“There has been a technical problem, and there is a market problem,” says Jeff Greason, CEO and a founder of XCOR. “The technical problem is how do you do a reusable orbital system where the frequency of flight is high enough, and the maintenance man-hours per flight are low enough that the economics of reusability really work.”
Reusable suborbital spacecraft like XCOR's Lynx spaceplane can validate orbital technologies, and Greason says his design team has worked with an eye to orbit from the beginning. The market problem is bigger “in many ways,” he says.
“If you're going to make a vehicle that flies 50 or 100 times a year, and you build a couple of them so you don't have just one, you need a few hundred things a year to launch. Some of those things will be satellites or, more likely, components of satellites that you launch and put together for larger on-orbit platforms. Some will be resupply to on-orbit facilities of one kind or another—ISS, Bigelow, satellite assembly nodes. Some of those will be tanks of propellant . . . and some of it will be people.”
Greason, a long-time new-space guru, has pushed for orbital fuel depots as a way to enable off-planet business. “Tanks of propellant have the great virtue that with no change in the mission, the consumers of the propellant do not have to care whether it comes up in three large tanks, or 30 medium-size, or 300 small tanks,” he says. “It's an open architecture. Once you divorce the launching of the propellant from the launching of the mission, you can change how you launch propellant with the vagaries of what is cheap this year.”
Other destinations could underpin a space launch market, regardless of the degree of reusability of the launch vehicle and the function of the destination. In his 2011 paper, Griffin lays out a detailed calculation—based on the same cost assumptions—that a government-backed lunar base, supplied commercially, would be a realistic incentive for a private cargo business. A 15,000-kg/year cargo market on the Moon for a station-sized six-person crew would generate an internal rate of return (IRR) of more than 27%, he estimates. It could begin with pre-positioned cargo as soon as there is a firm decision to build a lunar outpost, and it could be supplemented for more return on investment with cargo missions to the ISS and other destinations. NASA's Gerstenmaier says an outpost at the second Earth-Moon Lagrangian point under consideration as a gateway deeper into space also could be supplied commercially to spur the industry. By comparison, the ISS mission alone would generate an IRR of just 13%, Griffin calculates.
There is an old joke, which SpaceX founder Musk has been known to repeat, that the best way to make a small fortune in the space business is to start with a big one. Certainly the commercial route to orbit is as littered with bankruptcy filings as with rocket-failure debris.
In April 1999, Kistler Aerospace submitted an unsolicited proposal to NASA for commercial resupply of the nascent space station, according to Debra Facktor Lepore, a Ball Aerospace executive who was vice president of business development and strategic development at Kistler. Eventually the company joined SpaceX as a NASA-backed competitor in the Commercial Orbital Transportation Services seed-money effort Griffin launched to develop private cargo vehicles, but it couldn't meet its milestones and eventually failed.
“I was there in kind of the heyday, when we were starting the LEO [low-Earth observation] telecommunications,” says Lepore, who left long before the successors to Kistler filed for Chapter 7 bankruptcy in 2010. “The whole motivation then was on the LEO-type communications satellites that needed to have lower-cost access to space to really make its business plan. We were raising money, and we had lots of investors. There were lots of ups and downs in the process—the market crashed, Asian flu, dot-com/dot-bomb. The challenges [involved] really bad financial timing. It never was a technical issue. It was more an idea before its time.”
It is still far from clear whether the time has come today, even with the big U.S. government push. Indeed, many investors see that as an obstacle.