Commercial Viability Evaluation of the Suborbital Space Tourism Industry
Name
space.2018.0038.pdf
Description
Published version
Size
7.36 MB
Format
Adobe PDF
Checksum (MD5)
3fa8d903d1857b112f5b7ae4fcfb5196
Author(s)
Guerster, Markus
Crawley, Edward
de Neufville, Richard
Date Issued
2019
Journal
New Space
Publisher
Mary Ann Liebert Inc
Version
Final published version
Abstract
© 2019, Mary Ann Liebert, Inc. This article provides an evaluation of the commercial viability of the suborbital tourism market while considering the large uncertainties in the current demand predictions. Since it is unlikely that future demand forecasts will be significantly more precise, an analysis that takes these uncertainties into account is needed. Our study addresses this problem by using a Monte Carlo simulation to calculate the distribution of possible results in commercial terms (net present value [NPV] developed from a discounted cash flow analysis). By conducting a sensitivity analysis, we identify the most impactful factors in development and create a probability distribution of their uncertainties. Previous work done by the authors defined a design space of 33 suborbital vehicle architecture from which we picked for the purpose of this article optimal architecture number 4 with 1 pilot (this is the same architecture as XCOR's Lynx). Data from studies are used to model the distribution of the demand and its uncertainty. The cost model is mainly based on cost estimation relationships from one study. We implement several decision rules to simulate 5 different commercial strategies a company in this sector might have. We found that there are 2 dominant commercial strategies: a riskier strategy with an aggressive fleet expansion with a large vehicle (16 participants, average expected NPV is $2.8 billion, 41% chance of incurring losses) and a less risky strategy with a neutral fleet expansion and a medium vehicle (4 participants, average expected NPV is $2 billion, 33% chance of incurring losses). We conclude that the suborbital tourism market can probably be made commercially attractive by proper management of development, even in the face of significant uncertainty.
MIT Department
Massachusetts Institute of Technology. Department of Aeronautics and Astronautics
Massachusetts Institute of Technology. Institute for Data, Systems, and Society
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1089/SPACE.2018.0038
