Space tourism industry is lifting off

From the X Prize to civilian trips to the moon, private spaceflight is attracting more interest among investors and would-be voyagers.

The first humans to take a swing around the moon in more than 35 years may not be NASA astronauts, but space tourists.

That is Eric Anderson's vision. The president and CEO of Space Adventures – the company that has sent five well-heeled tourists to the International Space Station since February 2001 – says he already has his first two passengers, each willing to pay $100 million for a ride around the moon aboard a modified Russian spacecraft. If negotiations go well, the launch could take place in "a small number of years," he says.

Such grand plans from outside the major aerospace players might have been dismissed as wishful thinking a few years ago. Then, much of what passed for an alternative spaceflight industry existed largely as PowerPoint presentations and high hopes. Now, entrepreneurs' shop floors hum with activity. Launches are taking place. Regulations are changing to meet the fledgling industry's needs. And while the industry has yet to see millions of dollars pour in from investment bankers and venture capitalists, these folks are turning out in far larger numbers than they once did at conferences and workshops, several industry analysts say.

Over the past several weeks, a handful of events and announcements highlight some of the buzz of activity:

•In late June, Bigelow Aerospace launched its second small-scale inflatable module aboard a Russian rocket. The module, Genesis 2, joins Genesis 1, which has been on orbit for a year. The company plans to launch a larger module next fall along the way to full-scale modules that humans can live and work in.

•Officials for the next X Prize, the $2 million Northrup Grumman Lunar Lander Challenge, announced the roster of this year's competitors and noted that the number jumped from four last year to nine this year. Unlike the original X Prize, this one has a major aerospace company's name attached to it. And the purse comes from NASA. The competition will be held in New Mexico in October. Contestants must build prototype landers that can simulate a trip to and from the lunar surface.

•On the space-tourism front, orders for seats on Virgin Galactic's planned suborbital flights continue to pour in. The company formed after noted aircraft designer Burt Rutan's SpaceShip One captured the $10 million X Prize in 2004. Virgin Galactic will use Mr. Rutan's six-passenger SpaceShip Two for its flights. During the last quarter, bookings for the $200,000-a-seat flights were double those for the same period in the preceding year. So far, 200 people from 30 countries have signed up to fly.

"This is pretty exciting stuff," says George Whitesides, executive director of the National Space Society, a space-exploration advocacy group in Washington. "You have real private projects occupying every point along the spectrum of spaceflight."

Indeed, since Rutan won the X Prize, "there had been a slow but continuously accelerating pace of development" in the alternative spaceflight arena, says Peggy Slye, director of the space and telecommunications division for Futron Corp., an aerospace consulting firm in Bethesda, Md.

Many companies have progressed because their founders had deep pockets from previously successful business ventures. Or companies collected what analyst Derek Webber dubs "angel money" – $10,000 to $15,000 investments from people with shallower pockets but an abiding interest in the future of spaceflight.

But Rutan's victory in claiming the first X Prize represented "a real paradigm shift," adds Brett Alexander, who served as senior space-policy analyst in the White House Office of Science and Technology Policy. Mr. Alexander just joined the X Prize Foundation as executive director of its space-related competitions.

Earlier this month, Northrup Grumman, which owned 40 percent of Rutan's company, called Scaled Composites, reportedly bought the company outright – although Rutan will remain in the pilot's seat. Scaled Composites is building a fleet of five SpaceShip Twos for Virgin Galactic.

Another key event, Alexander says, came last August when NASA split $500 million between reusable-rocket start-ups – Space Exploration Technologies (SpaceX) and Rocketplane Kistler. The goal is to build reusable rockets that dramatically cut the cost of launching payloads into space. "Part of it is government money, but government as catalyst is a good thing," Alexander says.

Other investors are "really starting to take notice," he adds. He recalls attending an space-investment conference in Dallas in May. "I went down to the finance thing and kind of scratched my head, thinking: Is there going to be anyone in the room who actually has money? I walked in and it was standing room only.... There were a lot of people there from real investment houses."

With the eyes of so many potential investors looking on, the next three to five years will be crucial , adds Alexander. Virgin Galactic will have started its flights. And companies like SpaceX, whose Falcon 1 rocket left the launchpad in March, only to fail to put its payload into orbit, will be under close scrutiny.

"There will be incidents. There will be difficulties," Alexander concludes. "But by and large, the industry has to live up to a good measure of the hype that is building around it."

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