Capital Costs

If you spend $1 billion developing this system and capital costs are 10% then we need to make at least $100 mil per year to make this worthwhile. If we launch 8000 lbs of payload 14 times a day for 365 days a year that would be 40,880,000 lbs per year. Note that in three months we will put as much cargo into orbit as the Space Shuttle did in 20 years. If we amortize $100 mil over this yearly cargo then the capital costs per lb of payload each year comes to $2.5/lb.

If development can be done for half a billion, this number is cut in half. If early on we increase the strength of the tether or lift up parts to make another tether, this number would also go down. If the market size is smaller, then we amortize over fewer lbs of payload and the capital cost per lb goes up.

This flight rate relys on two way tourist traffic. If the flight rate is only one flight per day, the capital cost is still under $35/lb. If the flight rate were once per week, the capital cost contribution is up to $250/lb. At once per month, capital costs would be about $1,000/lb.

Direct Costs

  1. Kerosene and liquid oxygen for a rocket can average about $0.16/lb. So the cost for 80,000 lbs of rocket fuel is less than $15,000.
  2. We will initially need Xenon to fuel the thrusters on the tether. If an electrodynamic tether can be made to work then this cost can be reduced or almost eliminated.
  3. We have to return the rocket to the launch site. At most this should cost as much as another load of fuel, or $15,000.

The above direct cost estimate comes to $30,000. For 8000 lbs this gives to $3.75/lb. This is about 500 times cheaper than current prices. You could charge customers less than current prices and still have a substantial profit margin.

Again note the impact of flight rate. At one flight per day or less, the capital costs are much larger than per flight costs. Only at high flight rates does the cost of fuel become the major cost.

Operating Costs

Sales Price Per Pound to GEO

The price charged to customers has to cover capital costs, direct costs, operating costs, and make a profit. It could be $100/lb to start with, or $800,000 per launch for 8,000 lb payloads. People have been paying more than $10,000 per pound to GEO for cargo.

With 14 flights per day, 10 tourists per flight, we would send 51,100 tourists per year. Surveys indicate the market is larger than this at $50,000 ticket price. At this price, the gross income would be $2.5 billion/year. This is not all profit, as we have to cover the capital costs, launch costs, and the staff, food, and services at the hotel.

Price is a response to demand. At first when the novelty factor is high, and supply is limited, the tickets could probably sell for more than $50,000 each.

If the business plan offered here is successful, building another tether (or two or three), a larger payload tether and SSTT combination, or both will follow. Many investors are eager to be the second investor to get rich on an idea.

Tether Brings Rocket Back?

Once the tether is stronger it should be possible for the tether to grab the whole rocket/payload together and carry the rocket around the Earth once. The rocket would be released a bit short of the launch point so it could glide back down. This could save the costs of returning the rocket to the launch site. Since the rocket is released with no additional momentum it does not require any extra power or thrusters to do this, just a stronger tether and more ballast.

However, if we have a stronger tether, it could be better use of resources to sping it faster so the rocket would have a smaller delta-V and larger payload, and pickup a larger payload. So while bringing the rocket around the Earth once is an interesting idea, the company probably makes better profits by just flying the rocket back by either jet or its own propulsion.

Historical Launch Costs Trend

It is interesting that in the early days of space the Historical Trend in Launch Costs (page 16) were dropping very fast. After the Saturn V in the late 1960s, nothing has really dropped the costs much. If the early trend had continued, we would have been at a few dollars per lb to LEO about now.

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Copyright (c) 2002, 2003 by Vincent Cate. All rights reserved.