The Case against Space Tourism - It's not the 'killer app' we imagine

JimM · 2004-07-03 13:49:07

After posting this to the SpaceshipOne tread, I thought it might deserve a thread of its own.

http://www.msnbc.msn.com/id/5327529/]Here is a very interesting news article on MSNBC that is well worth reading all the way through.

The case against space tourism as the killer app for private space needs to be put more often: this extract from that article makes a good opener...

QUOTE/
...TGV's Bahn wonders if the focus on space joyrides is a case of putting the cart before the horse, to use an analogy from an earlier transportation era.

"They shouldn't be screwing around with space tourism," Bahn said of his colleagues. "Space tourism makes a great sound bite. It's a horrendous business model. They should be talking to the military or they should be talking about hauling the mail. If you look at the history of aviation, it is the history of military reconnaissance and airmail."

For Bahn, "hauling the mail" is a metaphor for low-risk applications that may not yet have become obvious — not necessarily a killer app, but "an app which generates a steady, predictable cash flow while you're fixing up your technology."

Bahn sees the issue of liability and insurance as a huge impediment to space tourism. Even if a multimillionaire ponies up tens of thousands of dollars for a half-hour suborbital flight to see the curvature of Earth and experience weightlessness, "that's a $20 million cargo you've got in the back seat," he said.

"If your insurance costs on the payload are on the order of what you'll be charging, your business model has a big problem," Bahn said.
/END QUOTE

So space tourism is no 'killer app'. Apart from the question of liability insurance, normally overlooked, killing it dead, it's all based on the 'build it and they will come' fallacy. No person or institution with money to invest or lend for a profit will give any sort of business plan with gigantic and fatal flaws like these a moment's consideration.

Lars_J · 2004-07-03 14:13:36

We don't have [real] space tourism yet - so I'd say it's a bit early to declare wether or not it will be a "killer app".

John Creighton · 2004-07-03 14:18:54

If in the future I make 200 thousand dollars a year I would by 10 to 50 thousand for a suborbital ride. If I never have kids, I would probably pay for the ride if my future income was 80-100 thousand dollars a year. If you love space enough, you don’t need to be a multi millionaire to pay for 10-50 thousand for a ride. Heck don’t a lot of people bay 10k for a normal vacation anyway.

JimM · 2004-07-03 15:53:05

We don't have [real] space tourism yet - so I'd say it's a bit early to declare wether or not it will be a "killer app".

What is being said here is that unless you can convince the money men that it's a sure-fire paying proposition first, we won't 'have [real] space tourism' for a very very long time indeed--and looking at it from the POV of the money men, it looks nothing like a killer app, but instead a sure-fire looser.

JimM · 2004-07-03 16:01:47

If in the future I make 200 dollars a year I would by 10 to 50 thousand for a suborbital ride.

That would be your entire income for 50 to 250 years you say you would pay. How do you propose surviving in the meantime?

If wishes were horses...

Space tourism is not the wonderful cure-all we keep telling each other. It'll happen one day as a spin-off of other space business; it will never be the main business that drives space forward.

Let's get real. That's all I'm saying.

ANTIcarrot. · 2004-07-03 17:44:33

I thought that one of the reasons SS1 made it to this stage was because it was being run *by* the money men (or two of them at least). Given that, do they really need the permission or approval of *other* money men in order to make a go of it?

Insurance needn't be the 'killer problem' either. People get killed on ski-trips all the time. Ditto for driving. It doesn't stop us from doing that kind of thing if we want to and there are plenty of companies around willing to take our money from us in the process.

Why would this one singular application be different? And even if it does prove insurmountable, a suitably air-tight disclaimer would probably solve the problem. At which point all you need is regular-grade flight insurance in case your burning wreckage crashes into a farm house.

I agree space tourism probably won't be the wonder profit engine many claim it to be, but it seems workable; as a means of generating advertising/promotion if not profit.

ANTIcarrot.

RobertDyck · 2004-07-03 18:21:33

Military has been driving NASA since its beginning; any change from what we have now will require a departure from the military. As for mail, email and fax have made high-speed transportation of letters obsolete. Current air cargo can carry packages. Concorde found that high speed passenger traffic across the Atlantic does have a market, but the cost is a major factor. Paying a multiple of economy fair ticket price was not worth increasing from 0.855 Mach to 2.0 Mach. In year 2000 a round-trip ticket from New York to Paris cost $8,148 (US dollars); today it would cost between $931 and $1,289 depending on airline and dates.

You can never duplicate an event of the past. Today is a different world than a century ago; the prime profit market will have to be different. If space tourism makes money, then go for it.

JimM · 2004-07-03 18:46:21

I thought that one of the reasons SS1 made it to this stage was because it was being run *by* the money men (or two of them at least). Given that, do they really need the permission or approval of *other* money men in order to make a go of it?

It's one thing to invest $10 or $20 or $30 million in a hobby if you're a billionaire. That's effectively what SpaceshipOne is to Allen-- a hobby, no matter how ernest he may be about developing private spaceflight.

It's another thing to invest $2 or $5 or $10 billion or more. That's not a hobby any more; we're now talking serious money. As a general principle billionaires don't get that way by making stupid investments. In any case, I doubt they could realise that much of their capital quickly without seriously damaging the value of the stock that makes them billionaires--so they have the collateral perhaps, but still have to convince a bank to lend them the money.

Insurance needn't be the 'killer problem' either

Oh yes it will be. Take one millionaire worth say $10 million and fire him skywards on a sub-orbital jaunt. In general, you can assume you've got a $10 million liability sitting on the passenger seat, so in the event of crash and burn, you have to fork out $10 million.

Insurance? This is CERTAIN to be seen as FAR more risky than skiing or driving or sitting in a scheduled jet flight. Sky high risky, at least until you've got a very substantial track record -- say 1,000 successful trips -- under your belt. So what will the premium be? I don't know but would not be surprised if it is well into six figures-- per passenger. So with $100,000 tickets, the result is rapid bankrupcy. And as the man says, it's highly doubtful a air-tight disclaimer is possible. And consider the liability risk and thus premium for a billionaire...

Well, as you see I beg to differ on insurance. But apart from that, consider the effect of your first fatal crash (there's bound to be one sooner or later) Remember the Hinderburg?

JimM · 2004-07-03 18:55:03

If space tourism makes money, then go for it

The trouble is, no-one will know for sure if it's profitable until after someone goes for it.

Running the numbers as best one can, it does not look close to a convincing business plan, and in any case it's putting the cart before the horse: it's a classic example of the 'build it and they will come' fallacy, or the triumph of hope over realism.

Rxke · 2004-07-03 23:00:42

I don't see insurance as the biggest problem.

But litigation. Imagine stinkin' rich kid blown to pieces, wich will happen eventually.
Now how do you get a stinkin' rich kid? By having stinkin' rich parents.
Wich have enough money for top notch lawyers to bring any business to its knees, it would be very easy to make the judge believe company X underestimated risks, so made false advertisements etc etc.

And since we seem to live in the age of litigation, lawyers and advocates are already ordering their new Ferraris...

JimM · 2004-07-04 01:19:00

I don't see insurance as the biggest problem.
But litigation...

But how does a company cover itself against this litigation? Why, by insurance... and it'll cost the earth just like i said: insurance kills space tourism.

ANTIcarrot. · 2004-07-04 03:55:02

It's another thing to invest $2 or $5 or $10 billion or more.

Ah, my mistake, I thought you were talking about sub-orbital tourist flights.

Take one millionaire worth say $10 million and fire him skywards on a sub-orbital jaunt. In general, you can assume you've got a $10 million liability sitting on the passenger seat, so in the event of crash and burn, you have to fork out $10 million.

Flight insurance does not work that way. A human being is a human being and killing one is no more or less worse than killing another. Lybia isn't promising to pay $20M for first class passangers and $10M to third class passengers for the Lockerby bombing for instance. Quite frankly they wouln't be allowed to for all sorts of reasons.

From the airline's PoV all they need to insure against is property damage if the plane and contents falls out of the sky, if baggage gets crushed, or if provable negligence on behalf of an airline (which they could have reasonable prevented) causes a crash. Hence you could sue for something like Challanger but not if the same kind of accident was caused by an undetectable crack in something.

So with $100,000 tickets, the result is rapid bankrupcy.

Airliners are not responsable for travel insurance, and passengers do not have to buy comprehensive insurance. They might be able to buy something reasonable for much less than $90k. Airlines are responsable for passenger insurance, but it is my understanding (and I do not claim to be an expert here) that is generally proportional to the amount of medical care a passenger would require in an accident. For any space application, that's liable to be near $0.

Wich have enough money for top notch lawyers to bring any business to its knees, it would be very easy to make the judge believe company X underestimated risks, so made false advertisements etc etc.

Existing law gives airlines a hell-load of protection from this kind of thing. If the airline screws up, then yes, the judge awards compensation, but the judge is very unlikely to award any more money to rich parents than he would to poor parents. The judge would also take a very dim view if the parents had first completely and knowingly agreed to take the risk after the full consiquences and chances had been explained to them.

In a similar case, if parents allow their child to under go experimental treatment which may or may not save their child's life (and might kill them) it is very difficult for them to sue the hospital. They judge would in many cases turn around and ask their lawyers, "I understand your client's loss, but just what they hell did the idiots *think* they were agreeing to?"

ANTIcarrot.
PS: Any lawyers here?

JimM · 2004-07-04 04:44:16

PS: Any lawyers here?

Not guilty, honest.

You mentioned Lockerbie. A very good example.

The airline that flew that 747 was PanAm. Where is PanAm today? Gone. Why? The litigation. It was faced with having to fork out something like $1 billion which is did not have. As a result it became history.

The threat of litigation and/or insurance is a very serious barrier which must be taken very seriously indeed. I reckened earlier on a different site that it can almost double the cost of each flight.

Flight insurance does not work that way. A human being is a human being and killing one is no more or less worse than killing another. Lybia isn't promising to pay $20M for first class passangers and $10M to third class passengers for the Lockerby bombing for instance. Quite frankly they wouldn't be allowed to for all sorts of reasons.

But it does work this way. Libya is forking out $6 million for every passenger. This is serious money, you know. If every passenger in your tourist ship is a billionaire, you can bet the farm that the litigation lawyers are the very best and can earn their huge fees. The flight operator will have to fork out truly vast sums-- and to insure against that will cost a fortune too.

ANTIcarrot. · 2004-07-04 07:01:16

The airline that flew that 747 was PanAm. Where is PanAm today? Gone. Why? The litigation.

http://www.airchive.com/SITE%20PAGES/TI … %20AM.html
It's not quite that simple. Eastern was forced to shut down at roughly the same time - and not because of litigation but because of the economic realities of the time. Both airlines were going though a period of 'bad luck'. I'm trying to look up exactly what happened, but there's little information to go on. All I've found so far focuses on the crash, not the consiquences of that crash.

But it does work this way. Libya is forking out $6 million for every passenger.

Lybia is a very special case, and is paying that money to shut these people up, not compensate them. It wants to get on with re-establishing international relationships with other countries, and has expressly not accepted responsability for Lockerbie. IIRC, $6M is also a lot more compensation than most victims/next-of-kin get.

And yes it is $6M per passenger. Irrespective of how rich or old they were. They all got the same. Which opposes your assertion that rich people get more compensation than poor people, and that carrying rich people means you need more compensation than if you're carrying poor people.

Think of it this way: If a person is 'worth' $10M then that worth is tied up in shares and property. Even if you kill the person, you don't destroy those shares or property, so why insure on that basis?

Besides which, even if this amount of compensation was to become standard, on a flight with two passengers, that's only $12M you need to pay out. That's hardly going to be crippling to a space firm. The loss of the rocket that went up with them might be, but not the litigation that results.

JimM · 2004-07-04 07:15:31

They all got the same. Which opposes your assertion that rich people get more compensation than poor people

You are disregarding my point about the effectiveness of the lawyers, which is generally a function of what you can afford to pay them and what you expect to get back for your investment. Rich people get the best.

As F Scott Fitzgerald has Gatsby say in "The Great Gatsby", "The rich are different. They have more money."

ANTIcarrot. · 2004-07-04 08:11:09

Perhaps.

In it's early days civil aviation was given a lot of protection against this kind of thing for precisely to prevent simple accidents forcing entire companies out of business.

In the end though it all boils down to the circumstances of the accident, the politics of the time, and the laws written between now and then.

Hopefully by the time the first space company is sued out of existance, it will have enough rivals to ensure the survival of the industry.

ANTIcarrot.

Ian Flint · 2004-07-04 08:25:18

Ok, why are you guys comparing airlines to space tourism?

The first is a transportation service having little to do with recreation in and of itself, the second is totally useless (for the time being) as a transportation service and is only used for recreation. Apples and Oranges.

You should compare space tourism to things like skydiving, bungee jumping, rock climbing, hang gliding, etc. Why don't you compare it to the Russian astronaut training they do for paying customers. They will take you to the edge of space in a Mig fighter I hear. What do they do about insurance and litigation?

JimM · 2004-07-04 11:47:05

You should compare space tourism to things like skydiving, bungee jumping, rock climbing, hang gliding, etc.

No, I think it will compare much more closely with ocean cruising. I think that's the way the courts will see it.

What do they do about insurance and litigation?

Run their business in Russia, where different rules apply, that's what.

Maybe that's the answer. Maybe the US is about the last place to run a space tourism business from.

Anyway, what happens to the business in general after the first fatal passenger-carrying crash? Remember the Hindenburg and what it did for the future of airships?

ANTIcarrot. · 2004-07-04 13:24:55

I believe that after the hindenburg people switched to a newer, faster, more capable design. But they didn't stop people flying passengers across the atlantic.

ANTIcarrot.

JimM · 2004-07-04 15:05:32

I believe that after the hindenburg people switched to a newer, faster, more capable design.

Not of airship they didn't. They still haven't and may never do.

But they didn't stop people flying passengers across the atlantic.

That's exactly what it did do. There were no more scheduled nonstop passenger flights (by aircraft, not airship) until after 1945. So for about 8 years, people were stopped.

Ian Flint · 2004-07-05 07:57:23

Here you go:

Just base your space tourism company in Puerto Rico.

Benefits:

1. The tax code there rocks!
2. Insurance and litigation should be less of a problem there too.
3. Burning wreckage has a lot of ocean to fall into instead of farmhouses.

ANTIcarrot. · 2004-07-05 08:42:55

Not of airship they didn't. They still haven't and may never do.

Quite correct, let me rephrase that: The hindenburg incident did not stop people from being transported by air across the atlantic as passengers. It delayed it for a few years, but then again, so did WWII.

The Hindenburg is also a notable for the way it is remembered. Hydrogen didn't bring it down, but rather the waterproof paint, which was essentially rocket fuel. Without that the Hindenburg probably would not have crashed. It was bad publicity, science, and investigation that doomed the whole idea of the hydrogen airship far more than any basic flaw in the design.

The upshot of all this:
*Bad publicity can indeed kill an industry off. (LTA transatlantic flight)
*Bad science can become policy.
But:
*A single accident does not doom unsimilar designs.
*A single accident does not doom an idea. (HTA transatlantic flight)

So bit of a mixed bag there.

ANTIcarrot.

JimM · 2004-07-05 09:07:29

Just base your space tourism company in Puerto Rico.

Well I think you're on the right tracks, but that's not far enough out, as Puerto Rico operates under the disadvantage (for this business) of being US territory. I'd say we need somewhere well beyond the reach of normal legal systems and preferrably at or near to the equator.

How does The People's Republic of the Congo (or whatever it calls itself this week) sound to you? Sumatra? (not bad; it's in Indonesia, straddles the equator, but is just a short hop from very civilised and modern and English-speaking Singapore. Or maybe you could buy the Pacific island of Nauru, almost bang on the equator but hundreds of miles from its nearest neighbour...

The thing is to remember that the company itself must not be formed or have any legal connection with the US or anywhere else that's likely to support a US-originated claim for damages, such as the EU, Australia, etc.

JimM · 2004-07-05 09:18:09

The Hindenburg incident delayed (transatlantic air travel) for a few years, but then again, so did WWII.

Arguably, by dint of the way it forced technical progress, WWII speeded up the arrival of fare-paying HTA transatlantic flight.

(But this is getting kinda off-topic.)

ANTIcarrot. · 2004-07-05 14:08:43

JimM, under what circumstances do you think a spaceline would have to pay comensation, and what would you think would be reasonable payouts for those circumstances. Since you started this topic I expect you can come up with a couple of examples...

Suitably detailed examples could be compaired to similar airline incidents, at which point we could begin to extrapolate from current legal trends.

ANTIcarrot.

New Mars Forums

Announcement

#1 2004-07-03 13:49:07

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#2 2004-07-03 14:13:36

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#3 2004-07-03 14:18:54

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#4 2004-07-03 15:53:05

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#5 2004-07-03 16:01:47

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#6 2004-07-03 17:44:33

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#7 2004-07-03 18:21:33

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#8 2004-07-03 18:46:21

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#9 2004-07-03 18:55:03

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#10 2004-07-03 23:00:42

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#11 2004-07-04 01:19:00

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#12 2004-07-04 03:55:02

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#13 2004-07-04 04:44:16

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#14 2004-07-04 07:01:16

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#15 2004-07-04 07:15:31

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#16 2004-07-04 08:11:09

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#17 2004-07-04 08:25:18

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#18 2004-07-04 11:47:05

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#19 2004-07-04 13:24:55

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#20 2004-07-04 15:05:32

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#21 2004-07-05 07:57:23

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#22 2004-07-05 08:42:55

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#23 2004-07-05 09:07:29

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#24 2004-07-05 09:18:09

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

#25 2004-07-05 14:08:43

Re: The Case against Space Tourism - It's not the 'killer app' we imagine

Board footer