Author Topic: Plausibility/Economics of "big" LEO settlement  (Read 9725 times)

Offline mikelepage

Often times you'll hear people say we should concentrate on Moon/Mars/asteroids etc because we've "done" low earth orbit (LEO), meaning that ~500+ people have been there.

To me that really underestimates the commercial potential of LEO as a destination, not just for tourism (although that's what I'll concentrate on here), but for support of ongoing expansion into the solar system.  It may only be a few hundred km from the surface, but it's nearly to the other end of the biggest gravity well we have to overcome in the near future.

My question is: how do the economics change in the scenario where hundreds of thousands, or even millions of people have been to LEO or beyond, and travel to LEO is simply a more exotic method of travel around the world? (since where you land is largely a matter of departure timing).  I'm not an economist/accountant, so this is largely spitballing, I would like to hear more educated assessments of the potential.

Say we end up putting hundreds of ISS-volume habitats into orbits 800-1000km altitude, where orbital altitude decay only happens on the order of hundreds of years, you still receive partial radiation protection of Earth's magnetic field.  Assume we eventually work out a solution for the space debris problem, and is some form of spin gravity so people can enjoy the novelties of seeing the Earth from space and experiencing zero gravity whilst still having the comforts of being able to bathe and go to the toilet with some sense of normalcy.

How we get from here to there:

As a ballpark figure, the worldwide ocean cruise industry 2015 carried about 22 million people per year for a total of ~$40Billion USD revenue, giving us an average spend of $1818 per person.  Let's say as an aspirational goal, we hope that eventually, 1/1000 of those people would spend 1000x that amount for a trip to orbit for two weeks ($1.8 million ticket price, 22k people per year), and returned to destination of choice because Dragon v2 can land anywhere and be shipped back from anywhere to Cape Canaveral/Brownsville. 

7 people at a time (6 passengers, one pilot/staff), 26 flights a year to a given space station: 6*1.8 = 10.8 million revenue per flight. Revenue is $280.8 mil per year per station.  Assuming reusable rockets reduces cost to 1/10 of current $70 million/flight = $7 mil per flight.

At that rate we're talking 156 spaceflight participants, per space station per year.  To service 22k people per year, we need 141 ISS volume space stations or a smaller number of larger ones.  Either way, this means space stations themselves are coming off a production line such as Bigelow Aerospace or otherwise.  Let's stick with the smaller stations BA 330 type for now.

From $10.8 million per flight, lets say $7 million launch costs, $3 million for upkeep/downpayment of the station, and $0.8 million profit.  For the station, 26 flights a year gives $78 million/year to pay off the initial launch and ongoing upkeep of the station.  Say the initial stations are BA330s launched on a Falcon Heavy for ~$135 million. At this flight rate, the launch of the space station is paid off inside 2 years, and if the station costs $200 million, you've paid off the station itself within 5 years.

What about the doubling time? - i.e., how long to fund a second space station from the proceeds of the first?  335/78 = 4.28 years (call it 4.5 so we can calc 4x at 9years).  So if we launch the first BA330 in 2018 and need 141 space stations...
2018 = 1 commercial space station
2027 = 4 stations
2036 = 16 stations
2045 = 64 stations
~2050 = 141 stations

So yeah, I know I'm making some optimistic assumptions, but I also think I'm making some pretty conservative ones (i.e. not accounting for any synergistic effects).  I guess we can achieve "big" LEO travel rates/settlement, 22k participants per year by at least 2050, if not sooner.  Anyone think I'm being too optimistic? too pessimistic?
« Last Edit: 08/28/2016 10:06 AM by mikelepage »

Offline QuantumG

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #1 on: 08/28/2016 11:24 AM »
Imagine that market buying the products of asteroid mining companies and developing industry.
Non-commercial spaceflight and filicide  http://tylervigen.com/view_correlation?id=185

Offline TrevorMonty

For existing LV and capsules in development 7 seats it is.

 Go to MCT class vehicles and we are looking at <$500k per passenger for 2wks in LEO.

For tourism and operating costs lower the orbit the better. Station keeping fuel requirements are nothing compared to significantly increase payload a lower orbit allows. Also better views of earth.

Offline KristianAndresen

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #3 on: 08/28/2016 05:12 PM »
If you consider what it is that the super rich are spending cash on (and you should, since their numbers are growing), it's not so much cruise ships - it's real estate. And it isn't tropical islands, which are surprisingly cheap as a result of being fairly numerous, it's downtown real estate in major cities, properties that have high value as a result of being unique. Their numbers are limited, as there is only one London, one Tokyo, e.t.c. The super rich are attracted to major cities for the same reason the middle class is. Everything is right there, the restaurants, the nightlife, you name it.

What I'm trying to say is, for LEO and a solid financial prospect, you really need something like a 3 dimensional Manhattan, not the ISS. The space to build a variable gravity villa should sell at a premium... *if* the transportation to and from your estate is dependable and comfortable (as I see it, that means the budget needs to include a launch loop, but that is a separate discussion).

The numbers get interesting when the gravity is low: Assume, say, 500 cubic meters per person. Then take the area of Manhattan (60 square km), and give it an extra dimension to work with, giving you 465 cubic kilometers. That's a population of 1 billion.

But instead of packing the place like a can of sardines, you can have something where the connectivity is like a city, but the perceived population density (probability of bumping into somebody) is rural. Which is something new.

Offline mikelepage

Re: Plausibility/Economics of "big" LEO settlement
« Reply #4 on: 08/29/2016 02:51 AM »
Good point about real estate vs tourism.  With so many space stations in orbit, one would imagine there will eventually be some that are privately owned.

Convenience on orbit will come with time and the size of the constructions, but for the initial period I think it's pretty convenient that with a higher inclination orbit like ISS you could put down virtually anywhere on Earth within 24 hours (track lines are 22.5 degrees longitude apart = ~2500km and I'm presuming there will be a role for dream chaser type vehicles for cross range):



Offline Asteroza

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #5 on: 08/29/2016 11:35 PM »
Wouldn't a big settlement, at least at the beginning, be supported by some sort of commercial anchor tenant with a regular supply visit requirement that allows for some secondary cargo delivery though?

The recent comments about ZBLAN fiber optic manufacturing being profitable with a BA-330 and 6 yearly cargo Dragon flights would be an example of such an anchor tenant.

Offline high road

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #6 on: 08/30/2016 07:19 AM »
My thought exactly: bring in the industry first, so the tourist sector can 'rent' as much of the infrastructure as possible, rather than putting it up themselves. Huge savings on overhead costs. Tourists would be rare and stays would be short at first, but both would increase as more and more infrastructure becomes available. But no space tourism agency would have to pay for any largely unused infrastructure.

Unfortunately, ACME Advanced Materials have found that parabolic flights give them enough time in microgravity, at a considerably lower cost, at least for their CiS refining process. Let's hope that scaling up production and bringing down the cost of launching to and operating in orbit tips the scale back in favor of continuous production in microgravity. Once there's a first company that makes its money by producing something (other than data) in orbit, others will follow.

Offline KelvinZero

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #7 on: 08/30/2016 08:14 AM »
@ mikelepage : There is an obvious danger to making the world look like a big ball of yarn.. space kittens  :)

The super rich tourist idea worries me a bit.. could get "Elysium", ie people whose only goal is to lord it over the rest of us while sucking up earth resources, rather than pioneers. Such a classist system might actively quash the pioneer movement because they are happy with the status quo and want LEO to remain an elite club for which they control the membership.

If it turns to asteroid resources then probably we would be ok, pioneers would have their place and eventually earth bound wealth would be left behind. If it is people who already own everything on earth (a fast approaching situation since money makes more money just sitting in the bank) then they cannot actually make more money from asteroid mining. Who do you sell to if you already own everything?

Re: Plausibility/Economics of "big" LEO settlement
« Reply #8 on: 08/30/2016 06:03 PM »
This is my first post on this site because I could not resist responding.  Love the enthusiasm but the predictions are crazy optimistic.

Let's say as an aspirational goal, we hope that eventually, 1/1000 of those people would spend 1000x that amount for a trip to orbit for two weeks ($1.8 million ticket price, 22k people per year)

It's not a direct relationship. Data show (http://space.alglobus.net/papers/Easy.pdf, see page 27) that far fewer people will pay big bucks for space tourism than you're assuming. 

Assuming reusable rockets reduces cost to 1/10 of current $70 million/flight = $7 mil per flight.

Again, crazy optimistic. Best real world data we have is the reusability will cut prices by 30% and even that is pretty much a rumor from SpaceX.  BFR/MCT/Skylon etc may get us way lower but they are all vaporware right now.

$3 million for upkeep/downpayment of the station

$3million/flight x 26 flights = $78 million per year in maintenance/debt servicing.  For an honest to goodness space station. Totally implausible considering what I know about engineering and financing today.

Look, I know I sound harsh (I want space tourism as much as anyone!!!) but there is way way too much hand-waving here. Your assumptions are going to get you into hot water and ultimately disapppoint you.

Online dror

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #9 on: 08/30/2016 06:30 PM »
...
The numbers get interesting when the gravity is low: Assume, say, 500 cubic meters per person. Then take the area of Manhattan (60 square km), and give it an extra dimension to work with, giving you 465 cubic kilometers. That's a population of 1 billion.
...
;)
2 D Manhattan:
« Last Edit: 08/30/2016 06:32 PM by dror »

Offline Impaler

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #10 on: 08/30/2016 09:35 PM »
I think we will see fewer larger stations rather then many many smaller ones.  This is simply more logistically efficient to build, maintain and shuttle cargo and passengers too.  Each station has basically unlimited 3 dimensional space to expand into so with a common 'backbone' that provides power and coolant many smaller independent moduals can be attached and run as quasi independent stations and then replaced as needed a bit like a trailer park.  This should satisfy any desire for independence without having to go through the trouble of setting up a complete station from scratch which will likely remain beyond most nations means for some time.

Stations at different inclinations will likely be used for different purposes, equatorial orbits are the most efficient to access both in payload quantity and launch frequency.  But they have poor earth observation potential due to always flying over the same terrain.  I expect these will be for zero g research or manufacturing.  Stations at high inclination will be tourist oriented and ones in between may be mixed, it will also allow nations to have stations that are optimal for their domestic launch site latitudes.


Offline mikelepage

Re: Plausibility/Economics of "big" LEO settlement
« Reply #11 on: 08/31/2016 05:40 AM »
This is my first post on this site because I could not resist responding.  Love the enthusiasm but the predictions are crazy optimistic.

Let's say as an aspirational goal, we hope that eventually, 1/1000 of those people would spend 1000x that amount for a trip to orbit for two weeks ($1.8 million ticket price, 22k people per year)

It's not a direct relationship. Data show (http://space.alglobus.net/papers/Easy.pdf, see page 27) that far fewer people will pay big bucks for space tourism than you're assuming. 

Welcome to the site - and glad it was my post that got you in ;)

I probably should have clarified at the beginning of the post (rather than the end) that I was projecting 22k people a year by 2050, but using 2015 dollars.  :) History tells us we tend to overestimate in the near term but underestimate in the long term.  Exponential growth is a beautiful thing.

I agree that expecting 1/1000th of the people to pay 1000x as much is a simplistic extrapolation but I think the paper you showed to actually does show it's a direct relationship (just not a linear one), it's just a matter of different starting assumptions and the scaling factor.

I like the results of this survey better (and how would we know which projection is more accurate?):
http://www.spacefuture.com/archive/space_tourism_and_its_effects_on_space_commercialization.shtml


As a very very rough curve fitting and extrapolation exercise for that orbital space flight demand data (and the fact that 8 flights have taken place for between $20 and $50 million. I get a decline in demand to 20% for every doubling of cost.

For the US (presumably this data is only indicative for first world countries).

This #people interested in orbital space flight for $ (USD) ticket price
130 million for $50k
26 million for $100k
5.2 million for $200k
1.04 million for $400k
208 thousand for $800k
42 thousand for $1.6 million
8 thousand for $3.2 million
1664 for $6.4 million
333 for $12.8 million
66 for $25.6 million
13 for $51.2 million

In that light, I think 22k spaceflight participants at a price of $1.8 million actually looks pretty reasonable.



« Last Edit: 08/31/2016 06:28 AM by mikelepage »

Offline mikelepage

Re: Plausibility/Economics of "big" LEO settlement
« Reply #12 on: 08/31/2016 05:58 AM »
Also, I should try to be more consistent about using the term "spaceflight participant" instead of tourist, because in my head these numbers are inclusive of people who are going in support of space industries like the above mentioned fibre optic production, asteroid mining, or Mars/Lunar exploration.  It's just that most of the data is couched in terms of "space tourism".

Secondly, to clarify, I'm not assuming every participant will be paying the same price and staying the same amount of time.  I'm trying to project the going rate (if you like) or average payment to support 22k people/per year in LEO (in 2015 dollars): which I think might be around $1.8 million, per person, per 2-week stay.  Whether that is funded by industry, or out of the personal pocket is up to them.

Personally I think this is conservative for 2050, but that it's a good goal to aim for.   If the numbers of participants go up, then the price should come down even further.
« Last Edit: 08/31/2016 06:31 AM by mikelepage »

Re: Plausibility/Economics of "big" LEO settlement
« Reply #13 on: 08/31/2016 12:54 PM »
I think the lesson here is that the world needs updated data on what people/organizations would pay for "spaceflight participation" aka tourism. Both your data (1999) and my data (2001) are woefully out of date. Those surveys were taken pre-9/11 pre-Great Recession pre-lots of stuff. Until the data are revised I think we are spitting into the wind.

That said, my gut tells me that ULA's Cislunar 1000 plan (or whatever it's called) is the best prediction i.e. 1000 people living in orbit by 2045.  Why do I think this? Because 1. it's ULA and if anyone knows anything about how fast or slow space development will go, it's those guys. 2. they're a fairly conservative company so if theyre saying 1000 people will be living in space by 2045, chances are it will be a lot more. And NO I do not work for ULA nor am I any way endorsing their plan.  Although it is pretty cool.

Perhaps the question we should be asking is, what technologies, financing, regulatory changes, world events etc do we need to happen to get 22,000 people living/working/visiting space by 2050? Currently I do not think it is plausible to have that many people living in space if current trends hold. But there is no reason current trends have to hold!

Offline mikelepage

Re: Plausibility/Economics of "big" LEO settlement
« Reply #14 on: 08/31/2016 03:05 PM »
I think the lesson here is that the world needs updated data on what people/organizations would pay for "spaceflight participation" aka tourism. Both your data (1999) and my data (2001) are woefully out of date. Those surveys were taken pre-9/11 pre-Great Recession pre-lots of stuff. Until the data are revised I think we are spitting into the wind. 

I'm not sure why the potential negative indication those events give should be weighted any more highly than the explosion of venture capital funding now being put into new space companies, not to mention the renewed popularity of space-based science fiction.  If the 1999 survey says just under 50% of people would travel into space for $50k, adjusting for inflation, it's not unreasonable that the same would be true now for $71k.  Western culture hasn't changed that much in 15-20 years.

Quote
That said, my gut tells me that ULA's Cislunar 1000 plan (or whatever it's called) is the best prediction i.e. 1000 people living in orbit by 2045.  Why do I think this? Because 1. it's ULA and if anyone knows anything about how fast or slow space development will go, it's those guys.

Really?  ??? I don't debate that the company knows rockets, and the plan is pragmatic, assuming we have minimal innovation between now and 2045, but I wouldn't trust an assessment of pace from the company that continued to insist that landing a first stage was impossible right up until the day it was done.  Now they've shifted the goal posts to saying it's not economically viable to reuse whole rocket stages - hopefully just a PR line they're using while they catch up to where the game is at, but I suspect not.

Quote
2. they're a fairly conservative company

Quite an understatement in my opinion.  My impression as an outsider is that there is a ton of risk-averse bureaucracy/politics in the corporate structure of it, that needs to be excised.  ULA could well be destined to be the Blackberry of the rocket world, unless they get with the program and stop relying on sole-sourced government contracts.

Re: Plausibility/Economics of "big" LEO settlement
« Reply #15 on: 08/31/2016 06:49 PM »
Western culture hasn't changed that much in 15-20 years

But wouldn't it be nice to have some quantitative data to know for sure? Perhaps the lack of quantitative data is what's holding back more investment in space?

the explosion of venture capital funding now being put into new space companies

It's funny you write that because I literally just finished an email exchange with a VC guy in the Pacific Northwest who loathes investing in space because he has lost so much money in it. Yes there is a lot of money going into space ventures but how much of it is profitable? Not too much. Not yet, hopefully. And certain not a lot at all focused on human spaceflight.

hopefully just a PR line they're using while they catch up to where the game is at, but I suspect not.

Yes, I get it. We all love to bash ULA. "Oldspace" and all that. I've done it myself at times. But the fact is, they've operated a successful space launch business for decades. Yes, they've accomplished it through crony capitalism and monopoly but if the goal is to have thousands of people living in space, we should not dismiss strategies that have worked in the past. I.e. if Congress wants to give ULA (or whatever 'evil' corporation is regularly mocked at dinner parties) a monopoly on building dozens of stations in orbit, would you say no? I wouldn't, because I want to use every tool at my disposal to get civilization off this planet. Ok, not EVERY tool. If ISIS wanted to build space stations I would oppose them.

Ultimately, at the end of the day, I think we are in vigorous agreement with one another :)

By the way I like your videos.

Offline high road

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #16 on: 08/31/2016 09:18 PM »

the explosion of venture capital funding now being put into new space companies

It's funny you write that because I literally just finished an email exchange with a VC guy in the Pacific Northwest who loathes investing in space because he has lost so much money in it. Yes there is a lot of money going into space ventures but how much of it is profitable? Not too much. Not yet, hopefully. And certain not a lot at all focused on human spaceflight.


E-commerce only had its biggest successes years  after the dotcom bubble had burst. It's quite likely that 90% of the current space startups will fail. But the remaining. 10% might be very succesful. That's what venture capital is all about: pick the right teams and bet on several horses to spread the risk. If you feel like you lost too much money, you did at least one of those poorly (or lacked a clear exit strategy). Besides, going bankrupt is a great way to amortize sunk costs and lower prices.  That's capitalism ;-)

Offline RonM

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #17 on: 08/31/2016 10:33 PM »
If the 1999 survey says just under 50% of people would travel into space for $50k, adjusting for inflation, it's not unreasonable that the same would be true now for $71k.  Western culture hasn't changed that much in 15-20 years.

Forgetting the Great Recession of 2008? The percentage of the population that could afford those prices has dropped.

Offline Ludus

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #18 on: 09/06/2016 03:31 PM »
There is certainly some market among adventurous rich people for space tourism. I don't think there's much evidence it's very large for ticket prices of over $1 million. The Virgin Galactic example was at around $200,000 but never really tested how firm the reservations were.

Cruises are trivially cheap by comparison. You can rent an impressive yacht for $200k/week and it can be shared with family and associates. Very rich folk are more frugal about actually spending money on experiences than you might think at first. A lot of the experiences are shared.

A lot of the seemingly indulgent purchases made by rich folk are actually pretty frugal. A lot of real estate, cars, art, or yachts end up costing much less net or even making money. They have resale value and can appreciate. You hear about some guy dropping $75M on a single painting. He may have literally put it on his AMEX card and gotten 75M miles credit! Everybody in the family flies first class free for years. In a few years he sells the painting for $85M makes $10M profit and gets the benefit of showing off his painting for a few years thrown in for free.

I'd guess an occasional Dragon2 flight would pretty much satisfy demand for orbital SpaceTourism in the million dollar plus range.

That's just going into orbit, floating around a bit and looking out the window then returning to earth. A SpaceStation would add a lot of additional cost raising ticket prices by some multiple.

Blue Origin and Virgin Galactic will likely start doing suborbital flights within a couple years (after many years of delay) and there will be some indication of the real demand at the $200k price point. Neither of these companies are in the business for it's profit potential. Branson does it for brand publicity value. Bezos sees it as a useful waypoint for reusable rocket development. Something to help pay for a lot of suborbital launch experience.

« Last Edit: 09/13/2016 05:46 AM by Ludus »

Offline QuantumG

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Re: Plausibility/Economics of "big" LEO settlement
« Reply #19 on: 09/06/2016 09:11 PM »
Indeed. The big problem with space tourism has always been supply, not demand.
Non-commercial spaceflight and filicide  http://tylervigen.com/view_correlation?id=185

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