The Space Foundation's Space Business Forum
It’s a pleasure to be with you this afternoon.
I want to thank Elliot Pulham for the invitation to appear at this distinguished gathering.
Let me also thank all of you in advance for your indulgence. I say that because I’m not going to talk about yield curves or earnings per share.
Instead, I’d like to tell you a little about the commercial space flight industry from the perspective of the federal office that regulates it: my office, the FAA’s Office of Commercial Space Transportation.
Although the industry’s been around making progress and profits for nearly a quarter of a century, it currently brings us television programming, satellite radio service, and satellite phones, among other things; commercial space transportation is often overlooked in the rush of daily events.
It makes it hard on investors searching for the next great thing, since they face a twin dilemma. On the one hand, they have to wait patiently and listen closely in order to detect subtle trends. On the other hand, in a crowded, noisy marketplace, they have to be agile and flexible and ready to react at a moment’s notice if they don’t want to be left behind.
Commercial space transportation has always been a quiet industry. But it may not always be that way. There are some changes ahead that I want to make sure you are aware of. But before I explain, let me speak briefly about a different industry in a different time.
Lesson Never Learned
148 years ago yesterday, The Great Eastern steamship set sail for New York for the first time. It had been designed by Isambard Kingdom Brunel, one of the greatest engineers of his era. The ship was enormous; at 692 feet in length, it was the largest ever built.
It was so large that it was built on the beach because there were no dry docks big enough to hold it. They had to drag the ship 330 feet to the water, a launch that took 89 days and was extremely expensive.
The ship was designed to carry 4000 passengers around the world without refueling. It had 3 separate propulsion systems: twin paddle wheels that were 56 feet in diameter, a 4-bladed screw propeller that was 24 feet across, and over 18,000 square feet of sails that were mounted on 6 separate masts.
It also had a number of firsts for the shipbuilding industry: a double hull, 12 watertight compartments, and gas for illumination. So it was truly a technological marvel.
Unfortunately, the business plan left something to be desired.
Although the ship was built to carry 4,000 people in luxury, on its maiden trip to New York, it had a crew of 418, but only 35 passengers. Then it promptly crashed into the dock and chewed five feet out of the wharf.
Eventually, the ship made history by laying the first transatlantic telegraph cable. But it never really made money. Why not? Primarily, because management didn’t see the changes that were occurring in the marketplace. They ignored the fact that immigration was increasing dramatically. Instead of focusing on wealthy clientele, they could have filled the ship with thousands of passengers paying relatively low fares on the trip west, and then returned to England filled with cargo.
But management wasn’t open to that kind of approach. They were believers in high technology, but they never really saw the need to adapt their business practices to the changes taking place around them.
New Thinking. New Management
So the question is, will America’s space program have similar problems? Well, that remains to be seen. But I can say for sure that the environment around us is changing. And if we want to be successful, we are going to have to learn to adapt to those changes.
Now, I know better than most that there are skeptics, people who think commercial human spaceflight is just wishful thinking.
As a matter of fact, nearly twenty years ago, the British singer and songwriter, Cathy Dennis, wrote a song — on a topic much different than commercial space — but with a lyric that goes right to the heart of the industry and its future.
“Is this for real,” she wrote, “or is it just another dream?”
Great question. Let me try to give you an answer.
The Office of Commercial Space Transportation
I’ll start with my own office to give you some idea of how long we have been around and how real it is.
In February of 1984, President Reagan issued an Executive Order making the Department of Transportation the lead agency for encouraging and facilitating commercial expendable launch vehicle activity in the United States.
In 1995, Congress moved the office to the Federal Aviation Administration, which is part of the Department of Transportation. The Office of Commercial Space Transportation has been there ever since.
Since 1989, we have had 189 licensed commercial launches without loss of life, serious injury, or damage to private property.
Please keep in mind that commercial space transportation is not NASA.
Commercial space transportation is about private enterprise, fee for service developers, builders and operators running a business. It will either be safe or it will fail.
That’s where my office is involved.
The FAA’s Office of Commercial Space Transportation provides government oversight for the launch and reentry of commercial space vehicles. We license the operation of spaceports, of which there have been six to date, with more on the way. We regulate the industry, conducting safety inspections, and issuing licenses and permits for the operation of launch vehicles.
With one historic exception, commercial space transportation so far has been about payloads being launched by expendable launch vehicles. Basically, that means that once the rocket has been launched, it never flies again.
In October 2004, we saw that “historic exception,” the successful launch and landing of SpaceShipOne, the reusable spacecraft that won the $10 million X-Prize and raised the curtain on the new world of commercial human space flight.
Two months later, Congress approved the Commercial Space Launch Amendments Act of 2004, which affirmed the Office of Commercial Space Transportation as the regulatory authority for commercial human space flight.
In accordance with our congressional mandate, my office has already issued regulations for experimental permits that will facilitate the testing of suborbital spacecraft. We have also issued regulations governing both the qualifications and training of crew and passengers.
None of that’s a dream. Those are just the facts. They’re all real.
So is the economic impact.
The Economic Impact of Commercial Space Transportation
Two months ago, my office released a report called, “The Economic Impact of Commercial Space Transportation on the U.S. Economy.”
Briefly, here’s what we found.
First, in 2006, commercial space transportation and enabled industries generated over $139 billion in economic activity. Second, the earnings in this same sector totaled $35.7 billion. Third, the industry supported over 729,000 jobs.
Those are the numbers. They are the real thing. And it is important to note that they do not include any potential impacts from New Space or space tourism.
But today, spaceflight as we have known it for half a century is at the doorway to change. While it may have started out quietly, the volume is about to rise.
I’ll tell you why.
As you know, NASA is in the process of retiring the Space Shuttle. In fact, there are just 10 more Shuttle launches left. After that, starting about 2 years from now, NASA will be relying on private industry to deliver cargo, and eventually crew members, to the International Space Station. NASA is focusing on a different destination. It is headed back to the moon and eventually to Mars. NASA’s future is exploration. It is moving beyond low-earth orbit work.
Low-earth orbit presents a tremendous opportunity for commercial space transportation. The work done there by the private sector will be exactly that: private. It will offer services. Decisions will be made in board rooms. More institutions will have input and access to space. The market forces that come with competition will exert downward pressure on prices.
Things are also changing in the suborbital arena. We’re on the threshold of seeing what we think will be a very significant new market in suborbital space tourism. My office is currently working with about a half dozen companies that are developing vehicles designed to carry passengers on suborbital flights to space. Let me cite just a couple of examples of recent milestones of interest.
In January, here in New York, Sir Richard Branson and Burt Rutan unveiled a model of SpaceShipTwo, their new space tourism vehicle. Next month, they will roll out the actual WhiteKnightTwo, the mothership that will carry the spacecraft up to its launch altitude.
You’ll be hearing from Virgin Galactic later this afternoon, but it sounds like business is good. They already have about $35 million in deposits from 250 prospective passengers, and their vehicle isn’t even built yet.
Another California company, XCOR Aerospace, recently announced plans to build the Lynx vehicle, which will be able to take off from a runway under its own power, carrying a pilot and a single passenger into suborbital space. Other companies have their own concepts, using a variety of different technical approaches.
There is tangible work underway by a number of companies aiming for space, partly because of their dreams, but primarily because they are confident it can be done by the private sector and it can be done at a profit.
The established commercial rocket companies are very much aware of these newcomers, and they are thinking through what it can mean for their own businesses. It will be an interesting time.
A Vital Factor
It will be interesting for a number of reasons, none more so than this one.
Everyone concerned knows that when the word “risk” is attached to this industry it has less to do with finances than it has to do with physical well-being. Danger is involved. These are rockets we’re talking about.
The key here isn’t how quickly the industry develops, but rather how safely it develops. Congress has expressed enough confidence in the future of this industry that it passed the legislation I described to help guide its development. At the same time, Congress also had enough concern about the risks involved to point out that the future of the industry depends on safety.
What we have here is an industry with “risk” written all over it, but with risk-mitigation as the overriding consideration in everything it does. In the industrial world, everyone talks about safety. But this industry will rise or fall with it.
That is a powerful incentive to get it right. And the FAA is there to help ensure that it happens. Safety is at the very heart of our mission.
Making a Difference
It would be disingenuous to say that everyone will succeed. The Golden Age of Aviation was golden for those who made it; not so shiny for those who didn’t.
It will be the same hard and rugged story for commercial space transportation. But commercial operations in space will reshape the way we live on earth.
It’s the way things are going to be.
And things are going to be different. This is not your father’s version of America’s space program.
The future of space belongs to private enterprise. It has to be that way if the country is to have a future there. If private enterprise in America doesn’t do it, there’s a real possibility that a foreign state will. And we might have to pay for it, perhaps in more ways than one.
So, with that, let me come back to that song lyric I mentioned at the outset, and ask the question one more time.
“Is this for real or is it just another dream?”
For the generations of the hopeful who came and went before us, private space travel was just a dream, illusive and unreachable.
For this generation, it’s for real and it’s getting underway right now.
It’s history in the making.
And it’s a fresh economic opportunity where private enterprise will lead the way.
Thank you very much.