SpaceX vs Virgin Galactic — The Race to a Space Tourism Business Dominance

Only 566 humans have ever been to space. More than 85% of these people are from three nationalities. More than half of them are from the USA. The experience of those who have been to space has shaped how humans perceive the universe in arts, literature, and science. If going to space was available to a wider range of people, there would certainly be a large demand for this experience.

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Number of people who have been to Space by country

“There are 7.8 billion humans, only 566 humans have ever been to space, this is 0.000007%”

It may be true that there are other experiences that offer a reasonable amount of thrill such as skydiving, scuba diving, or even Zero G’s 7-minute weightlessness experience for $6,700. The dream of going to space, or even the lower earth orbit, is on the minds of many people. However, the opportunities for the general public to have this experience has been traditionally limited or unavailable. This is mainly due to the fact that the concept of going to space is largely associated with either scientific discovery or to prove the technological superiority of a world superpower. However, as technology has advanced over the decades, the cost of sending one kg of mass to orbit has been decreasing over the years. During the NASA space shuttle program the cost was $54,500 per kg, today this costs NASA $22,500 per kg. This cost is projected to fall even more in the future. NASA is aiming to reduce this cost to triple digits by 2040s and single digits by 2060s.

It is worth discussing the distinction between the two types of space experiences; the first is being in the lower earth orbit, similar to the experience of the astronauts in the international space station. The second is beyond the lower space orbit, which is similar to the Apollo moon missions. Understanding this distinction is important because of the significant differences in the technologies required to enable such experiences, as well as the resources required to fund and develop such experiences. Traditionally, both low earth orbit and beyond low earth orbit type experience has been publicly coordinated and funded by nation-states like the USA and Russia. To date, no private or commercial company was able to send private individuals to the international space station or the moon. Therefore individuals who experienced space travel were always subject to approvals and scrutiny of nation-states responsible for space travel. That is until SpaceX and Virgin Galactic came to life.

Commercial Space Companies

Space X was founded by Elon Musk in 2002 with a mission of making humanity interplanetary, while Virgin Galactic was founded by Richard Branson in 2004 with a mission of being the spaceline for earth. While the two companies develop technology and solutions that would enable private citizens to experience space travel, their reasons are quite different. For Space X the interim goal is to create a transportation system that would help humans reach Mars, while Virgin Galactic’s goal is to create a solution that helps more humans get access to the space experience. This is very clear to us when we investigate Virgin Galactic’s space experience from astronaut training, comfortable seating in their Spaceship Two, and fashionable space suits, versus SpaceX’s unclear plan for the first private space tour around the moon and the design of the internal space of their spaceship, called Starship.

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Virgin Galactic (Right) vs. Space X (Left) Space Suits

From a business perspective, the main idea here is that Virgin Galactic’s timeline to monetization and sustainable profit is much shorter than that of Space X. This is why Virgin Galactic choose to go public (SPCE) while Elon Musk kept Space X a private company, with the exception of a possible spinoff of its global satellite internet network “Starlink”, which may turn profit early. For both Virgin Galactic and Space X, getting a viable space tourism business will depend on the costs to the customer, as well as safety and being able to provide an unforgettable experience.

Challenges to reach the finish line

The path to the finish line is always challenging and as SpaceX has experienced when the first nine rockets blew up before the company was able to get its rockets to orbit. SpaceX also lost equipment used for testing its new spaceship SN4. As for Virgin Galactic, the company failed one of its test flights and a pilot was killed in 2014.

Space X has definitely set the bar higher than Virgin Galactic with its “dear moon” 6-day space tourist mission. The private tour around the moon was announced in 2018 and is scheduled to take place in 2023 carrying a Japanese billionaire with 6~8 artists around the moon to inspire the artists in their creation of new art. It’s worth noting that the cost per passenger is not yet known, however, it was revealed in 2019 that if Space X were to carry space tourists to the lower space orbit to board the international space station the costs will be around $52 million. While it is highly uncertain if Space X will actually be able to deliver on the promise to their first client, Virgin Galactic was able to set a more realistic goal of doing flight tests in 2020 and prepping to fly private clients in 2021 to the lower earth orbit for $250,000 per passenger. Virgin Galactic has been building a pipeline of customers for a few years and has 700 reservations already.

To reach the finish line, the final hurdle for both companies is to be able to nail down and refine a highly sought after space travel experience. They will both face some regulatory scrutiny in order to be able to operate as a space tourism business, and this demand for space tourism has to continue growing for them to be successful in the long term.

References

[1] “List of space travelers by name — Wikipedia.” https://en.wikipedia.org/wiki/List_of_space_travelers_by_name. Accessed 3 Nov. 2020.

[2] “Home — ZERO-G.” https://www.gozerog.com/home/. Accessed 3 Nov. 2020.

[3] “The Recent Large Reduction in Space Launch Cost — TTU ….” 8 Jul. 2018, https://ttu-ir.tdl.org/handle/2346/74082. Accessed 3 Nov. 2020.

[4] “Advanced Space Transportation Program fact sheet — NASA.” 12 Apr. 2008, https://www.nasa.gov/centers/marshall/news/background/facts/astp.html. Accessed 3 Nov. 2020.

[5] “Low Earth orbit — ESA.” 2 Mar. 2020, https://www.esa.int/ESA_Multimedia/Images/2020/03/Low_Earth_orbit. Accessed 10 Nov. 2020.

[6] “What Was the Apollo Program? | NASA.” 18 Jul. 2019, https://www.nasa.gov/audience/forstudents/5-8/features/nasa-knows/what-was-apollo-program-58.html. Accessed 10 Nov. 2020.

[7] “Virgin Galactic Holdings, Inc. (SPCE) Stock Price, News ….” https://finance.yahoo.com/quote/SPCE/. Accessed 10 Nov. 2020.

[8] “Officials: 1 pilot dead, 1 hurt in test-flight failure — CNN.” https://www.cnn.com/2014/10/31/us/spaceshiptwo-incident/index.html. Accessed 10 Nov. 2020.

[9] “#dearMoon.” https://dearmoon.earth/. Accessed 16 Nov. 2020.

[10] “Here’s What a $52 Million Ticket to the ISS Will Get You | WIRED.” 11 Jun. 2019, https://www.wired.com/story/heres-what-a-52-million-dollar-ticket-to-the-iss-will-get-you/. Accessed 16 Nov. 2020.

[11] “Follow Us — Virgin Galactic.” https://www.virgingalactic.com/fly/. Accessed 16 Nov. 2020.

[12] “Virgin Galactic — Virgin Galactic Announces Second Quarter ….” 3 Aug. 2020, https://investors.virgingalactic.com/news/news-details/2020/Virgin-Galactic-Announces-Second-Quarter-2020-Financial-Results/default.aspx. Accessed 16 Nov. 2020.

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