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P Collins, February 2001, "The Prospects for Passenger Space Travel", Speech to the 4th Annual FAA Commercial Space Transportation Forecasting Conference, Arlington, Virginia.
Also downloadable from prospects for passenger space travel.shtml

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The Prospects for Passenger Space Travel
Professor Patrick Collins

It is a great pleasure to have the opportunity to address this conference, which has established itself as a key venue for those with an interest in the future of the space industry. It is unfortunate that economists' comments are not always welcome at space industry conferences - because we tend to ask rather pointed questions like "Is this activity worth doing?" But it is important for someone to 'say it like it is' since this can reduce waste, improve policies and thereby contribute to economic growth. And, to put it bluntly, space has a very poor economic record: with very high costs, very low revenues, and taxpayers around the world providing $25 billion every year to cover the endless 'red ink'. I believe we can change this: space can become a booming, popular and profitable area of business - a jewel of the world economy instead of a black hole. But that needs appropriate policies, which are emphatically not being followed today. To find the right model for space policy, a historical perspective is useful.

Imagine that it is 100 years ago, February 1901. President McKinley had just been inaugurated for his second term. It was the era of horse-drawn carriages, railroads and telegraph. It would be another 7 years before Henry Ford produced his first 'Model T' (of which eventually 15 million were built). Of course, at that time no-one had ever flown in an aeroplane; famous scientists had even 'proved' that 'heavier-than-air craft' could not carry people. Can you imagine the 'giggle-factor' that the Wright brothers faced? Yet, in 1903, these two entrepreneurs flew a piloted, powered aeroplane - years before the first 'Model T' - and now, 100 years later, more than 1 billion people fly in aeroplanes every year, 3 million people every day.

As a result, aviation today is of enormous economic importance. It generates almost $1 trillion in annual revenues; it gives employment to tens of millions of people directly, and to many more tens of millions indirectly through stimulating the growth of travel, tourism and hospitality services world-wide. Socially air travel has transformed life on our planet, bringing people together around the world - even making attendance at this conference possible for many of us. Yet in 1901, which in some respects is not so far away, the idea of passenger air travel was almost unthinkable.

Compared to that, in 2001 the idea of passenger space travel is far easier to accept, for several reasons. First, people have already been traveling to and from space for 40 years! Second, several hundred peoples' experience has shown that there are no significant physiological problems - traveling to orbit and back involves no significant stress, and standard medications are effective against motion-sickness in space as they are against 'car-sickness', 'sea-sickness' and 'air-sickness'. Third, we know that the investment required to start passenger space travel operations is of the order of billions of dollars - not tens of billions, nor even hundreds of billions. And since US taxpayers alone pay $14 billion/year for the government's 'space program', and taxpayers in other countries pay a further $11 billion/year, it would clearly be no strain whatever to make this investment.

It is also important to note that there is no other opportunity in space with anything near the same potential. Commercial space activities, though growing, are notable for low demand and excess supply, which ensures that services such as satellite launch and Earth observation are unprofitable when assessed from a commercial point of view, despite cumulative government investment in space of about $1 trillion to date. So we are faced with the question - WHY is passenger space travel not already happening? Why is this apparently very attractive opportunity not being exploited?

Fundamentally it is because of institutional history: government space agencies were set up during the Cold War to outdo the Soviet Union in performing 'space missions'. Like many government organisations, space agencies are monopolies, but unlike most others they receive only very loose oversight, because they don't supply services to the general public. By way of contrast, think of the FAA: when there are air traffic delays, or a fatal accident, or other flaws in aviation services, the general public and the media complain noisily, and 'political pressure' is applied to the problem. But Nasa and other space agencies are different: their only interface with the public is through television and newspaper articles describing what they are doing, which are difficult for the public to evaluate.

So space agencies feel very little pressure to do what the public wants, and they tend to follow their own interest - which any economist will tell you is to preserve their monopoly status. The extraordinary history of Nasa's work in the area of passenger space travel is an object-lesson in this. The most economically valuable report that Nasa has published in its 40-year history is NP-1998-03-11-MSFC, 'General Public Space Travel and Tourism' - because it explains that space tourism could start at any time and will become the largest business in space, and it gives a list of recommendations to help bring this about. Yet, despite public promises by both administrator Goldin and associate administrator Garver to make this report available on Nasa's web-site, you cannot find it; there is no hint of its existence. And why do these senior Nasa staff not want the American people to read this report? Presumably because they do not want the media, politicians, teachers and the general public to know that we could see the start of passenger space travel services at a public cost of just a fraction of one year of Nasa's budget.

It does not seem excessive to describe this as a cover-up. As I have said in other speeches, for as long as Nasa refuses to make this report readily accessible to the US taxpayers who paid for it, it cannot claim it is working for the benefit of the American people. To an economist it is sadly clear that Nasa is working for itself - to protect the vested interests in its existing activities, and not to achieve economic benefits for US taxpayers.

As of so many things, Adam Smith wrote perceptively about this problem, explaining that government organisations have an inevitable tendency to "deceive and oppress" the public. Nasa is required by law to help develop commercial space activities - yet it spends nothing on the activity which it has itself stated in print will be the largest business in space, while spending vast amounts of taxpayers' money on activities with no such potential. That is why Nasa covers up this epoch-making report, and refuses to implement its recommendations.

But let me move on to a happier topic - how far will passenger space travel grow? Will it just remain the activity of a few rich individuals, as critics like to maintain? No - research on both demand and supply give us every reason to believe that it will grow like aviation. First, market research that I and colleagues have performed in Japan, Canada and the USA shows that the idea is immensely popular: a majority of the population say they would like to take a trip to space, and most of these say they would pay several months' salary to do so. If you take any interest in young people's culture, you will know that they are longing for novelty and excitement - and the potential for marketing space travel services is surely limitless. So there is good reason to believe that passenger space travel will be immensely popular.

Quantitatively, if just 10% of the rich countries' population were to take a single space flight at $20,000, this would represent a market of $2 trillion. Yet more than 50% say they would like a flight; most say they would like to make several trips; and the middle- class population of the world is growing rapidly - so this is surely a serious under- estimate of the potential market.

Second, the pioneering work of the Japanese Rocket Society in designing a vehicle for passenger travel to and from orbit is widely accepted - though their cost estimates have been criticised for being too high. They estimated that for an investment of some $12 billion it would be possible to carry passengers to orbit for about $25,000/passenger, starting in 10 years; this compares with the $6 billion development cost estimated in the USA for the larger and more complex 'Venture-Star'. It is notable that even $12 billion is less than 6 months of space agency spending world-wide.

The total amount spent on our market research since 1993 is about $5,000. In that same time space agencies have spent $175 billion - about $100 billion of it coming from US taxpayers. It would clearly be absurd to argue that this is good for taxpayers: economically this is clearly a terrible misallocation of resources.

For the Japanese Rocket Society's work a scenario was developed whereby 50-passenger ' Kankoh-maru' vehicles could start commercial service in 2010 after performing 1200 test-flights over 3 years. By producing 8 vehicles/year, passenger numbers could grow by 100,000/year, so that by 2020 there could be 1 million passengers/year. With further growth, by 2030 we could expect to see 5 million passengers/year and the development of a range of more advanced services, as shown in the Figure.

Several points are worth noting about this figure. 1) On this scenario, some 40 million people would have visited space by 2030, that is, some 2% of the middle class of that time - yet we know that most of these people want to take a trip. 2) The investment required to realise this scenario, almost all of which would come from the private sector, is far less than the $750 billion that taxpayers would pay through 2030 for space agency activities - yet the economic value of this scenario would be about $1 trillion higher. 3) Some 20,000 people would be working in space - as hotel staff, which will be the largest employment in space for several decades. 4) Space travel might reach $1 trillion/year, the scale of air travel today, by 2050.

Some people feel uneasy about such a scenario as they think that leisure industries aren't important; we should be doing more 'serious' things, like making machines or building buildings. But humans have made such progress that just surviving doesn't keep us busy any more: a smaller and smaller proportion of the population can produce all that is needed in each industry. And so we need new industries to prevent the growth of global unemployment. The 20th century saw the growth of many new industries that now employ most of the population in the rich countries, a major one being aviation. I believe it is now unarguable that space travel can grow into another global industry like air travel - in which case it will create tens of millions of great jobs. A consumer service industry employing aerospace technology - what could be better for the US economy? The US trade deficit is more than $1 billion/day, due to a relative lack of competitive goods and services being produced in the USA. Is America going to go back to competing with Chinese companies making bicycles? or clothes? or televisions? Or will it go forward - and supply services that the rest of the world can't perform yet?

Isn't it obvious which the USA ought to choose?

Economically it is desirable that governments should help this to happen - just as they have helped other industries, particularly transportation, including aviation. Not least because "If government isn't for it, it's against it" - and currently governments are preventing it. Investors cannot invest in vehicles that are seen to have government competition - and they don't. And they find it hard to understand the potential when the supposed leaders of the space industry hide the most important economic information, and confuse them by making huge investments in uneconomic activities.

Thus it would be greatly in the economic interest of taxpayers for governments to restructure their space activities to follow the model of aviation. Instead of giving priority to government 'missions' of little economic value, they should focus on aiding the growth of a thriving commercial industry. That requires major restructuring - which is of course resisted by those with a vested interest in preserving the status quo. But what's new? One reason for America's economic success has been that it is good at throwing out the old: the government does not do everything it can to protect existing industries - as it does, for example, in Japan, thereby delaying vital innovation. But in space the US government has done just that - supporting a monopoly agency with a massive annual budget. Remember, Nasa's budget is as big as the FAA's. However, the FAA's budget is more than covered by the taxes paid by airlines. But there's no trillion-dollar space travel industry paying for Nasa - in fact, there's little else in space except government spending, and none relating to passenger travel.

From the point of view of the economic benefit of the US people, the FAA has the right way of thinking - and space agencies, sadly, do not. I understand that AST's budget has recently been doubled. That's excellent news. But it's still less than 1/1000 of Nasa's budget. If AST's budget is doubled - and doubled - and doubled again, it will still be less than 1% of Nasa's! Yet AST's work is economically more valuable than Nasa's. This is how distorted government space funding is.

By working with the private sector to develop passenger space travel, the FAA's AST will make greater progress in achieving economic value from space activities than NASA does with 1,000 times its funding. If that seems an extreme statement, I would welcome a challenge - but the figures are black-and-white: work that is aimed at developing the largest commercial activity in space is economically far more valuable than work that has no such potential.

Well, I had better not continue longer on this topic, or it will be thought that I'm a 'plant' by the AST. I'm an economist who's stumbled across this extraordinary wasted opportunity - but, instead of being praised or thanked, I find myself up against entrenched opposition in the space industry. I'm glad to have found some friends in the FAA; in Japan too the aviation industry is starting to take the lead in this field, to the shame of the space agencies. Perhaps we can hope the incoming Nasa administrator will turn over a new leaf; economically this is certainly much the most important issue facing him or her.

Some people sneer at talk of space tourism, saying that just having fun in space is "trivial". Well, I profoundly disagree. For economists, consumer services are not trivial - they drive the economy. If Americans didn't consume $25,000/year, they couldn't have average incomes of $25,000/year. Furthermore, the idea that governments have some 'higher purpose', and that the way politicians and civil servants spend taxpayers' money is somehow more valuable than the way individuals spend their own money, is not only nonsense, it is dangerous nonsense. It was that kind of thinking that led to the abomination that was the Soviet Union. Adam Smith wrote about this too with laser-like clarity:

"It is the highest impertinence in kings and ministers, to pretend to watch over the economy of private people, and to restrain their expense... They are themselves always, and without any exception, the greatest spendthrifts in the society."

Nothing has changed in this regard in the last 200 years. Governments have spent more than $1 trillion on civilian space activities, yet the resulting commercial activity, satellite communications, turns over barely $20 billion/year - not 1/50 of what private industry would generate with the same investment.

However, quite apart from economic considerations, I believe that visiting space is profoundly educational - in the widest and deepest sense. Nothing could be better than to make the experience of space flight available to as many people as possible; and it seems highly appropriate that such a new service should become available at the start of a new century. There are many social problems in the rich countries arising from the ever-growing freedom that we are achieving through economic development: among other things this gives people the freedom to degenerate through lack of meaningful challenge. In view of the many problems facing our children today, I can think of nothing more inspiring for them than to be able to realistically aim at traveling to space.

Astronauts often give talks to school-children, and they like to ask them "Won't you be an astronaut?" I think this is dishonest - because not one in a million children can be an astronaut. If instead you ask "Won't you take a trip to space?" or "Won't you work in a space hotel?" you're offering something that will be possible for millions of people - and I can tell you that 10-year olds are electrified by the idea. So I am very optimistic that the glittering goal of space travel, which is of particular attraction to young people, will have a pervasive and beneficial influence in giving meaning and challenge to many peoples' lives. Indeed I believe it is hard to over-estimate the beneficial cultural influence that will result from opening the space frontier to passenger space travel.

It will not be achieved by sending a few government employees into space, even if they go as far as Mars. I was brought up to understand that that was the difference between the USA and the Soviet Union. Yet, astonishingly, it is now Russia where passenger space travel is available, and the USA where the public is allowed to watch government-made TV programs about the government's "astronaut-heroes" performing "missions" in space. What an astounding reversal! (It is also further proof that the most promising business in space is passenger travel: Russia has already raised more than $100 million in commitments, despite the extremely high price.)

Not only will millions of people be able to make a space trip, and many thousands of people work in orbital hotels - but this is just the beginning: there is literally no limit to the potential growth of this activity. As I have described elsewhere, tourism in low Earth orbit is a key step in leading to further development of space, because it will create a market in space. Doesn't that word ring a bell? Where there's a market there's business opportunity. For example, there are many subsidiary industries that will spring up to service orbiting hotels. How about a window maintenance service? Lots of windows, and large ones, are key for space hotels, and just like in airliners, their physical condition will be critical. So the companies which currently maintain airliners' windows will have a new field for expansion. And I could give a dozen other examples.

The American Society of Civil Engineers hold a wonderful space conference every other year in Albuquerque. Civil Engineers know how to construct buildings on the Moon, and they know how to make oxygen, iron, aluminium, glass and other things from lunar materials. They know how to do all this - but there's no market for this work; space agencies have no use for it. So it's currently just a labour of love; they're thinking "One day this will be useful" Well, tourism in orbit will offer a market for lunar exports. For a start, how about delivering thousands of tons/year of water-ice to low Earth orbit? We will need it as de-orbiting propellant and for hotel supplies. They'll have to beat the cost of launching it from Earth - say $100/lb - but they tell me they can. So orbital tourism can drive the initial commercial development of the Moon, and thereafter tourism to the Moon will take off.

Personally, I never believed the 'Internet hype' that the future was to be just sitting and looking at a screen. Almost all the many media articles about the 21st Century offer this image - everyone sitting at computer screens. But it's not enough! Far more significantly, in my opinion, the development of passenger space travel is going to create a truly new era of civilization - it's going to revolutionise the 21st Century just as passenger air travel revolutionised the 20th Century. And it will be equally good for the world economy, creating tens of millions of great jobs.

It's truly going to be a 'Golden Age'. And it's ours for the taking; we know how to do it; it requires very modest investment. But unless we take positive steps in this direction, it could be unnecessarily delayed for decades. We'll certainly never get there if we continue spending $25 billion/year on every kind of loss-making space activity - and nothing on passenger space travel. And in view of the economic storm-clouds building in the world economy, due to over-supply in existing industries and a lack of new ones, that would be a tragic waste. Thank you.

Much of the material referred to in the text can be found in documents in the library at


Patrick Collins is Professor of Economics at Azabu University, and a Guest Researcher at both the Institute of Space & Astronautical Science (ISAS) and the National Space Development Agency (NASDA) in Japan.

Born in Sussex, England in 1952 he graduated from Cambridge University in Natural Sciences and Economics in 1976, and received his MSc from Imperial College in 1978. Working at Imperial College Management School until 1991, the major focus of Professor Collins' research for the past 25 years has been the potential for commercialisation of space activities - concentrating on passenger space travel and power from space.

Professor Collins has published over 100 papers on these subjects; he wrote the first doctoral thesis on the economics of power from space; he carried out the first market research on the demand for space tourism; he co-authored the first book on the subject; and he is a key figure in both the Japanese Rocket Society's Space Tourism Study Programme and the 'SPS 2000' Project to develop a pilot plant to deliver power from space. In 1997 he co-founded the web-site which is the main on-line archive of information on these subjects, and of which Space Future Consulting is the commercial arm.

P Collins, February 2001, "The Prospects for Passenger Space Travel", Speech to the 4th Annual FAA Commercial Space Transportation Forecasting Conference, Arlington, Virginia.
Also downloadable from prospects for passenger space travel.shtml

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