Virgin Galactic Back on Track… But is the Track Getting Narrower?

After nearly two years since flying people to space, Virgin Galactic (SPCE) successfully completed a crewed flight test last week, signaling the imminent return of suborbital tourism operations. While Virgin Galactic has trailed behind Blue Origin in the space tourism market, a launch anomaly investigation has recently kept Blue Origin’s New Shepard rocket grounded for 8 months and has given Virgin Galactic an opportunity to close the gap. Virgin Galactic is dedicated to serving the suborbital space market with the White Knight Two and SpaceShipTwo, and it is critical to the company’s bottom line that they achieve regular, revenue-generating flight operations. Blue Origin, on the other hand, has more diversified interests and can leverage their experiences with New Shepard – such as the challenges of operating a reusable rocket – and apply those lessons to their New Glenn launch vehicle and recent NASA Sustaining Lunar Development (SLD) award.

Taking a step back, one wonders if these rocket-based suborbital space ventures have missed their opportunity. Considering the overall space tourism market, a 20-year window of minimal competition (recall the Ansari X-Prize was won in 2004!) appears to be closing now due to pressure from lower cost suborbital approaches and new options for orbital access. Suborbital balloon companies, like World View and Space Perspective, are poised to offer unique and longer lasting trips to the edge of space (see Table below). For orbital travelers, both SpaceX and Axiom are offering space tourism opportunities – albeit at significantly higher prices. Additional companies are set to join the orbital fray in the coming years with multiple commercial space stations envisioned, bolstered by support from NASA’s CLD program.

Regardless of which experience customers prefer, space tourism remains an expensive endeavor with a relatively small market of participants that can afford a ride. With multiple competing offerings emerging, the market will continue to fractionate, threatening margins and market share for all parties. For the suborbital tourism companies, there will be pressure to either significantly reduce prices to grow the market or compete for balloon-ride participants, or enhance their offering (higher/faster/longer) to offer a compelling alternative to orbital access.

*Future trips to orbit the moon are expected but would come with higher price tag