One of the most common metrics used in discussing new launch vehicles and particularly RLVs is the price in $/lb delivered to LEO. You almost can’t have a discussion about the Space Shuttle, Saturn V, SpaceX, new commercial RLVs, or almost any other launch vehicle without the discussion at some point talking about the $/lb metric.
Another common discussion item with RLVs is the chicken and egg problem of high flight rates. The logic typically goes something like this: RLVs tend to have more development costs (and hence higher amortization costs) than ELVs. This means that in order to be profitable, they have to fly more often than a comparably sized ELV. Most studies peg the profitability breakeven point somewhere around 30-50 flights per year–though from what I’ve seen most of those assume “black-aluminum” RLVs designed using “black aluminum” development processes. The chicken and egg problem comes from the fact that at that price point, there’s nowhere near 50 payloads per year worth of demand right now especially if you’re focusing on “existing” ELV markets. Most studies indicate that for existing ELV markets, you don’t see hardly any demand elasticity until you get your vehicle’s $/lb to orbit price below $1000/lb.
The problem is, that for a 1st Generation RLV, being able to both get to the point that you can profitably offer a price of $1000/lb, while simultaneously building up a market of 50 flights per year is extremely daunting. While I think there’s no technical reason, with chemical rockets that you couldn’t eventually get down into the $100-500/lb price range, getting anywhere near those prices for 1st Gen commercial RLVs is going to be tough for several reasons:
- Regulatory and Insurance Learning Curves: As was pointed out in a paper a few years ago by several of the now Space Cynics, most of the costs associated with an RLV flight are likely going to be things like range costs, insurance costs, regulatory compliance, etc. While I think many of those costs could be greatly reduced over time, there is going to be a learning curve as groups used to dealing with artillery rockets start understanding that RLVs are different animals, not just ELVs with landing gear.
- Technology Maturation: While many of the technologies needed for making a successful RLV are more mature than I think most people appreciate, there still are some areas that are poorly developed. The biggest one being robust, reusable thermal protection systems, and general reentry/recovery techniques. There have been lots of research done in these areas, and there are tons of good ideas, but very few of them have ever made it even to bench-tests, let alone actual flight demonstration. Whenever you’re developing something that has an R&D project involved, the costs and timeline can take a big hit. Government agencies could help a lot by funding some demos of these sorts, but if they don’t, those costs will have to be amortized by that first vehicle.
- Planning for Iterations: A point Monte Davis has made on several occasions is that one of Shuttles key flaws was that they expected the first attempt at an orbital RLV like that to be a fully operational vehicle. There was no intention ever to treat it as an attempt, fly it a few times to figure out what needs improvement, and then do another RLV development program. You can see the same attitude with attempts like Kistler’s K-1. Part of how they blew so much money is that from the start they were building things up to have three operational vehicles, with no plan of iteration in the middle. Now, this is a discussion for another post, but intentionally designing a vehicle that you know isn’t likely to be fully up to operational snuff doesn’t mean that you can’t make any revenue off of that vehicle. But in reality you need to budget probably for more than one development program. And that is going to make developing a 1st Gen RLV a lot more expensive than later RLVs.
There are probably other reasons beyond these, but it is likely true that a 1st Gen commercial orbital RLV is going to struggle to get their costs low enough to be able to make a profit at a $1000/lb nominal price. It may actually be possible, but it’s also iffy enough that the industry experts any investor is likely to speak with when doing due diligence are likely to scoff at it. And that is one of the two or three main reasons we don’t see many attempts at funding/building such vehicles (the other two being lack of a big enough demonstrated market, and the high amount of investment that needs to be raised).
All of that however is probably well-known by anyone who has looked at the problem very much. Here’s where my counter-intuitive observation kicks in.
How Something More Expensive Can Sometimes Be Cheaper
I had been thinking a lot about these things, when a statement in a post by Tom Olsen (which I otherwise agree with a lot of) started the logical chain that led me to my observation. Tom made the statement that he didn’t believe that $200/lb to LEO with conventional rockets could be profitable. While I agree wholeheartedly with him for 1st Gen commercial RLVs, I think you could probably approach that number over time, even without magical new propulsion technologies or structural materials (though those wouldn’t hurt). More importantly, the $200/lb number doesn’t seem really that relevant to me. You don’t need to get anywhere near that to start seeing new markets appear, and to see the entire way we do things in space start changing.
This got me thinking though about what price you do need to reach before interesting things start happening. I happened to be just in the middle of trying to write my big ominbus article about people as an RLV market when Tom wrote his article, and that’s when I made my counter-intuitive discovery: you might not actually have to get the $/lb price of your RLV much cheaper than existing ELVs to be able to offer a per-seat ticket price low enough to reach the elastic part of the passenger spaceflight demand curve.
A long time ago, I wrote a blog article about the part of t/Space’s CE&R study where they did a reanalysis of the Futron space tourism study. While I have some further thoughts on the implications of that study, suffice it for now to say that they found that demand numbers started getting interesting at a ticket price around $5M.
Now, I don’t personally have a lot of background on crewed vehicle design (since Masten is focusing on unmanned science payloads for the current time), so I don’t know exactly how much “payload mass” you would need per passenger to supply all the services that don’t come standard on a well-designed RLV. But for argument’s sake, let’s say it comes out to in the 500-1000lb/person range. The higher number is in-line with Dragon theoretically carrying either 7000lb of cargo or 7 crew (1000/lb per person), as well as HMX’s old AAS concept, which would’ve carried about 4000lb of cargo or 4 crew. In both cases it looks like the crew capacity may be more limited by volume than by payload mass capacity, which might justify the lower 500/lb per person number.
For a $5M per seat price, assuming a two person vehicle, with one pilot and one paying passenger, that comes out to $2500/lb equivalent cargo price if you need 1000lb per person, and a whopping $5000/lb equivalent cargo price if you need only 500lb/person. The latter price is actually comparable to the current price of an Atlas V 401 (~$4500/lb), and the former price is still higher than a basic Falcon IX (~$1700/lb depending on what the current numbers are). So, ironically, an RLV could possibly have a lower ticket price than an ELV + capsule in spite of having a higher nominal price in $/lb for payload.
An interesting thought here is that according to t/Space’s analysis, at $5M per seat ticket prices, you could likely get ~20 passengers per year pretty quickly. If you only initially need to hit a nominal equivalent price target of $2500-5000/lb, you might be able to make a profit at that point only flying 20 times per year at the $5M ticket price. That’s a pretty low bar compared to needing to hit $1000/lb and 50+ flights per year.
Now, I may be all wet on this. 500-1000lb per person may be way too low. $2500/lb may still be too hard for a 1st Gen commercial RLV. $5M per seat may not actually get you enough demand to close your business case. And for other cargoes like satellite delivery or propellant, the actual nominal price per pound number is going to be a lot more critical. But it sure seems interesting, because if I’m not off-base, that may make closing the case for an RLV a lot easier.
So am I all wet on this? Or is this something that has been obvious to everyone else for a while, and I’m only finally getting this? Or is this as counter-intuitive to you as it was to me?
[Note: Maybe I’m just misunderstanding them, but I think most of the commenters have misunderstood what my counter-intuitive idea was. It is merely that an RLV that would have far too high of a price per pound to be competitive in the satellite launching business may still be far cheaper for launching people than an ELV with a capsule. I wasn’t trying to make any statements about the specific size of the manned spaceflight market at various price points, the desirability or undesirability of orbital accommodations or anything else. I was just trying to share that observation. We’ll discuss a lot of those other issues in later posts. Patience.]
Latest posts by Jonathan Goff (see all)
- An Updated Propellant Depot Taxonomy Part III: GEO Depots - September 18, 2020
- An Updated Propellant Depot Taxonomy Part II: Distributed LEO Nano-Depots - September 16, 2020
- An Updated Propellant Depot Taxonomy - September 15, 2020