The Economic History of the Solar System: First Commercial Ventures Era

The period in which governments monopolize space exploration quickly came to an end. By the early twenty first century, a number of private companies were focusing on ventures in space. Although some of these were spectacular (and fanciful) such as Elon Musk’s desire to set up a colony on Mars, most had viable commercial ends in mind.

There were two main areas of commercial interest, the space tourism industry and the booster industry. Of the two, space tourism was the sexier and more visible. Space tourism focused on providing the well off with a space experience. The first target for commercial space tourism innovators was the simple launch of a small compliment of tourists past the Kármán line allowing a view of the curvature of the Earth and a short period of weightlessness (along with the bragging rights of having been in space). These developments created the basic technology for launching groups of people into space but ultimately the stand alone space tourism industry was a dead end never fully progressing past the stage of taking paying passengers past low Earth orbit.

The problem that beset the industry was the increasing difficulty of getting tourists to each new stage. Getting past the Kármán line was one thing, getting the same sized group into orbit was something else. With each new target, the costs increase exponentially along with the risk – the higher the orbit the more complex and challenging the re-entry becomes. In spite of the vision of early science fiction authors, it was never feasible to get a paying group to the moon and return them to Earth – not as a stand alone venture. The benefit that the space tourism industry did provide was efficient and reusable means to get a group of humans into low Earth orbit. It was only later, once the development of permanent platforms supported by resources mined from space that the true value of this could be exploited.

The other major area of development was on launch vehicles. Government involvement was always historical, with the first exploration era based entirely on government owned launch vehicles. This made sense as the first launch vehicles were simply re-purposed ballistic missiles. The commonality of purpose between the needs of the ballistic missiles and boosters was short lived. With the miniaturization of nuclear warheads, ballistic missiles only needed to carry a modest payload for a relatively short distance but be ready for deployment within minutes. Boosters to put equipment into space demanded ever increasing throw weight and range and launch windows were usually well defined. Without the defence dollars driving innovation, it opened the field for the commercial launch industry who caught up with and then surpassed the government. The advantage the commercial launch industry had was focus on innovation in two specific areas. The first of these was cost to orbit and with its focus on payback, the private industry soon found and leveraged those efficiencies to bring down the cost to orbit. Innovations included reusable launch vehicles, reusable booster stages, and more efficient engines including hybrid engines that could convert from jet (requiring air) to rocket (using own oxidizing agent) operation. The second area of focus was on reliability. This was important to attract better paying customers and to reduce insurance overheads.

With private industry providing efficient and reliable transport to orbit, the government owned booster industry came to a close. Even the largest launch vehicles were commercial ventures. The remaining government involvement was that government subsidized and supported their own national carrier to ensure that their own military and intelligence agencies did not become reliant on launch vehicles from other countries. Each major space exploring nation (the U.S., Russian and China) had a healthy, though subsidized national provider of launch services. The launch industry always remained divided with stiff competition for the dollars of non-military customers who needed equipment launched into space.

This separation of ownership of the launch vehicle and payload was a crucial step in the race to explore space. It took the complex and risky task of getting items into space away from the government sector enabling them to focus on the actual exploration of space itself.

This post is part of The Economic History of the Solar System. The background for this series can be found here.


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