SpaceX, the private spaceflight company led by CEO Elon Musk, has done much to reinvigorate the space industry. Promises of flights to Mars and around the moon still look rather fanciful for a company dedicated almost exclusively to delivering satellites and cargo into low orbit, but SpaceX’s list of firsts is no small thing. It made the first retrieval of a private spacecraft from low orbit, and can boast the first ever landing of a rocket on a barge. It has also made inroads on improving costs through pioneering work in reusing booster rockets.
These are impressive feats of engineering, ones that have captured the public imagination and copious press attention in recent years, but that should not distract investors from looking dispassionately at the company’s capabilities and market opportunities. Indeed, there are many issues standing in the way of SpaceX becoming the runaway success story its investors, the public and its valuation all expect. In another forum, we discussed the challenges facing SpaceX, including the relatively limited market opportunity, low margins and mounting competition. Competition has mounted even since we last visited the subject of SpaceX, with China now pushing for massive increases in private investment into spaceflight.
In this research note, we focus on a different aspect of the SpaceX business: commuter rocket travel. We find that, despite the hype and promises coming from Musk, the prospect of true commuter rockets is pure fantasy – and will remain so for the foreseeable future.
Space tourism might work
While some of Musk’s boosters and admirers might actually believe that a promised tourist flight around the moon will actually happen next year (it was originally meant to happen late in 2018), few serious space industry watchers pay much credence to the notion. Manned missions are, by their nature, far riskier than unmanned flights, so sending a bunch of tourists into space within 12 months looks far-fetched indeed. Not least because SpaceX has yet to attempt manned missions even in low earth orbit. With the delay in the scheduled manned flight to mid-2019, SpaceX may even find venerable aerospace giant Boeing (BA, Financial)Â beating it to the mark.
Space tourist trips for the super-wealthy might become possible some day, but there is not likely much money in the enterprise. Richard Branson’s Virgin Galactic is charging well-heeled tourists $250,000 to reserve their rides on its planned tourist spacecraft, and 700 people have put their names down so far. But ultimately, that would be a rather niche business. Of course, Musk has never been one to settle for realism.
But prices are out of this world
Last September, Musk announced a proposed commuter rocket program. At the unveiling, a glitzy CGI video demonstration showed rockets traversing the globe, delivering passengers anywhere on Earth to any destination in under an hour. Not only that, but Musk also asserted these flights would be cheap. In an Instagram post, the tech billionaire made the following cost prediction:
“Fly to most places on Earth in under 30 mins and anywhere in under 60. Cost per seat should be about the same as full fare economy in an aircraft. Forgot to mention that.”
This statement is illustrative of Musk’s tendency to promise the fantastical, only to have to walk it back later. Simple physics should tell us that such a price point is impossible, given the fuel expenditure needed to lift mass. SpaceX’s Falcon Heavy is one of the most efficient payload delivery rockets yet built, but it still costs over $2,000 per kilogram of mass. Assuming a person plus baggage comes out to 100kg, that would make the breakeven ticket price (even excluding all other costs) come out to a whopping $200,000.
Of course, Musk and his futurist supporters often respond to questions like cost with some variation of the phrase, “It’s just an engineering problem.” In other words, it is just a matter of making a better rocket that is more efficient and inexpensive. But no amount of hand-waving can dissipate the fundamental question of cost. While SpaceX has unquestionably made significant incremental improvements to rocket engineering, it has not managed to shift the equation by orders of magnitude. That would be necessary for Earth-to-Earth commuter rockets to ever be viable on a cost basis. SpaceX has done nothing thus far that should make investors, or the public, believe it can make such a radical leap.
No one likes brittle transit systems
Mass transit systems are marked by a number of key features. Cost is one. But so, too, are predictability and safety. In terms of predictability, rocketry has not much improved in the past several decades. Because rockets, by their very nature, have to contend with a harsh environment, things like weather conditions can have massive impacts on launches. These are, again, fundamental physics problems, not engineering puzzles that can be readily solved.
So if we imagine a commuter rocket, we have to assume the weather conditions that prevent or delay launches in today’s rockets would still hold. Thus, if the weather is bad at the launch site or the landing site, the whole mission could be scrubbed. Being sure you will reliably get to your destination on time is an important part of transportation, one that rocketry cannot deliver.
Now some might argue the tremendous reduction in travel time would make up for these other deficiencies. But the time advantage is going to be cut down considerably from the travel time. Remember, a lot of time is spent on the ground before a launch, getting fueled up and everyone not in the rocket far away from the launch site. The process is liable to take hours, considerably longer than prep for a commercial airline flight. Furthermore, the launch site itself will have to be remote. While SpaceX’s commuter vision video implies it could be done on a floating platform within view of a major city, it is vanishingly unlikely that a rocket launch would be permitted anywhere near a populated area. That is, in part, because launches are incredibly loud.
Great balls of fire
Noise pollution is not the only reason rockets are launched from fairly remote locations. There is also a serious safety issue. The rocket Musk wants to send to Mars, and which he claims could handle Earth-to-Earth commuter transportation, can hold enough fuel that an explosion would result in a detonation of about 10 kilotons. In essence, rockets are giant bombs. That is why launch protocols are so strict and their location carefully chosen. Any commuter rocket would have to be sufficiently remote to prevent a catastrophic explosion damaging inhabited areas – including shattering glass from concussion.
Of course, no one would want to climb on a rocket that has a relatively high probability of exploding. Currently, SpaceX’s rocket launch success rate is about on par with the industry average of 95%. But there are precious few travelers who would be willing to shave off a few hours of travel time in exchange for even a 1% chance of being engulfed in a giant fireball.
Here lies the true insuperable barrier to commuter spaceflight. While plane crashes happen about once in every 10 million flights, rocket explosions are fairly commonplace.
Of course, Musk could once again counter that the engineering problems can be solved. Yet it would require improvements that would make space flight orders of magnitude safer. SpaceX’s innovations have been incremental improvements, but this proposal requires a full-on revolution. We are not holding our breaths.
Verdict
While SpaceX might be able to build a somewhat profitable business by focusing on satellite launches, and perhaps developing its own satellite network, these are clearly not enough for Musk’s ambitions. He seems determined to push boundaries, even when the laws of physics start to push back. That can be an admirable trait in an innovator, but it can also sound the death knell for a company.
If SpaceX pursues impossible pipedreams instead of real opportunities in the space industry, it could end up burning up.
Disclosure: I/We own no stocks discussed in this article.
