Space Policy and Space Tourism


I want to thank the committee for inviting me to submittestimony on space policy in general and space tourism inparticular. This is a very broad topic about which books have andare being written. This fall, for example, I will publish a bookentitled Space: The Free-Market Frontier, based on a CatoInstitute conference earlier this year.

In this discussion I will highlight certain points that I shouldbe useful for policy makers who wish to see space become a realmopened not only to a handful of government astronauts but to allindividuals seeking adventure, discovery, knowledge and beauty.

The Benefits of Space

It is first useful to put the topic in perspective byconsidering some of the past, present, and potential futurebenefits to society of space travel and the ability to live andwork in space.

The ability to travel outside the Earth's atmosphere already hasushered in important commercial benefits, most notably fromcommunications satellites and remote sensing, the sectors in whichprivate suppliers have been freest to operate. Data from the FAA'sOffice of Commercial Space Transportation places the value ofAmerica's space-related economic activity at $61.3 billionannually, generating earning of $16.4 billion and employing nearly500,000 workers. The Satellite Industry Association estimates thatworldwide satellite industry revenues alone were $83 billion in2000, up from $69 billion in 1999, with the American portioncurrently valued at $37.5 billion. SIA estimates that there are253,600 jobs in that industry worldwide, up from 205,400 in 1999,with 136,500 Americans employed. The International Space BusinessCouncil puts space current industry revenues even higher, at $96billion in 2000. A Merrill Lynch study in 1999 projected that theglobal satellite market will grow to $171 billion by 2008. Thesefigures to not take account of all secondary and tertiaryeffects.

The contributions to human knowledge and, I might add, to thehuman spirit, generated by access to space have been at least asimportant as the commercial benefits. The philosopher Aristotlesaid "All men by nature desire to know." From the days that earlyhumans looked up at the Moon and the stars from the warm savannasand cold caves, they wondered about the nature of those lights inthe sky. Telescopes were the first great leap forward in revealingthe nature of the universe. Space travel was the next leap,allowing us to place scientific instruments and observatories inorbit, to send robot probes to the planets, and to travel intospace and to the Moon ourselves.

But the full benefits of human space activities lie in thefuture. In the long run, the capacity to travel and work in spacecould literally ensure the human race's survival, for example, byallowing us to detect, divert or destroy meteors or comets headingtoward Earth. Further, spacefaring could be as valuable as theopening of the Americas was to humanity. Men some day not only willland on Mars but will terraform it, making it into a second habitatfor humanity in this solar system.

The future also promises more commercial benefits. Much has beensaid about the potential for creating and manufacturing newmaterials in the mircogravity environment of space. Space alsocould help guarantee cheap and unlimited sources of clean energy.Current or near-future technologies can allow solar arrays in orbitto collect energy and beam it to Earth via lasers of microwaves. Asan intermediate step, natural gas that currently is flared off as awaste product in Middle East oil fields could be converted intoanother form of energy, bounced off of a device in orbit andreceived in California or some other energy-starved part of theworld.

But currently launch costs are too high to make such projectscommercially viable. For example, some estimates suggest that forsolar energy collectors to be commercially viable, launch costsmight need to fall by as much as two magnitudes, from about $10,000per lb. to $100 per lb.

Private space travel offers one of the most promising potentialspace markets for the future. Surveys by the Space TransportationAssociation and other groups and scholars suggest that a majorityof Americans would take a trip into space if they could afford it.Surveys that examine the prices individuals would be willing to payto go into space place the value of that market at least at about$10 billion.

I suspect that if the actual prospect of going into spacematerializes, the market would grow even larger. After all,consider the place of space in popular culture. Some 20 millionpeople each year visit the Air and Space Museum in Washington.Science fiction movies, television shows, books and magazines areenjoyed by more than a billion people worldwide and generatebillions of dollars in revenue. These figures suggest that if rideson real rockets were readily available at reasonable rates,millions more would want to go. But the high costs as well as lackof availability keep those who dream of flying in space chained tothe Earth.

The Unrealized Revolution

Even given the impressive private-sector commercial spaceachievements, for example, with communications satellites, and thetechnological and scientific achievements of the NationalAeronautics and Space Administration (NASA), space enterprise sofar as been an unrealized revolution. Looking back to civilaviation, we find that 40 years after the Wright brother's firstflight, probably at least a million people had taken flights inplanes. By contrast, 40 years after the first men traveled intospace, fewer than 500 individuals have followed them. When themovie 2001: A Space Odyssey was released in 1968, itdepicted what most people expected for that future year; commercialflights into space and orbiting space hotels. The year 2001 hasarrived and the vision of Arthur C. Clark and Stanley Kubrick isunrealized.

Contrast space enterprise with the explosive growth in the pasttwo decades of information and communications technology. MostAmericans appreciate that pioneers like Microsoft's Bill Gates andApple's Steve Jobs have made a revolution in the private sector,offering hundreds of billions of dollars in new goods and services,making them affordable for most Americans, and capturing theimagination and enthusiasm especially of young people who see whatman at his best can accomplish. Even where the government didinitial research, for example, developing primitive internettechnology, it was the private sector that made it available ataffordable prices to millions of consumers.

To understand the barriers to private space travel, it isimportant to keep in mind three important facts:

First, travel is tied to the general fate of most other privatespace efforts. Less costly rocket designs or the ability to placeprivate habitats in orbit are the essential elements for asuccessful space tourism sector. Reforms that help the spaceindustry in general can benefit, both directly and indirectly,private space travel. Regulations that hinder the industry ingeneral will smother commercial synergies that arise in a healthyindustry.

Second, since the beginning of the Space Age, the activities byNASA, U.S. government policies, and international treaties havesystematically hindered or barred many private space endeavors. Thepast two decades have seen numerous policies struggles to free theprivate sector, some successful, some not.

Third, America's general regulatory regime and that part of itin particular that governs commercial space activities is theprincipal barrier to the expansion of those activities. If such aregime were in place earlier in this century, civil aviation wouldnot have developed as it did and air travel might be as rare asspace travel. If such a regime had been applied two decades ago toemerging personal computer, software and internet firms, thecommunications and information revolution would have beenstillborn.

With these points in mind we turn to a more detailed examinationof space tourism.

Dennis Tito and the Current Situation

The demand for trips into space by private citizens offers apotential market that could usher in a breakthrough in the fight tolower the costs of traveling to space. It might be more accuratenot to describe this as "space tourism," a term used in apejorative manner by opponents of Tito's flight. Those opponentsmeant the term to conjure up pictures of people in shorts andsandals and loud-colored shirts taking pictures of things they hadlittle understanding of or respect for. In fact, Tito and those whofollow his lead are better described as adventurers, individualswilling not only to spend money but to take risks to have thethrilling and profound experience of traveling into space.

It is necessary to place Tito's flight in its full context.Tito, of course, originally planned to visit the Mir space station.Russia has planned to deorbit it when private parties came to itsrescue in the form of MirCorp, a company 40 percent owned byprivate Western investors and 60 percent owned by Energia, Russia'smostly privatized rocket company. MirCorp planned to make thestation financially self-supporting facility. For example, itsigned a deal with the producer of the TV show "Survivor" to allowcontestants to train and compete at Russia's Star City with thewinner traveling to Mir for a 10-day stay.

Top NASA officials in part were responsible for Mir's demise.For example, behind the scenes they pressured Energia to abandonMir so it could devote more resources to fulfilling InternationalSpace Station (ISS) commitments. Also MirCorp wanted to pay for theuse of several Russian "Progress" supply rockets that were sittingunused but on which NASA had first call. Even though they couldhave been replaced before NASA would need them, NASA would not letMirCorp purchase them. Finally, MirCorp wanted to export a tetherneeded to supply energy to Mir from the United States to Russia forlaunch. The U.S. State Department, under pressure from NASA,delayed the export license for 10 months, until after the Russiansdecided to abandon Mir.

Thus Tito's flight to ISS was made necessary because of Mir'sdemise. It is also important to note that the budget of Russia'sspace agency is just over $100 million. That means that an offerfrom Tito of $12 million to $20 million to travel into space was aan important source of revenue. Further, SpaceHab, an Americancompany, is paying the Russian government to be allowed to placemodule on the Russian part of the ISS to provide a variety ofcommercial telephony and communications services. The Russianslikely will sell more rides to the ISS.

The public's interest, enthusiasm and support for Tito's flightwas in sharp contrast to the strong opposition from NASA's topmanagement. Now the ISS partners are discussing how to limit accessto the station, to head off other private travelers and commercialactivities.

Thus it is necessary to raise the question of what should be therole of the NASA or governments in private space travel as opposedto the private sector? The problem arises in large part becausegovernments rather than private parties own the ISS. If an Americancitizen offers NASA money for a ride to the station, a number ofproblems would arise.

As a general principle, should NASA devote resources paid for bytaxpayers to help private individuals who have the money topurchase the services? Generally government resources should not beused in this manner.

Should NASA be providing such services in competition withpotential private sector providers? Again, government agenciesshould not be competing with private providers to offer any goodsor services.

So should we expect governments not provide private trips tospace and leave it to the private sector? Ultimately yes! And anumber of entrepreneurs indeed are planning such efforts. Forexample, Bigelow Aerospace is designing a private space stationthat it hopes to launch in several years for a fraction of the costof the ISS, providing a place for private travelers to stay as wellas for scientific and other commercial activities. Other companiesare developing suborbital systems for quick trips above theatmosphere and to place cargoes and people in orbit.

But there are several policy and governmental barriers to theseefforts.

Regulatory Chains

It is important to remember that private companies are stillfighting a decades-long struggle to remove regulatory barriers totheir efforts. From the beginning of the Space Age most Americanpolicy makers assumed that governments would be actors operating inspace and thus made no allowance for private actors. In the 1970swhen private companies did arise that wanted to sell servicesrather than hardware to NASA and other government agencies, NASAwas not interested in giving up its bureaucratic empire. Startingin the Carter years, government agencies were barred from usingprivate carriers to place cargoes in space.

The 1982 private launch of the Conestoga rocket broughtto light the regulatory barriers to private companies. The rocket'smaker had to spend six months and $250,000 to get permission tolaunch.

The creation of the Office of Commercial Space Transportation(OCST) in the Department of Transportation was suppose to avoid thejurisdictional confusion that Conestoga faced. TheChallenger disaster in 1986 eventually led to the removalof the ban on government payloads from private rockets. In 1995 theOCST was transferred to the Federal Aviation Administration.

Securing permission to launch still involves safetyrequirements, reentry licensing, financial responsibilityrequirements, site operations licensing, and various environmentalimpact requirements. If this sort of regime had been in place inthe early part of this century, the civil aviation industryprobably would still be a dream waiting for a deregulated future tobe realized.

Because of this regulatory regime, Kistler Aerospace, which isdeveloping a reusable launch vehicle, was required to meet withlocal interest groups and Indian tribes, and draft extensiveenvironmental impact statement as part of its effort to securepermission to launch from a federal test facility in Nevada. J.P.Aerospace of California was competing for the private Cheap Accessto Space (CATS) prize of $250,000 for placing a payload 124 milesabove the Earth by November 8, 2000. It began the effort to securepermission to launch from the Black Rock Desert in northern Nevadain May, 2000. The company was informed in late September by thegovernment that it would take another two months to process thelicense. J.P. Aerospace missed the deadline. Other companies toohave lost business because of the licensing process. Potentiallycustomers generally want two month lead time for launches. Since itoften takes launchers six or more months to secure a license, it isobvious how private providers are hindered.

It is no wonder that other countries, for example, Australia,are openly courting American companies to launch from theirless-regulated facilities. Add to the licensing difficulties thefact that many government branches and agencies still havejurisdiction over the activities of space enterprises and it isalso little wonder that they have failed to develop faster.

The Commercial Space Act of 1998 sought to remove barriers toprivate space efforts. It did, for example, remove the ban onprivate providers bringing vehicles and payloads, including privatetravelers, back from space. It also required NASA to purchaseservices rather than hardware whenever possible. But due to lack ofenforcement, NASA has not had to honor this mandate.

Further, the fact that the regulatory regime continues to changeintroduces uncertainty to a sector in which uncertainties intechnologies are already major problems. This uncertaintyconcerning the regulatory regime itself is a major barrier toinvestments and the expansion of private space activities.

Another extremely serious hindrance to private space activitiesin general is the export control regime. In 1998 Congress passedthe Strom Thurmond National Defense Authorization Act. That lawtransferred jurisdiction over exports from the Commerce Departmentto the State Department, which has been much stricter and slower inapproving exports. Already the American satellite industry is beingseriously harmed. We saw how the delay in authorizing the export ofa tether helped kill the Mir space station. This law is harming theprivate space sector in general and certainly will hinder theemergence of private space travel.

Perhaps one way to deal with the regulatory problems faced byprivate space entrepreneurs, in addition to changing the laws,would be to establish an ombudsman both to help such entrepreneursthrough the regulatory process and to monitor each step of theprocess. This monitoring will illuminate the regulatory roadblocksand thus better allow policy makers to eliminate them.

Other ways to help the space sector in general and thus privatespace travel would be to create and enterprise zone in orbit, tonot tax or regulate commercial activities off the Earth's surface.After all, taxes are one of the greatest burdens on privatecommerce. Private parties in space would provide all of their ownservices and thus the government would have little cause to chargethem for services provided on Earth. In the long run potentialproblems with the Outer Space Treaty also will have to be dealtwith to ensure that private space travelers and the companiesproviding such services are secure in their property andliberties.


In addition to changing the regulatory regime, something must bedone about the ISS. We have seen how NASA often uses its influenceto stifle private space efforts. There is also always the danger ofunfair NASA competition with the private sector. The ISS and NASA'srole in it poses just such a problem. Those dangers must becontained if private space travel is not to face even moreroadblocks.

It would be best if the station were privatized, but that wouldbe politically difficult since the United States is in partnershipwith other governments in the ISS. Thus a possible alternativewould be to organize the ISS like an airport authority or amulti-jurisdictional port authority like the Port Authority of NewYork and New Jersey. Such a station authority would be charteredamong the station's owners, that is, the governments that areparticipating. NASA would not be U.S. governmentrepresentative on the authority though it could be a customer ortenant on the station. That authority initially would provideinfrastructure, safety, utilities and a regime that would allowprivate parties to run commercial operations on the station. Theprivate sector could take over even those functions at some point.The authority would not be allowed to finance any stationbusiness operations, to expand into unrelated businesses, or to ownany stock in station contractors. Those restrictions also wouldapply to NASA itself. In addition to commercial activities, theprivate sector would provide and pay for all future travel to andfrom the station, station operations, maintenance, andexpansion.

Such an approach would mean that station resources would beallocated for the highest valued activities. A real market would becreated. Because market prices would be paid, this approach wouldhelp contain the danger of unfair competition from a governmentstation to a private station.

It is also important that a station port authority arrangementallow for private sector expansion and perhaps even eventualtakeover of the station. For example, perhaps to expand activities,one provider wants to add infrastructure that would provide energycheaper than the shared energy facilities. It would not be soundpolicy if the station owners, the governments, could veto such amove in order to hold on to their control and stake in thestation.


The discussion above highlighted the potential for private spacetravel. The potential of such a sector can serve as a reason forpolicy makers to renew their efforts to reduce and eliminateregulations on the private space sector.

If the right policies are initiated, space can become a realmnot just for NASA astronauts but for all Americans.

Subcomittee on Space and Aeronautics
Committee on Science
United States House of Representatives