


to grow or develop quickly; flourish



to begin to grow, as a bud; put forth buds, shoots, etc., as a plant (often fol. by out, forth).

ME burjon, burion; shoot, bud, deriv. of LL burra wool, fluff




Let’s see; in the USA we have, what, three or four space launch vehicle manufacturers in active production?  Is that “burgeoning?”


Sea Launch, one of the most innovative companies in both their business model and their technical approach is in bankruptcy court.  Two of the “old space” major players have formed a joint venture to pool their launch capabilities and fly maybe 5 or 6 times in a good year.  The geosynchronous satellite market has largely gone overseas to Ariane or India or China. 


As my father, the CPA, taught me:  for a business to stay in business, it must make a profit.  That is what businesses do.  If there is no return on investment, they go out of business.  It is not just the technical challenge, nor the production challenge; it is the business challenge and profitability which are inhibiting commercial space flight.  If somebody can do the job cheaper than your company, then you are in real trouble business-wise.  Ergo, commercial satellites have gone “off shore.”


There are a couple of smaller, entrepreneurial, companies which are making good progress toward medium launch vehicle operations.  We applaud them and wish them well and have in fact provided some fiscal support.


But compare where the US commercial space launch business is today with the situation a decade ago when there were at least dozen firms in the space launch business.  The proper adjective for US commercial space flight should be “moribund” rather than “burgeoning.”


Not that there aren’t a lot of folks out there who have an idea, a concept, some preliminary engineering feasibility studies and some hopeful powerpoint charts trying to attract venture capital.  There are a lot of those folks.  Many of these are pursuing the technically simpler and much cheaper sub orbital “market.”  Even that is a struggle as we can see by the serious “gap” in suborbital capability since Space Ship One flew twice in 2003 and the next flight maybe in 2010.


But any student of space flight knows that recent history is littered with the wreckage of serious commercial space launch companies  hat failed.  Just a few names to jog your memory:  Conestoga, Beal, Rotary Rocket, Kistler . . . fill in your own favorites.  Several of these had serious financial backing, great technical teams, and some even built and launched flight hardware.  All are gone. 


On my spaceflight shelf is a slim volume with the title “LEO on the Cheap” written by a guy who should have known better.  In the 1980’s there was a German organization called OTRAG that had a great plan to get to earth orbit cheaply.  Nothing ever came of it. 


All of these fledgling companies share a common belief, that getting to LEO should be easy:  just eliminate the waste, bureaucracy, and inefficiency of the government or of the “old space” (aka military-industrial-complex) guys and apply the latest management theories and – voila’ – cheap, regular, plentiful access to space will immediately follow.


Many people wishfully believe that it is that easy.  I personally wish it were that easy.  I cannot tell you how much I wish it were that easy.  But if wishes had wings then pigs could fly. 


If we are to reawaken the US commercial space launch industry and build it into a vibrant, competitive (which is to say, cheaper), reliable, regular space launch business, many things will need to be addressed.  From my knothole it would appear that the ITAR laws are one of the critical components that prevent competition.  And ITAR (International Traffic in Arms Regulations) has its merits in a dangerous world. 


By Federal statute and general interest, NASA is encouraging, promoting, and even to some extent enabling commercial space flight in the US.  Could more be done? Absolutely, and we should.  Will there be problems along the way?  No doubt.  Will astounding breakthroughs in cost reduction appear?  I doubt it. 


Commercial air travel required the revolution from propellers to jets to become really viable.  I suspect space travel will require something similar.  As long as we rely on chemical rocket propulsion it is likely we will see only incremental cost decreases. 


I wish you would find that breakthrough.  Meanwhile, the rest of us will plod through trying to incrementally improve the biplanes.  And the business ain’t “burgeoning”. 

15 thoughts on “Burgeoning commercial space industry”

  1. Good to hear reality for a change instead of the standard company line. It’ll never get linked anywhere of course. Unfortunately, while commercial progress is geological, there doesn’t appear to be a future in government spaceflight at all. Whether it takes 20 or 50 years, the next manned space program is going to be funded by dot coms, real estate speculators, & gold bugs, not the treasury.

  2. Probably the reason commercial space ventures are having trouble is because it’s impossible to compete with the US government. If a private company could deliver satellites to orbit cheaper than the government, I wonder if it could be successful.

  3. It is hard to have a burgeoning business when for the life of this industry there hasn’t been any real business at all.

    Things here have never worked by price – cost = net profit, with net earnings the accumulated net profit – fixed expenses. Too much “cost plus” with the inevitable distortions.

    What we really are talking about is leveraging more of private industry, either in the established firms who have the know-how, or the not yet established ones that might acquire it. In either case not really “going concerns” – the best you can hope for is just less overhead than in the past.

    Going offshore is just leveraging another governments cost sharing scheme – internally the same deal, just at a different price point for the moment. As anyone who bet on cheap Russian launches can attest, cheap Chinese ones won’t last forever either.

    The problem isn’t with launchers or business, it is with the application of space. That is what needs to change, and until it does governments will subsidize access. It’s a fool’s errand to consider any differently.

    So yes we should invest in propulsion tech that changes things. But then you screw up the quid pro quo’s over allocation of funds to subsidize access.

  4. Good to see statements like ‘burgeoning commercial space industry’ being tested – if some months late. The statement got into the summary and full paper due to the short time frame for the HSF study leaving many statements not tested.

    The US has burdens that other countries do not that affect the economic competitiveness of many of its industries, not just the space launch industry.

    From Australia we see China not having the courage to let go of the exchange rate tether to the US dollar which damages both countries.

    We see countries like Australia, UK and most European countries not having the courage to walk beside, rather than behind, the US and thoroughly question the US on security issues to save ourselves money and possibly lives.

    The US burdens itself too – with not collecting enough tax (now 5% of US GDP will go to interest on national borrowings), having too many federal, state and local taxes, a very expensive health system that does not cover enough people and therefore financially ruins some citizens. Companies having to purchase health insurance for employees does not help their competitiveness.

    A high migration program (legal and illegal) adds bulk but not quality to an economy. Australia is in this same boat with the US. Migration ensures property prices are generally rising and attracts investment away from other industries, particularly high-tech. Migrants can take several generations to learn the social capital of a country and become fully economically productive.

    The US has advantages in that it can have a Cabinet of subject matter experts and the disadvantage of western democracies of a Congress with very few scientists and engineers.

    From a rest of world perspective, the US appears to have made a great choice for national leader. If space launch policy gets the same thorough going over as the Afghanistan/Pakistan policy we may just see a great space policy leading to a space launch industry once a new health law is signed.

  5. Wayne, thank-you for another well-reasoned commentary. Statements like this take on a life of their own if never questioned. And when they occur in an ‘executive summary’, questioning them is like claiming the Emperor has no clothes; true, but politically gauche.

    After all, how could these experts be wrong?

  6. Great article. I totally agree with it, and specially with the three last paragraphs. Sad, but true.

  7. It’s sad that you feel we must keep “plodding along”. It’s probably true that the business isn’t “burgeoning”, yet. There’s sort of a paradox there. In order for investment to take place, there needs to be a market identified. In order for the market to grow, cheaper access to space would help. But, I must take issue with some of your claims. First, you stated that “recent history is littered with the wreckage of serious commercial space launch companies that failed”. You mentioned Beal. He testified to a Congressional subcommittee that “… government subsidies to competing launch providers constituted the private sector’s biggest business risk.” National space transportation policies have for a long time promoted the idea of purchasing commercial Earth to LEO services. The problem has been that NASA always chooses to buy its own vehicles for its own purposes. Let me expand on that by reminding everyone that NASA hasn’t built a spacecraft in a long time (if ever) and certainly has not built launch vehicles. NASA buys them from the lowest bidder. The same people and companies who have been building spacecraft and launch vehicles for NASA for decades are still up to the task. I’m referring, of course, to Lockheed Martin and United Space Alliance (together, ULA). SpaceX is doing things right, too, but let’s talk about the existing launch vehicles that have an excellent safety record – as opposed to the paper Ares-1 (Ares-1X is not Ares-1).

    You also misrepresent both the existing and fledgling companies. I have never heard anyone suggest this was easy. Elon Musk has admitted that this was hard, for sure.

    Finally, I would argue that the commercial space transportation industry is burgeoning, but spaceflight as NASA has been doing it is (and has been) moribund. At some point, NASA is going to have to step out and agree to purchase rides to LEO from commercial providers, and the sooner they do that, the better off we’ll be in the long run.

  8. Let the commercial world do its thing. If they say and believe they can do it cheaper to LEO let them try, with their own money and their own people on at least the initial test flight eg SpaceX. I hope they succeed. In the mean time NASA needs to get on with Ares 1 and 5 for deep space and ISS only as a contingency. The original Augustine report from 1990 makes more interesting reading. It actually has more relevance today that the current 2009 Augustine report, which is purely an engineering report based on a budget and not a strategic direction report. In 1990 the recommendations included development of heavy lift vehicle, exploration base on the Moon, Manned Missions to Mars, and a rescue vehicle for the Space Station. Now that sounds just like Ares 5, Altair, Orion and Ares 1. I would suggest NASA is heading in the right direction, with the right hardware. If I could write a Cheque for US$50 Billion I would send it to NASA today.

  9. It doesn’t take too much imagination to figure out that a plane that takes off with a spaceship and is capable of near orbit flight with a slightly extra boost could end up with coast to coast flight. I assume if six people are willing to spend $200,000 for a five minute flight there would be people who would pay for fast transcontinental transportation. See the announcement of SpaceShip Two today by Virgin.
    http://www.virgingalactic.com/ . New Mexico isn’t the only place there are spaceports albeit most other than New Mexico, Mojave, and Kodiak are government property based and may not be suitable for scheduled travel. See http://spacecollective.org/seananderson/2158/Other-Global-Spaceport-Locations for one listing of spaceports. They seem to be on both coasts.

    If Branson pulls it off and comes up with a SpaceShip Three that does transcontinental flight from LA to NY and vice versa he might just develop a market. If he did, then perhaps there will be a burgeoning space industry.

    I haven’t the technical background to do the numbers so maybe somebody could figure out if he could with slight modification of his SpaceShip Two design do transcontinental flight. If he can, than that will be the start of something, maybe a “burgeoning”. I think he won’t have Concorde’s problem with sonic boom since he will go outside the atmosphere. He’s starting small so his up-mass isn’t prohibitive. I wonder if he has this in mind. He seems to be one clever guy and Bert Rutan of course is a genius.

  10. Wayne,

    After reading your blog, I have started to research commercial applications for LEO. It amazed me that 2 different companies have already achived many things. SpaceX looks like 3 years (if not more) ahead of Ares I/V including cargo (both up and down, pressurized and non pressurized) and crew (up to 7). And if I am not wrong they have the ability to launch on different locations vs Ares I/V which will be only in Cape.

    Other one is spaceShipTwo which is getting ready to live with 1000 people already signed to pay 200K each.

    After reading their web sites and looking their business plan, I came up 2 questions to you.

    Q1: You kept mentioning the realities of human space flight. How delicate the enviroment and applications were. Now I look this companies they have very limited number of stuff designing and implementing with fraction of Ares budget. How is that possible that they are on the verge of going live? (What is their FS 1.1 , 1.025 )

    Q2: NASA has budget of 10’s of billions. As far as I know Shuttle needed 3 billion to operate each year and Ares is getting 1.5 Billion a year now. If everybody believes human space flight so important, why NASA can not allocate more money within its own budget vs all other projects ? I know they are all important but everybody agrees human space flight is something we HAVE TO do so why not spend more money on that?

  11. Like everytime, the beginning needs investment, it is the same for a lot of smaller companies. I mean new technologies, new researches and so on… But, it's pretty sure that after some time, it will work. Space travel is too interesting, for so many people.

    Let's hope, I will walk on the moon one time in my life…

  12. The space industry faces massive layoffs during the next two years as the space shuttle program comes to an end. Crist, who is running for the U.S. Senate, likely will seek input about what the state’s role should be in the transition to a post-shuttle economy.

  13. Wayne a well rounded account. Someone has to ask these questions. I am a great believer in where theres a will theres a market. Commercial flights will become more and more in demand as wealth of the select few grow. With all the factors weighing in I do think that there will be a reduction in cost however the needed to make these advancements are not in place just yet. Im sure your shall keep us updated as always.

  14. Great insight as always.

    Agree on the comments on SpaceX. Good luck to them. But to the person that compared spaceship two to things NASA has done and SpaceX is trying to do… You missed it by tens of thousands of feet per second.

    Heaven help us.

Comments are closed.