Claim: Commercial Crew is going to be a train-wreck in slow motion...

[grr]

As well, after NASA switches to ordering Commercial crew flights what is to stop Korolyev from offering to sell the now slack capacity of a well proven and much cheaper Soyuz as a competitor?

I think it's a pretty safe bet that when NASA starts using commercial crew services the Russians are going to go back to letting Space Adventures sell their excess seats to tourists.

I think that it is a safer bet that SpaceX will be doing the same, but 10's of millions LESS per seat.
In addition, one might even make a SWAG that Bigelow will be allowed to attach a sundancer, or something similar to ISS by 2014, and that would then be used for commercial space. But that is a PURE SWAG.
But that later is a nice way to get private space stations going.

Although I like the idea of allowing space tourists on commercial crew flights, NASA has given no indication that it intends to allow space tourists on the U.S. parts of the ISS. In fact, in the draft certification requirements for commercial crew, they have actually asked commercial crew providers to ensure that these extra seats could be replaced with cargo. Furthermore, if NASA was to purchase a Bigelow module for the ISS, it would be for astronauts (not for tourists).

That is why I said a SWAG on the bigelow part and not a bet.

 It will require a change in how CONgress and NASA perceives things. And interestingly, NASA IS changing.  The problem is politicians. But, if Boeing is allowed to take commercial crew up there (not just tourists, but other govs such as UK), then I suspect that SpaceX and Boeing will push hard to be there. ANd will L-Mart fight it? Nope. ATK or any other space company? Nope. They will all want this expansion.

[Jim]

The supposed selling point of commercial is that companies will compete with each

No, it is not.  You don't get it.  See one of the members tag line. The selling point is commercial practices are cheaper than gov't for the same task. 

I think I get quite fine. With no competition, commercial practices don't translate into cheaper costs for government, it just means a bigger profit margin to be pocketed for the company that has monopoly position.

Wrong, it does and it is proven

[Jim]

And what is bad about it?

$$$

The EELV are not as cheap as hoped, but they are still cheaper than what they replaced(Titian IV). A Titian IV launch cost about the same as a shuttle one.  Progress was made.

Bingo, and those increases were not due to lack of competition.

[Downix]

And what is bad about it?

$$$

The EELV are not as cheap as hoped, but they are still cheaper than what they replaced(Titian IV). A Titian IV launch cost about the same as a shuttle one.  Progress was made.

More than a Shuttle, actually.  Adjusting for inflation, to run the Titan program, with two launches per year, would cost a bit over $7 billion/year in todays dollars, compare that to the $5.2 billion for the Shuttle with 5 launches.

[neilh]

Btw, could we change the thread title to something a little less inflammatory?

[Jim]

And what is bad about it?

$$$

The EELV are not as cheap as hoped, but they are still cheaper than what they replaced(Titian IV). A Titian IV launch cost about the same as a shuttle one.  Progress was made.

More than a Shuttle, actually.  Adjusting for inflation, to run the Titan program, with two launches per year, would cost a bit over $7 billion/year in todays dollars, compare that to the $5.2 billion for the Shuttle with 5 launches.

Huh?

[pathfinder_01]

Huh?

I think he means for Titan IV, that was the only ELV that cost anywhere near the shuttle. Titan III and the rest were cheaper. Not to mention Titan IV could lift more and probably was more likely to launch on time than the Shuttle(barring weather).

[docmordrid]

And what would F9 w/Merlin 1D and Falcon Heavy at anywhere near its quoted cost and decent flight rates do to the EELV market?

[Oberon_Command]

Huh?

I think he means for Titan IV, that was the only ELV that cost anywhere near the shuttle. Titan III and the rest were cheaper. Not to mention Titan IV could lift more and probably was more likely to launch on time than the Shuttle(barring weather).

Talking of Titan III, how would that rocket compare to current EELVs and shuttle cost-wise? Would it have been cheap enough to be worth using as a commercial crew launcher?

[Downix]

Huh?

I think he means for Titan IV, that was the only ELV that cost anywhere near the shuttle. Titan III and the rest were cheaper. Not to mention Titan IV could lift more and probably was more likely to launch on time than the Shuttle(barring weather).

Right, was referencing the Titan IV.  I did a cost-analysis for it a bit back, and was surprised to find out that to operate it per year was higher than the Shuttle in the mid-90's.

[Downix]

Huh?

I think he means for Titan IV, that was the only ELV that cost anywhere near the shuttle. Titan III and the rest were cheaper. Not to mention Titan IV could lift more and probably was more likely to launch on time than the Shuttle(barring weather).

Talking of Titan III, how would that rocket compare to current EELVs and shuttle cost-wise? Would it have been cheap enough to be worth using as a commercial crew launcher?

At a flight rate of 5 per year, the Titan III would run around $228.5 million per flight, lofting it's payload of 14 metric tons.

You have to realize, the Titan's economic model works on high-overhead paired with high flight rate.  The actual per-launch cost of both Titans is remarkably low, the Titan IV's unit cost puts the Falcon to shame.  The thing is, to hit that low per-unit cost, they have high overhead.  Keep the flight rates up, this is great.  Flight rates drop, it becomes unaffordable.

If you used the same Titan III at the SpaceX anticipated flight rate of 24/year, it's cost plummets to $74.4 million.  Then again, if you flew the Titan IV at that rate, it's cost would similarly plummet, same with the EELV's. 

The issue remains, it is not the lack of launchers, it is too many launchers are preventing enough critical volume to get the flight rate up. 

[Jim]

And what would F9 w/Merlin 1D and Falcon Heavy at anywhere near its quoted cost and decent flight rates do to the EELV market?

Those are not givens.  SPacex is finding that costs are going up despite the printed spin.  Their burn rate is high and getting higher.

[Robotbeat]

And what would F9 w/Merlin 1D and Falcon Heavy at anywhere near its quoted cost and decent flight rates do to the EELV market?

Those are not givens.  SPacex is finding that costs are going up despite the printed spin.  Their burn rate is high and getting higher.

And if they are wildly (or even mildly) successful and end up getting DoD launches (with the requisite integration capabilities), then it might lead to eventually removing one of the EELVs for the sake of cost reduction. This is an advantage with the commercial approach...

[edkyle99]

Huh?

I think he means for Titan IV, that was the only ELV that cost anywhere near the shuttle. Titan III and the rest were cheaper. Not to mention Titan IV could lift more and probably was more likely to launch on time than the Shuttle(barring weather).

Right, was referencing the Titan IV.  I did a cost-analysis for it a bit back, and was surprised to find out that to operate it per year was higher than the Shuttle in the mid-90's.

No way did Titan IV cost more than Shuttle.  The only fair comparison is on a total program cost basis, not by cherry-picking a budget from a particular year.

 - Ed Kyle

[Danderman]

No way did Titan IV cost more than Shuttle.  The only fair comparison is on a total program cost basis, not by cherry-picking a budget from a particular year.

It is not particularly useful to argue one way or another whether Titan IV was more expensive than Shuttle, since the budgets for both are so arcane. However, I think everyone can agree that Titan IV was really, really expensive; more so than EELV.

The Lockheed guys I knew would use the term "Titanize" to denote the process by which an inherently cheap system becomes an expensive system.

[Downix]

Huh?

I think he means for Titan IV, that was the only ELV that cost anywhere near the shuttle. Titan III and the rest were cheaper. Not to mention Titan IV could lift more and probably was more likely to launch on time than the Shuttle(barring weather).

Right, was referencing the Titan IV.  I did a cost-analysis for it a bit back, and was surprised to find out that to operate it per year was higher than the Shuttle in the mid-90's.

No way did Titan IV cost more than Shuttle.  The only fair comparison is on a total program cost basis, not by cherry-picking a budget from a particular year.

 - Ed Kyle

No fair jumping back several posts of an argument to try and make a point either, this was discussed several posts later.  (and it was not a particular year, I actually was using the block from 1987-2002)

In 1990, for instance, the Titan IV program cost $587 million, of which only $11 million was incidentals for the launch vehicles themselves, the reaminder being overhead.  And that is with the overhead being shared with two other series as well, the Titan 34 and Titan III.  When those were retired, the Titan IV now had to share all of those costs by itself, which made it's per-year cost jump to $2,471 million in 1990 dollars.  That is roughly $4.7 billion in todays dollars.  it's incidentals remained only $11 million, for a total of 6 launches.  And none of these costs included the USAF portion of costs, which is still unknown (will be de-classified in 2018) but with estimates ranging from $2-4 billion in todays dollars, which I pegged dead-center at $3 billion, hence my above figure.  If we eliminate the USAF cost portion, as it is an unknown, we still have a program that is less than a half-billion in cost from the Shuttle's own $5 billion per year operational cost, which flies at similar rates.  However, the Titan gains far more from higher flight rates than the Shuttle, while it suffers more from lower flight rates.  The failure of the Titan 34 program to take off commercially is truly what doomed the Titan.

[bad_astra]

Titan IV had a higher flight rate?

[Downix]

Titan IV had a higher flight rate?

no, it had a matching flight rate, for one year.

[Cherokee43v6]

Gregori,

You appear to have a rather poor understanding of economics and the actual power of a monopoly company.  In fact, your understanding of modern business practices sounds very much like extremely bad fiction or the 'Montgomery Burns/Scrooge McDuck school of greed'.

If one were to assume a monopolistic commercial space launch situation, there is an upper limit on how much the launch provider would be able to charge.  That amount is in no way shape or form 'the maximum amount of blood the turnip will yield'.  Laws of supply and demand will stabilize a price that is acceptable to all parties, supplier and consumers.  If the supplier raises the price to high, the consumers will 'insist' on alternatives, thus creating competition. This is in fact the scenario in which we now find ourselves because Government does not have to obey the laws of supply and demand until the people's voice (Congress) cuts the purse strings.  Therefore the monopolist will only charge the maximum amount that still protects their monopoly status. 

If the monopolist proves successful in earning a profit then others will look closely at what they are doing and try to find a way to enter the market with improved processes or technologies that enable them to undercut the monopolist's pricing, thus creating competition.  The previously monopolist company must then respond by either reducing its own profits or improving its own processes to reduce costs so it can match the competitor.  SpaceX is a prime example of an alternative company creating new methodologies to create a product at a significantly reduced cost as compared to the traditional suppliers in the field.

The true concern here is not a monopoly... it is the fact that this is a 'monopsony' scenario.  In other words, we have multiple suppliers but currently only a single consumer for those services.  Luckily, there is also a company out there who is seeking to break this mold as well.  However, Bigelow Aerospace's business model is at the mercy of the successful development of Commercial Crew capability.

[oldAtlas_Eguy]

Thank you for your clear cut explanation of economics that quite a few here are not versed in. I have been doused in business economics by helping the spouse understand the higher level math portion of her MBA studies. I found I learned quite a bit about business economics and business financial management that I thought I knew but was completly wrong about. There are a lot of misconceptions out there about relationships between investment, spending (costsof  both capitol and overhead non-recurring and of direct recurring) and profit and how they are handled to determine profitability.

People look at SpaceX's spending and their revenue and can't understand how they can be profitable. Investment and capitol expenditures are not a straight-forward effect on the calculation of net-income. Capitol expenditures (equipment to manufacture a product, buildings, pad improvements and even most R&D) are amortized over multiple years as a charge against revenue in the calculation of net-income for a year. So for example SpacX has recieved $600M in investments which is cash that is placed in the bank and $700M in capitol expenditures, which are checks written against the cash in the bank, that is amortized over 5 years at a charge of only ~$140M a year. This is charged against revenue for which SpaceX has recieved >$250M in 2010. Direct costs for the two flights of ~$80M + the ~$140M amoritization charge + other costs ~$20M is the yearly expenditure subtracted from the revenue of $250M leaving a profit of ~$10M. This is an extremely simplified version but it shows how a company like spaceX calculates profit.

The thing to watch out for is the continuation of increasing capitol expenditures without an increase in revenues to cover the increase in amoritization charge against revenue. If capitol expenditures is managed correctly the year to year varriation in amoritization charges would have only small increases, remember that an expenditure that happened 5 years ago would be paid off and a new expenditure in the current year would take its place allowing for capitol expenditures to continue every year but only so far as it is managed correctly.