(Corrects spelling of spaceport director’s name in ninth paragraph.)
July 27 (Bloomberg) -- The frontier of commercial spaceflight, which opened when NASA’s shuttle program ended this month, is taking shape in an unfinished assembly of metal, glass and concrete that resembles a rust-colored stingray burrowed halfway into New Mexico’s desert.
“Spaceport America” bills itself online as “the world’s first purpose-built commercial spaceport” and will be the official home of Virgin Galactic, billionaire Richard Branson’s venture that proposes to take tourists into suborbital space. It’s about 75 miles southwest of the Trinity atomic-bomb test site where the U.S. ushered in the nuclear age 66 years ago.
It’s even closer to the mobile home of Florita Munoz in Rincon, New Mexico. Munoz, 69, says she has little regard for this latest attempt to enter a new era. The 4-year-old project has already cost her state, the 10th poorest in the U.S., $209 million in public money. It’s at least nine months behind schedule and its director says it won’t generate as many jobs as backers once claimed.
“There’s a lot of people that are having a hard time making a living, and I think they should have concentrated on the people more than the spaceport,” said Munoz, who lives off her deceased husband’s $25,000 annual pension.
President Barack Obama has used the end of the shuttle program to call for expanding commercial spaceflight. Spaceport America -- which has hit snags in its plans to accommodate NASA-style orbital launches, to attract an aerospace plant and even to hold competitions of a nascent “Rocket Racing League” -- shows some of the challenges ahead for space-age investors, be they private or public.
‘Think in Decades’
“You have to think in decades” to comprehend the benefits of spaceport development, said Derek Webber, a director of Spaceport Associates, a consulting firm. Webber, a former satellite and launch vehicle engineer for aerospace companies, is a self-described advocate of space tourism. While New Mexico’s project is “a bold first attempt,” he said, any return on its investment may be several years away.
“Is it reasonable for them to be skeptical?” he said. “Of course it is.”
Former Governor Bill Richardson, a Democrat, championed the project and the state legislature approved it in 2007, after a pair of economic-impact studies predicted it would create as many as 3,460 jobs. Voters in Sierra County, where the spaceport is located, and Dona Ana County, where Munoz lives, voted in local taxes to help finance its construction.
Now, Governor Susana Martinez, a Republican who replaced Richardson in January, has ordered an audit of the spaceport’s spending and said the facility must secure private investment to augment the public money. Spaceport director Christine Anderson, who took charge in February, disavows the earlier job projections, calling them a “feel-good plan.”
She’s working to update them, she said -- reducing tourism numbers, launch counts and revenue projections to “more conservative” figures. The new estimates aren’t yet available.
Richardson, who called the project his “legacy,” said he remains confident.
“Well, it’s going to revive the economy of Southern New Mexico,” he said in a telephone interview. “It’ll be a linchpin not just for jobs but science education and technology companies to come to the area.”
He predicted “worldwide attention” for the first launch, and said he hopes to be among the first travelers, though he hasn’t reserved a ticket with Virgin. “I hope they give me a discount,” he said.
“Expected Completion: Early 2011,” reads a sign on the spaceport’s freshly paved access road. Work on the 110,000-square-foot terminal and hangar continues, punctuated by whirring drills and beeping cranes. The construction has created about 800 jobs at the site in New Mexico’s Jornada Del Muerto Desert. The name means “Journey of the Dead.”
At some point -- it’s not clear when -- plans call for this to be the point of departure for journeys of the rich: Virgin Galactic’s suborbital tourism flights, at $200,000 per passenger. It’s company policy not to announce dates for completion, said George Whitesides, Virgin Galactic’s chief executive officer.
The company has a 20-year lease with Spaceport America that commences once the facility is completed. Over the full term, the agreement is expected to generate $150 million to $250 million for the spaceport, said Aaron Prescott, the facility’s business operations manager.
Virgin already has 440 people signed up for its flights, said Whitesides, a former chief of staff at NASA who said he’s on the list of signees himself. He said his company was attracted to New Mexico by its 330 days of clear weather for launches; its high elevation, which limits fuel costs; and its New Jersey-sized chunk of restricted airspace, shared with the adjacent White Sands Missile Range.
“Of course, the fourth reason is that the state is building a spaceport,” Whitesides said.
Virgin will have spent $300 million in research and development by the time its SpaceShipTwo is ready for service, he said. Finishing the craft, which is about the size of a midsize corporate jet and seats eight including the crew, will take another year or two, he said. Virgin does not yet have a commercial launch license from the Federal Aviation Administration.
When it opens for business, the company will send as many as 500 people into suborbital space in the first year, Whitesides said. SpaceShipTwo would be taken 50,000 feet into the air by a carrier craft called WhiteKnightTwo.
At that height, the smaller ship would detach and use its own engines to climb to more than 62 miles above Earth’s surface -- the common definition of when space begins, and still miles below orbital altitude. Passengers will have six minutes of weightlessness before the ship returns to Spaceport America, where it would glide to a landing on the 2-mile runway.
Virgin would market services beyond tourism, such as research opportunities and atmospheric testing, Whitesides said. Over time, the cost of a flight should decrease, he said, comparing suborbital tourism to early transatlantic flights, which cost passengers thousands of dollars when adjusted for inflation. “Now you can fly across the Atlantic for 400 bucks,” he said.
For the time being at least, it’s not lost on local residents like Ray Lind that Spaceport America will largely cater to Branson’s wealthy customers.
Rich Man’s ‘Boondoggle’
“The taxpayers pay to build a spaceport for an enormously rich man and he’s going to be flying people into space at what, $200,000 a shot?” said Lind, a repossession man for Roadrunner Collateral Recovery in Las Cruces, about 45 miles south of the facility. He called the project a “boondoggle.”
Anderson said the spaceport will also focus on education and research. To date, it has played host to 12 vertical launches of suborbital research rockets, grossing “a few thousand dollars per launch,” Prescott said. The facility will be open for tours by those who won’t be flying; visitor centers are planned for nearby towns as well.
Pat Hynes, who heads a NASA-backed space education program called the New Mexico Space Grant Consortium, said the spaceport would benefit the community. Between references to Robert Goddard and Wernher von Braun, two pioneers of modern rocketry who both worked in New Mexico, she traced the idea of building the facility to the Kennedy administration.
“It’s our heritage as much as chili is,” Hynes said.
Goddard and Von Braun
While Goddard, von Braun and other 20th Century rocketeers valued New Mexico’s location for their experiments, the fact that it’s far from any large body of water makes Spaceport America unsuitable for large, NASA-style orbital launches, given current technology. That’s because detachable booster rockets need safe places to fall -- and that means oceans.
“Ventures looking to do orbital launches at this time, unless they have reusable launch vehicle technology that can get around some of the range issues would not be able to use Spaceport America right now,” said John Foust, a senior analyst at Futron Corp., a Bethesda, Maryland-based consultant that prepared one of the early economic-impact studies.
Futron’s 2005 report, which predicted as many as 3,460 jobs and $460 million in economic activity by 2015, was based in part on the assumption that some orbital launches would be possible. The study, which was funded by the state Economic Development Department, contemplated that at least one aerospace company capable of carrying NASA payloads into orbit would set up shop near the spaceport.
No Rocket Racing
Two other potential revenue generators that were mentioned -- a NASCAR-style racing league for rockets and annual rocketry competitions -- have dropped from the picture entirely. In the Futron report, they accounted for at least $62 million in economic activity and more than 630 jobs.
“We were asked to provide a study and examine the potential economic impact of the spaceport,” Foust said. “We provided one to the best information available at the time.”
Using that report, and another prepared by New Mexico State University researchers, then-Governor Richardson campaigned to win funding for the spaceport.
“What we’ll bring with the spaceport is new companies, new jobs and a tax base, a stronger tax base that will fund education, health care and other social needs here in New Mexico,” he said during a 2007 speech at Vista Middle School in Las Cruces.
That year, the state legislature was flush with a $500 million surplus from energy reserves. It approved spending $140 million from the state general fund for the project, said David Wilson, a spaceport spokesman. The state issued bonds to pay for the rest, and voters in Dona Ana and Sierra counties approved local taxes of 25 cents on every $100 of sales to help meet the debt service. In each county, roughly 25 percent of people live below the poverty level.
The $200 million or so “would have made a big difference in terms of an investment in those communities,” said Dona Ana County Commissioner Billy Garrett, a Democrat who took office this year. “The people here were pitched the idea that this was going to produce jobs and businesses that would allow for greater opportunity for them.”
The opportunities remain difficult to quantify. While the first phase of construction, which includes roads, the hangar and the runway, is 87 percent complete, Anderson said the spaceport won’t be fully functional until 2013. This month, she told a state legislative committee that she expected operating income of no more than $100,000 through that year.
The spaceport would receive $5.3 million in income from Virgin Galactic in 2014, according to her presentation. By 2016, operating income from all sources would total $8.3 million -- including tourism and launches by companies other than Virgin, according to spaceport documents.
Its operating expenses by then would be $6.9 million, leaving $1.1 million for capital reinvestment and almost $300,000 in cash flow, according to the documents. It’s unclear how many people would work for the spaceport itself. Darrell Green, an electrical subcontractor whose Albuquerque-based company was wiring the hangar in the 96-degree heat, said that building would “be mostly automated.”
“I don’t see putting more than 20, 25 people out here to work,” said Green, a superintendent for Bowers Electric Inc. When the spaceport is operational, Virgin Galactic would employ 250 people there, Whitesides estimated.
The stakes are high in a place “where the little guys can’t stay in business,” said Pat Speers, 73, manager of the Oasis Motel, about 35 miles from the spaceport. She was referring to boarded-up storefronts along cracking roads in Sierra County.
“It’s scary, because everyone is planning so big on it,” Speers said.
The county’s economic development organization has adopted a new slogan, “Home of Spaceport America,” and in the county seat, street signs are decorated with stickers of gold spaceships. It’s reminiscent of 1950, when this town of about 7,000 changed its name from Hot Springs to win a radio quiz show’s contest.
Time will tell how the new slogan works out in Truth or Consequences, New Mexico.
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