A Deep Dive on Space Tourism
The dawn of a new industry or billionaires’ folly?
In 2001, Dennis Tito became the first “space tourist,” paying an estimated $20mm for a ride to the International Space Station (ISS) on a Russian Soyuz rocket. Twenty years later, space tourism has now hit the mainstream. Human spaceflight has always captured the public’s imagination and that was on full display the past few weeks as we watched Virgin Galactic and Blue Origin jockey to be the first to send their respective billionaire founder to space. And while the Bezos vs Branson rivalry became silly at times (as did the internet debate about what private citizens should be allowed to spend their money on), we will inevitably look back at the summer of 2021 as a watershed moment for space tourism.
As active investors in space tourism via our investments in Space Perspective and Axiom Space, now seemed like the perfect time to offer a deep dive into the industry and explain why we think it’s a worthwhile pursuit.
Today’s nascent space tourism market represents less than $1B of the overall ~$400B space industry. This has led many commentators to complain about the disproportionate amount of attention it receives from media and investors. However, it’s ultimately the intense consumer interest underlying this coverage that has investors like us so excited. Today, the industry is completely supply-constrained. As one data point, Virgin Galactic stopped accepting new ticket reservations in 2014! However, we are now entering a new phase in the market with multiple companies launching commercially over the next couple of years.
As with many new forms of transportation, the prices will initially be high and targeted to luxury travelers. Virgin Galactic, which was charging $250k/ticket before halting reservations, shared that 90% of their reservation holders have a net worth over $1mm and ~70% have a net worth less than $20mm. They view their target market as the two million individuals globally with a net worth greater than $10mm.
Industry market projections vary quite a bit but with such a large addressable market (those two million individuals represent a $500B total addressable market) there is general consensus that space tourism will grow to be a multi-billion dollar market ($3B or $8B) this decade.
Types of Experiences
There are 3 general approaches to space tourism: suborbital rockets, suborbital spaceballoons, and orbital rockets.
Companies in this bucket use suborbital rockets to take passengers up to 80–100 KMs in altitude where they experience zero gravity and take in the view of Earth for a few minutes before promptly returning back to earth. Because they don’t reach the requisite speed and altitude to enter orbit around Earth, they are considered suborbital. The engineering required to make these systems reusable, cost-effective, and most importantly safe is immense (literal rocket science).
The advantages of suborbital rockets include:
- They offer a thrilling ride on a rocket ride to space.
- Passengers experience weightlessness.
- If you cross 80 KMs in altitude, you can maybe call yourself an astronaut.
The challenges are:
- Extremely short duration, particularly at apogee (the highest point of the flight). Most people list being able to view the Earth from space and experience what astronauts refer to as the “overview effect” as the biggest selling point for space tourism. On suborbital flights, you will only have a few minutes to take in the view.
- The intensity of the experience will make it inaccessible to many people. Passengers experience 3.5–6 Gs as the rockets go faster than 2,000 miles per hour.
- There is a high perceived level of risk associated with rockets.
- They are generally forced to operate in remote places (i.e. New Mexico and West Texas).
The two key players here are of course Virgin Galactic and Blue Origin.
Virgin Galactic has been the face of space tourism since Richard Branson founded it in 2004. It has been a long road for Virgin Galactic — they estimate they have spent a billion dollars over 17 years on developing their platform. One unique aspect of their approach is that their rocket launches from a plane flying at ~45,000 feet where the atmosphere is much thinner and allows them to use a much smaller rocket. A key business advantage is this allows them the flexibility to launch from many more places than someone like Blue Origin as they require less ground infrastructure, though for the time being all launches are scheduled to be from Spaceport America in New Mexico.
In 2017, Virgin Galactic spun out the use of their technology for deploying satellites into a separate private company, Virgin Orbit. This means, for the time being, Virgin Galactic will be a pure-play space tourism company, though they have signaled that they want to explore point-to-point passenger transportation (e.g. New York to Singapore via a rocket) in the future.
Blue Origin is offering a fundamentally similar experience as Virgin Galactic but the key distinction between the two is in Blue Origin’s ambitions to expand well beyond space tourism. The New Shepard rocket used for passenger transport was a way for the company to develop a commercial product while solving the key engineering challenges required for reusable rockets. They intend to use those learnings on their next platform: New Glenn. New Glenn will be a cargo-focused rocket with a massive payload designed to compete head-on with SpaceX and ULA for launch contracts. This, combined with the fact that it is still a private company bankrolled by one of the richest men in the world, means they have way less pressure to grow space tourism into a large and profitable business. As of the writing of this post, they have yet to announce a price for their tourism service though they did start accepting people on a waitlist and claim a $100mm backlog.
Suborbital spaceballoons are a radically different approach to space tourism. As the name suggests, it involves using truly massive spaceballoons (18,000,000 cubic feet) instead of rockets to bring passengers up to 30+ KMs in altitude.
This is the approach that we’ve been most excited about as shown by our investment in Space Perspective which is described in more detail below.
The advantages of suborbital spaceballoons include:
- Comfort and Accessibility: Replacing a rocket with a gentle balloon ride to space means replacing high-Gs, extensive training, and a 4-point-safety harness with a comfortable seat and cocktail — an experience even your grandmother would feel comfortable with (unless your grandmother is Wally Funk, then you can disregard).
- Duration: 1–2 hours at apogee (the highest point of the flight) to take in the view of Earth from space.
- Cost: Much lower operating costs allow these companies to sell tickets for a fraction of the price. An order of magnitude cheaper when compared at cost per minute.
- Lower Carbon Footprint: Spaceballoons require much less energy to travel to space and use environmentally friendly hydrogen as their “fuel”.
The key disadvantages are:
- Lower Altitude: ~30KMs vs 80–100KMs with suborbital rockets. (Though 30KMs is still over 99% of the atmosphere and has the same awe-inspiring view.)
- No Weightlessness: Because of their gentle ascension speeds, passengers do not experience weightlessness. Fun fact: the weightlessness on Virgin Galactic and Blue Origin is not a result of a lack of gravity. At 100 KMs, gravity is nearly just as strong — 9.4 m/s² vs 9.8 m/s² at sea level. The weightlessness is actually a result of passengers “free falling” after the engine shuts off, similar to a roller coaster or parabolic flight.
The differences between the two approaches can be boiled down to whether you're optimizing your space experience around a rocket ride or the view.
Space Perspective is the dominant player in this sector and we are lucky to be their largest investor. They will be transporting 8 passengers on a luxurious six-hour journey to space in a pressurized capsule. Last month, they began accepting ticket reservations after a successful test flight. Ticket prices today are $125,000 per person and they will be initially flying from outside of the historic Kennedy Space Center near Orlando, FL. They have not publically disclosed their ticket sales but I’m thrilled to share that customer demand has greatly exceeded expectations and we intend to top Virgin’s backlog by the end of the year. You can read more about why we invested in them here.
Zero 2 Infinity is a Spanish company also pursuing suborbital spaceballoons but has yet to fly a test flight or begin ticket sales.
Companies utilizing orbital rockets take passengers into orbit around the Earth. These are multi-day experiences that involve weeks of training and cost tens of millions of dollars. We expect this to be a niche but meaningful part of the eventual space tourism market. There are a few key players in this segment:
Space Adventures is the original space tourism company, which organized Dennis Tito’s trip in 2004. They book trips using 3rd party rockets like Soyuz or SpaceX. Last year, they announced that they booked SpaceX’s 4 passenger Crew Dragon on a multi-day mission to a target orbit over 1,000 KMs in altitude. They are offering tickets for $52M per person and have yet to announce any sales.
Axiom Space is another one of our portfolio companies and is building the first commercial space station to replace the ISS. Space tourism will be one of their products and in 2019 they announced their first mission, AX-1, to take 3 passengers on SpaceX’s Crew Dragon on a 10-day trip to the ISS. All 3 seats were sold for $55mm each and the mission is scheduled for January 2022.
Why does space tourism matter?
In line with the times, the public discourse around space tourism has been extremely polarized. Some are celebrating the feats of engineering and human courage that were on display, while another faction bemoans this as another example of the wealthy frivolously spending their money instead of helping those on Earth. Personally, I agree with those that point out that that this frustration would be more productively directed at the government officials that set tax policy.
The question I’m more interested in exploring is why space tourism is a worthwhile pursuit. At Prime Movers Lab, our mission is to invest in breakthrough scientific inventions that have the ability to impact billions of lives and I understand why some ask how space tourism fits that mandate.
There are many things that you could point to like the power of space to inspire the next generation of scientists and engineers or all the unintentional Earth-based technologies that came out of the space industry. But I’m most excited considering the second-order effects of exposing more and more people to what many astronauts have described as the profound experience and shift in perspective from seeing Earth from space — dubbed the “overview effect.”
You develop an instant global consciousness, a people orientation, an intense dissatisfaction with the state of the world, and a compulsion to do something about it. From out there on the moon, international politics look so petty.
— Edgar Mitchell, Apollo 14 astronaut
While I haven’t been to space yet, this resonates with me in the same way that international travel has led me to be more open-minded and the realization that we are all much more similar than different. Today, fewer than 600 people have experienced the “overview effect.” What will happen as that number grows to thousands, tens of thousands, and eventually hundreds of thousands of people?
I won’t be the first to point out that the key existential risk of our time, climate change, is a global-scale problem that no one nation can stop on its own. It will require a level of global cooperation that we have yet to achieve. This might be seen as idealistic but the reason I’m personally so excited to be involved with space tourism is I believe it has the potential to support that necessary shift towards global consciousness. If consciousness is a loaded word for you, you can reframe it as the scope of an individual’s caring— are they looking out for just themselves, their family, their tribe, their country, or the entire world? Progressing people up that spectrum is the potential promise of space tourism. And while I look forward to when the costs decrease so that it’s available to the general public, I believe there is immense leverage in starting by exposing those with the means to make a difference to the “overview effect.”
Travel is fatal to prejudice, bigotry and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things can not be acquired by vegetating in one little corner of the earth all one’s lifetime.
— Mark Twain
Prime Movers Lab invests in breakthrough scientific startups founded by Prime Movers, the inventors who transform billions of lives. We invest in companies reinventing energy, transportation, infrastructure, manufacturing, human augmentation, and agriculture.
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