[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE EMERGING COMMERCIAL SUBORBITAL
REUSABLE LAUNCH VEHICLE MARKET
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON SPACE AND AERONAUTICS
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
SECOND SESSION
__________
WEDNESDAY, AUGUST 1, 2012
__________
Serial No. 112-101
__________
Printed for the use of the Committee on Science, Space, and Technology
Available via the World Wide Web: http://science.house.gov
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. RALPH M. HALL, Texas, Chair
F. JAMES SENSENBRENNER, JR., EDDIE BERNICE JOHNSON, Texas
Wisconsin JERRY F. COSTELLO, Illinois
LAMAR S. SMITH, Texas LYNN C. WOOLSEY, California
DANA ROHRABACHER, California ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland BRAD MILLER, North Carolina
FRANK D. LUCAS, Oklahoma DANIEL LIPINSKI, Illinois
JUDY BIGGERT, Illinois DONNA F. EDWARDS, Maryland
W. TODD AKIN, Missouri BEN R. LUJAN, New Mexico
RANDY NEUGEBAUER, Texas PAUL D. TONKO, New York
MICHAEL T. McCAUL, Texas JERRY McNERNEY, California
PAUL C. BROUN, Georgia TERRI A. SEWELL, Alabama
SANDY ADAMS, Florida FREDERICA S. WILSON, Florida
BENJAMIN QUAYLE, Arizona HANSEN CLARKE, Michigan
CHARLES J. ``CHUCK'' FLEISCHMANN, SUZANNE BONAMICI, Oregon
Tennessee VACANCY
E. SCOTT RIGELL, Virginia VACANCY
STEVEN M. PALAZZO, Mississippi VACANCY
MO BROOKS, Alabama
ANDY HARRIS, Maryland
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota
LARRY BUCSHON, Indiana
DAN BENISHEK, Michigan
VACANCY
------
Subcommittee on Space and Aeronautics
HON. STEVEN M. PALAZZO, Mississippi, Chair
F. JAMES SENSENBRENNER JR., JERRY F. COSTELLO, Illinois
Wisconsin TERRI A. SEWELL, Alabama
LAMAR S. SMITH, Texas DONNA F. EDWARDS, Maryland
DANA ROHRABACHER, California FREDERICA S. WILSON, Florida
FRANK D. LUCAS, Oklahoma HANSEN CLARKE, Michigan
W. TODD AKIN, Missouri
MICHAEL T. McCAUL, Texas
SANDY ADAMS, Florida EDDIE BERNICE JOHNSON, Texas
E. SCOTT RIGELL, Virginia
MO BROOKS, Alabama
RALPH M. HALL, Texas
C O N T E N T S
Wednesday, August 1, 2012
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Steven M. Palazzo, Chair,
Subcommittee on Space and Aeronautics, Committee on Science,
Space, and Technology, U.S. House of Representatives........... 10
Written Statement............................................ 11
Statement by Representative Donna F. Edwards, Ranking Minority
Member, Subcommittee on Space and Aeronautics, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 11
Written Statement............................................ 12
Witnesses:
Ms. Carissa Christensen, Managing Partner, The Tauri Group
Oral Statement............................................... 13
Written Statement............................................ 15
Dr. Alan Stern, Chairman, Suborbital Applications Researchers
Group
Oral Statement............................................... 29
Written Statement............................................ 31
Mr. George Whitesides, CEO and President, Virgin Galactic LLC
Oral Statement............................................... 40
Written Statement............................................ 42
Mr. Bretton Alexander, Director, Business Development and
Strategy, Blue Origin
Oral Statement............................................... 47
Written Statement............................................ 49
Mr. Andrew Nelson, Chief Operating Officer, XCOR Aerospace
Oral Statement............................................... 54
Written Statement............................................ 56
Dr. Stephan R. McCandliss, Research Professor, The Johns Hopkins
University
Oral Statement............................................... 66
Written Statement............................................ 68
Appendix I: Answers to Post-Hearing Questions
Ms. Carissa Christensen, Managing Partner, The Tauri Group....... 88
Dr. Alan Stern, Chairman, Suborbital Applications Researchers
Group.......................................................... 93
Mr. George Whitesides, CEO and President, Virgin Galactic LLC.... 96
Mr. Bretton Alexander, Director, Business Development and
Strategy, Blue Origin.......................................... 99
Mr. Andrew Nelson, Chief Operating Officer, XCOR Aerospace....... 107
Dr. Stephan R. McCandliss, Research Professor, The Johns Hopkins
University..................................................... 115
THE EMERGING COMMERCIAL SUBORBITAL
REUSABLE LAUNCH VEHICLE MARKET
----------
WEDNESDAY, AUGUST 1, 2012
House of Representatives,
Subcommittee on Space and Aeronautics,
Committee on Science, Space, and Technology,
Washington, D.C.
The Subcommittee met, pursuant to call, at 2:24 p.m., in
Room 2318 of the Rayburn House Office Building, Hon. Steven
Palazzo [Chairman of the Subcommittee] presiding.
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Chairman Palazzo. The Subcommittee on Space and Aeronautics
will come to order. Good afternoon and welcome to today's
hearing entitled, ``The Emerging Commercial Suborbital Reusable
Launch Vehicle Market.''
In front of you are packets containing the written
testimony, biographies, and truth in testimony disclosure for
today's witness panel.
I recognize myself for five minutes for an opening
statement.
I would like to thank our many witnesses for agreeing to
testify before our Subcommittee. I know that considerable
effort goes into your preparation, and I want to thank you for
taking the time to appear today to share your knowledge with
us.
Today's hearing will look at the emerging commercial
suborbital reusable launch vehicle market. Suborbital vehicles
can cross the thresholds of space and travel to the upper
reaches of the atmosphere, typically above 62 miles for brief
periods of time but not orbit the earth. Our hearing will
provide an opportunity to receive testimony from researchers,
market analysts, and some of the companies that are vying to
build the vehicles to compete in this emerging marketplace.
We are going to learn about a newly-released ten-year
forecast of market demand. Many in the research community are
hopeful to exploit the unique microgravity environment of
suborbital flight with economical, routine access that enables
expanded human research, atmospheric research and microgravity
biological and physical research.
Space tourism proponents are optimistic that a safe
operational system will be developed to support their business
ambitions, yet there are significant technical, financial, and
regulatory challenges to be overcome before these hopes can be
realized. Companies can perform test flights with an
experimental permit from the FAA but cannot sell their services
and become full-fledged commercial entities without first
obtaining an FAA launch and reentry license.
In addition, current law prohibits the FAA from issuing
regulations on human spaceflight until October, 2015. Until
then the FAA will engage with the industry participants who can
share their views on how to improve safety without proposing
burdensome regulations.
I encourage industry to work closely with the FAA so that
they will be able to draft effective regulations in 2015, and
diminish the chance that these regulations will stifle the
industry.
I look forward to hearing from our experts about their
plans to develop a profitable and sustainable business. It is
my hope they will be successful bringing these new markets into
the mainstream, recognizing that the commercial suborbital
launch vehicle business faces significant technical challenges
as new designs are introduced. I am optimistic they will
perform safely and profitably while reducing costs and
increasing the quality of suborbital research.
We have a lot of ground to cover today. I want to thank our
witnesses again. I look forward to today's discussion.
[The prepared statement of Mr. Palazzo follows:]
Prepared Statement of Subcommittee Chairman Steven M. Palazzo
Good afternoon and welcome to today's hearing. I would like to
thank our many witnesses for agreeing to testify before our
Subcommittee. I know that considerable effort goes into your
preparation, and I want to thank you for taking the time to appear
today to share your knowledge with us.
Today's hearing will look at the emerging commercial sub-orbital
reusable launch vehicle market. Suborbital vehicles can cross the
thresholds of space and travel in the upper reaches of the atmosphere,
typically above 62 miles for brief periods of time, but not orbit the
Earth. Our hearing will provide an opportunity to receive testimony
from researchers, market analysts, and some of the companies that are
vying to build the vehicles to compete in this emerging marketplace.
We're also going to learn about a newly released 10-Year Forecast of
Market Demand.
Many in the research community are hopeful to exploit the unique
microgravity environment of suborbital flight with economical, routine
access that enables expanded human research, atmospheric research, and
microgravity biological and physical research. Space tourism proponents
are optimistic that a safe, operational system will be developed to
support their business ambitions. Yet there are significant technical,
financial, and regulatory challenges to be overcome before these hopes
can be realized.
Companies can perform test flights with an ``experimental permit''
from the FAA, but cannot sell their services and become full-fledged
commercial entities without first obtaining an FAA launch and reentry
license. In addition, current law prohibits the FAA from issuing
regulations on human spaceflight until October 2015. Until then, the
FAA will engage with industry participants who can share views on how
to improve safety without proposing burdensome regulations. I encourage
industry to work closely with the FAA, so that they will be able to
draft effective regulations in 2015, and diminish the chance that these
regulations will stifle the industry.
I look forward to hearing from our experts about their plans to
develop a profitable and sustainable business. It is my hope they will
be successful bringing these new markets into the mainstream,
recognizing that the commercial suborbital launch vehicle business
faces significant technical challenges as new designs are introduced.
I'm optimistic they will perform safely and profitably while reducing
costs and increasing the quality of suborbital research.
We have a lot of ground to cover today. I want to thank our
witnesses again, and I look forward to today's discussion.
Chairman Palazzo. I now recognize Ms. Edwards for her
opening statement.
Ms. Edwards. Thank you, Mr. Chairman, and I will be brief.
I also join you in thanking the witnesses and also thanking
them for their patience. Sometimes our schedules are a little
bit unpredictable, but I want to welcome all of our witnesses
because I anticipate that this is going to be a really
interesting and informative hearing on the emerging commercial
suborbital transportation market.
And Mr. Chairman, this Subcommittee has been heavily
involved in commercial space transportation issues, including
suborbital systems. It is also clear that developing commercial
suborbital systems has been a challenging undertaking. At a
2003 joint House/Senate hearing on commercial space
transportation, companies predicted that commercial suborbital
flights could be anticipated as early as 2006. A few years
later at a hearing held by this Subcommittee in April, 2005, an
industry representative estimated that service could begin in
2008 or 2009.
Based on the prepared statements provided by the industry
witnesses, I am encouraged by the progress that is being made
by competing designs, and I look forward to continuing
accomplishments. I would like to also better understand what
challenges this emerging industry has encountered in getting to
where it is today and what hurdles remain.
And further, I hope to hear from our witnesses on what
challenges have been overcome, what opportunities lie ahead,
the potential impacts on NASA research activities, and what
steps will be needed to ensure that this can be done safely,
and I would add to that what it is that this Congress needs to
do to ensure your success.
And so thank you, Mr. Chairman, and I yield back the
balance of my time.
[The prepared statement of Ms. Edwards follows:]
Prepared Statement of Ranking Minority Member Donna F. Edwards
Good afternoon. I'd like to join the Chairman in welcoming our
witnesses to what I anticipate will be an interesting and informative
hearing on the emerging commercial suborbital transportation market.
Mr. Chairman, this Subcommittee has been heavily involved in
commercial space transportation issues, including the suborbital
systems.
It is clear that developing commercial suborbital systems has been
a challenging undertaking. At a 2003 joint House-Senate hearing on
commercial space transportation, companies predicted that commercial
suborbital flights could be anticipated as early as 2006. A few years
later, at a hearing held by this Subcommittee in April 2005, an
industry representative estimated that service could begin in 2008 or
2009.
Based on the prepared statements provided by the industry
witnesses, I am encouraged by the progress being made by competing
designs, and I look forward to continued accomplishments. I would like
to better understand what challenges this emerging industry has
encountered in getting to where it is today, and what hurdles remain.
Further, I hope to hear from our witnesses on what challenges have
been overcome, what opportunities lie ahead, the potential impacts on
NASA research activities, and what steps will be needed to ensure that
this can all be done safely.
Thank you and I yield back the balance of my time.
Chairman Palazzo. Thank you, Ms. Edwards. If there are
Members who wish to submit additional opening statements, your
statements will be added to the record at this point.
At this time I would like to introduce our panel of
witnesses, and then we will proceed to hear from each of them
in order.
Our first witness is Ms. Carissa Christensen, a Founder and
Managing Partner of the Tauri Group, an analytic consulting
firm based in Alexandria, Virginia. Ms. Christensen is a
recognized expert with over 25 years of experience in analysis
of space systems, industry economics, regulatory requirements,
and underlying demand.
Our next witness is Dr. Alan Stern. Dr. Stern is an
Associate Vice President of the Southwest Research Institute,
and in 2011 was appointed Director of the Florida Space
Institute. Dr. Stern is the Principle Investigator of NASA's
Pluto Kuiper Belt Mission, and in 2000 and 2008, he served as
the Associate Administrator of NASA's Science Mission
Directorate.
Our next witness is Mr. George Whitesides, the CEO and
President of Virgin Galactic, the space tourism company founded
by Sir Richard Branson. Prior to Virgin Galactic Mr. Whitesides
served as Chief of Staff of the current NASA Administrator and
before that as Executive Director of the National Space
Society.
Our next witness is Mr. Bretton Alexander, Director of
Business Development and Strategy for Blue Origin, a developer
of human spaceflight systems founded by Amazon.com's Jeff
Bezos. Prior to that Mr. Alexander was the Chair of the
Commercial Space Committee of the NASA Advisory Council. Since
2008, Mr. Alexander has served as a member of the FAA's
Commercial Space Transportation Advisory Committee, COMSTAC.
Our next witness is Mr. Andrew Nelson, Chief Operating
Officer and Vice President of Business Development for XCOR
Aerospace. Mr. Nelson originated the space vehicle wet lease
concept that is at the heart of XCOR's market strategy. Prior
to XCOR Mr. Nelson spent approximately 15 years in the
aerospace sector and a total of nine years with two Wall Street
firms; Morgan Stanley and Lehman Brothers.
The last witness on our panel, Dr. Stephan McCandliss, is a
Research Professor at the John Hopkins University, Department
of Physics and Astronomy and is currently Principle
Investigator of a Sounding Rocket Program. Since coming to the
John Hopkins University, he has launched 15 sounding rocking
borne for UV spectroscopic instruments. Dr. McCandliss has been
Principle Investigator and Co-Investigator on several NASA
grants to develop space mission technologies and served as a
member of NASA's Sounding Rocket Working Group from 1999 to
2003.
Welcome to you all.
As our witnesses should know, spoken testimony is limited
to five minutes each. After all witnesses have spoken, Members
of the Committee will have five minutes each to ask questions.
I now recognize our first witness, Ms. Christensen, for
five minutes.
STATEMENT OF MS. CARISSA CHRISTENSEN,
MANAGING PARTNER, THE TAURI GROUP
Ms. Christensen. Chairman Palazzo, Congresswoman Edwards,
Members of the Committee, thank you for the opportunity to
testify today on emerging markets for suborbital reusable
vehicles. On a personal note, it is an honor to be part of
this, and to be testifying today. I spent my career in
commercial space, and I am delighted that Congress is
interested in this important subject.
My firm, The Tauri Group, recently completed a six month
study to forecast ten-year demand for suborbital reusable
vehicles or SRVs. The FAA Office of Commercial Space
Transportation and Space Florida jointly funded the study.
Our purpose was to develop an objective and rigorous
forecast of SRV demand and market dynamics. Equally
importantly, we sought to identify the ways current realities
could change, positively or negatively, in order to help
decision makers understand and manage future outcomes. Our
research and analysis-focused process included 120 interviews
assessing budgets, market studies, and other data and surveying
more than 200 high net-worth individuals who can afford current
prices for suborbital flights.
We used this data to develop our forecast and to describe
future uncertainties and our assumptions about them. My
testimony describes results of that study.
Our study concluded that demand for SRV flights at current
prices is genuine, sustained, and appears sufficient to support
multiple providers. We estimate baseline demand, reflecting
predictable trends that exist today, at about 400 to 500 seat
equivalents each year, for people and for cargo. Our growth
scenario sees that number nearly triple. Our constrained
scenario sees it halved. Additional potential demand is
possible from unknowns such as research discoveries, commercial
applications, or a viral consumer response. Price reductions
would also increase demand.
The largest market by far in our analysis is commercial
human spaceflight for individuals. We estimate it at more than
80 percent of the total. Given current prices most of these
individuals will be wealthy. Many will be from outside the
United States.
These individuals enable a new SRV industry with
capabilities that can benefit researchers, educators, and
others.
Specifically, we identified five additional markets active
in our ten-year forecast period. Basic and applied research,
aerospace technology test and demonstration, satellite
deployment, education, and media and public relations. Our
baseline for these markets shows initial demand for about 30
seat equivalents that grows to 130 annually. Our constrained
scenario grows more slowly, and our growth scenario increases
to nearly 400 seat equivalents, representing thousands of
payloads.
As of this moment purchases of SRV services in most of
these markets have already begun.
SRVs have unique capabilities for basic and applied
research. We identified currently funded research areas that
are better served by SRVs than by existing alternatives. We
predicted some of the funding in these areas would shift to
SRVs. These areas are atmospheric research of the poorly
understood upper reaches of the atmosphere that affect weather
and climate, suborbital astronomy to get access to infrared and
ultraviolet observations from outside the atmosphere,
longitudinal human research on space travelers to understand
things like vascular and immune response to microgravity and
acceleration, and microgravity research where the unique
combination of SRV capabilities may energize the research
community and attract new organizations.
SRVs can also be used for test and demonstration of certain
types of technology, and may also serve as launchers for small
satellites, which are increasingly used for research.
Finally, our analysis suggests SRVs may be widely used for
STEM education. Student-built projects can fly to space and
return, frequent launches aligned with academic calendars, and
schools can likely afford SRV prices for small payloads. Based
on analogous hands-on STEM programs, we estimate that after ten
years as many as 600 K through 12 schools and more than 100
universities could be flying small student payloads.
SRVs will create a different kind of space transportation
industry than we have seen before. This space marketplace will
be heavily influenced by individual consumers with government
potentially around a tenth of total demand. An important
regulatory challenge is developing an effective approach for
these unprecedented new dynamics.
In closing, I would like to thank you for the opportunity
to speak today, and I look forward to your questions.
[The prepared statement of Ms. Christensen follows:]
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Chairman Palazzo. Thank you. I now recognize Dr. Stern for
five minutes to present his testimony.
STATEMENT OF DR. ALAN STERN, CHAIRMAN,
SUBORBITAL APPLICATIONS RESEARCHERS GROUP
Dr. Stern. Thank you. Chairman Palazzo, Congresswoman
Edwards, and Members of the Subcommittee, thank you again for
the opportunity to meet with you today.
I am a planetary scientist, and I have used suborbital
sounding rockets since the 1980s. I have been a Principle
Investigator on numerous NASA missions, and I served, as you
said, as Associate Administrator responsible for the Science
Mission Directorate at NASA headquarters. I am the current
Chairman of the Commercial Spaceflight Federation's SARG or
Suborbital Applications Researchers Group.
Mr. Chairman, in 1946 when the U.S. Army formed its rocket
research panel to determine how researchers could best exploit
the capabilities of captured German V-2 rockets, only a tiny
fraction of the Nation's scientists were aware of the powerful
impact that suborbital rockets could have on their research.
After all, few scientists of that era had ever before had
access to space launch capability of any kind.
Yet barely a decade later rocket borne research had become
so powerful a tool that it formed the centerpiece of 1957's
landmark International Geophysical Year.
In 2012, the space research and education communities and
large parts of NASA and other federal research agencies are
similarly unaware of the powerful opportunities that the new
reusable suborbital vehicles can offer for education and for
research. Today's analogies to V-2s in 1946 are strong.
Early adopters like myself see transformational promise in
these vehicles, primarily because they offer frequent access to
space at low cost. Indeed, within a few years this industry is
likely to provide the capability to fly hundreds to perhaps
thousands of experiments annually and to do so at typical
payload launch costs that are ten times or more lower than the
1 to $2 million present day sounding rocket costs.
These vehicles also offer other important benefits. For
example, gentler rides for payloads than on suborbital sounding
rockets, reducing design costs, the development of market-
driven, simple, rapid payload safety integration processes that
lower barriers to entry for scientists and universities and
corporations. The opportunity to fly larger payloads than we
could normally fly on a sounding rocket, reduced experiment
waiting times to flight going to the high-flight rates, and
very importantly the opportunity to fly researchers and
educators with their payloads.
This capability is another game changer that will reduce
experiment development costs and increase experiment
reliability by eliminating the need for expensive experiment
automation that has for too long been commonplace in space as a
substitute for the researcher or the educator being able to be
there themselves as in most scientific disciplines.
These new vehicles offer something else that is also both
new and revolutionary. That is the routine stepping stone
capability to try out and develop research players and
experimental techniques at low cost before they are brought up
to the International Space Station. Just as in the minor
leagues in baseball we try out players and techniques before
advancing them to the majors.
As a result of these numerous attractive attributes, I
expect broad demand for commercial reusable suborbital vehicles
in the following areas. Upper atmospheric research, space life
sciences, technology testing for spaceflight, microgravity
science, auroral, ionospheric, and space weather research, and
an education and public outreach.
As early evidence for the demand for these vehicles and
what they are likely to generate in that demand, I point out
that the number of scientists attending Next Generation
Suborbital Researchers Conferences has doubled in the past two
years, from about 200 in 2010, to over 400 this year.
Researchers and educators are already voting with their feet.
What these communities could use now are more funding
opportunities with NASA and other agencies to exploit the
coming capabilities of these vehicles.
And finally, let me say that the primary regulatory
uncertainties that I foresee for these new vehicles are those
that might limit their ability to achieve high flight rates at
low costs and to fly researchers and educators on those
flights.
I urge you to minimize these and other regulatory burdens
on this new and highly-promising American industry, and I thank
you for your time and for inviting my views.
[The prepared statement of Dr. Stern follows:]
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Chairman Palazzo. Thank you. I now recognize our next
witness, Mr. Whitesides, for five minutes to present his
testimony.
STATEMENT OF MR. GEORGE WHITESIDES,
CEO AND PRESIDENT, VIRGIN GALACTIC LLC
Mr. Whitesides. Mr. Chairman, Congresswoman Edwards, and
Members of the Subcommittee, I am honored to be here today.
Virgin Galactic's goal is to become the world's first
commercial space line. We have invested hundreds of millions of
dollars into this business and into the American economy. Our
prime contractor, Scaled Composites, has constructed our first
space vehicles and is currently flight testing them as we
prepare for commercial service. Our manufacturing joint
venture, the Spaceship Company, is hard at work building our
second vehicle set. Overall, this project has directly or
indirectly employed over 1,000 people in the United States
since its inception.
As I continue my testimony, Mr. Chairman, with your
permission I would like to share some video footage of our
vehicles in flight, taken over California's Mojave Air and
Spaceport and New Mexico's Spaceport America.
Virgin Galactic was founded in 2004, to commercialize the
technologies demonstrated by SpaceShipOne, the first privately-
built vehicle to safely carry human beings into space. When it
landed, it not only earned the $10 million X PRIZE and a spot
in the Air and Space Museum, it also served as evidence that
private entities are capable of building and operating
spaceships that can carry humans both safely and affordably.
To date, Mr. Chairman, we have accepted $70 million in
deposits, representing over $100 million in future business.
Those financials are important but so is a different
measurement. As of last week we have accepted deposits from 536
individuals, which is more than the total number of people who
have ever gone to space. We anticipate flying that many people
within our first year or two of commercial service.
Our system is proving to be an attractive platform for
researchers and educators. Already we have accepted deposits
from several customers in these areas, including universities
as well as research institutions and from NASA itself. With a
spacious cabin, relatively gentle gravity loads, frequent
flights, affordable pricing, and a longer period of
microgravity than many other platforms, we will offer an
important tool to help innovators conduct significant science,
advanced technology, and educate and inspire the next
generation.
We commend Congress and NASA for creating NASA's Flight
Opportunities Program, which is playing a critical role in
assuring that experiments are ready to fly as soon as the
spaceships themselves are in service. As we prepare for
commercial service, staff at both Virgin Galactic and Scaled
Composites have been interacting with the FAA and in particular
the Office of Commercial Space Transportation, or AST, for many
years. We believe that the FAA and specifically AST are
responsibly discharging their legislative accountabilities
concerning suborbital spaceflight.
Businesses like ours have a clear imperative to do all that
we can to responsibly manage the risks associated with
operating our vehicles. In our case many of our staff,
including myself, will fly on our spaceship before any member
of the paying public, and our founder, Richard Branson, will be
on our first commercial flight. Our team includes a number of
professionals with deep expertise in safely operating aerospace
vehicles. This includes our Vice President of Operations, Mike
Moses, who was responsible for the preparation and launch of
the Space Shuttle's final 12 missions. Mike and other members
of our team interact with AST on a regular basis, allowing for
frank, two-way exchanges of information.
In 2004, Congress determined that eight years of real
flight data was a reasonable amount of time for a regulatory
learning period, a value with the suborbital industry supported
then and continues to support today. When it passed the most
recent FAA Authorization Bill, the House of Representatives
renewed the eight-year period. The Conference Bill extended the
learning period for the scope of the FAA authorization itself,
which runs until late 2015.
We are pleased and appreciative that Congress took this
action and look forward to working with both bodies of the
legislature on the duration of this period in the next
Congress.
Moving forward, the regulatory uncertainty that has the
biggest potential impact on our business is the concern that
the learning period for our suborbital operations might be
reduced. Already we are faced with the prospect that soon after
we go into commercial operations, rules and regulations may
change substantially, potentially disrupting those operations
and our business. A stable regulatory environment is the best
way to preserve America's status as the world leader for
suborbital spaceflight.
In closing, Mr. Chairman, I thank you for the opportunity
to appear before you today. As we all remember Sally Ride this
week, an American hero and a pioneer who opened the space
frontier to women, Virgin Galactic seeks to build on her legacy
by opening the space frontier to all. I look forward to
answering any questions you might have.
[The prepared statement of Mr. Whitesides follows:]
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Chairman Palazzo. Thank you. I now recognize our next
witness, Mr. Alexander, for five minutes to present his
testimony.
STATEMENT OF MR. BRETTON ALEXANDER,
DIRECTOR, BUSINESS DEVELOPMENT
AND STRATEGY, BLUE ORIGIN
Mr. Alexander. Thank you, Chairman Palazzo, Congresswoman
Edwards, Members of the Subcommittee. Thank you for the
opportunity to testify this afternoon on behalf of Blue Origin.
We appreciate the Committee's longstanding support of the
development of space and commercial human spaceflight.
Blue Origin was founded in 2000 by Jeff Bezos, the founder
of Amazon.com, with the sole purpose of developing technologies
and vehicles to enable human access to space at dramatically
lower costs and increased reliability. The ultimate goal is to
enable more people to fly in space to be able to do more
things, whether for science, exploration, or simply adventure
travel.
We believe in incremental development, beginning with
suborbital vehicles before moving onto orbital systems. Our New
Shepard suborbital system will take three or more astronauts to
100 kilometers altitude where they will experience several
minutes of microgravity, be able to see the darkness of space,
and view the curvature of the earth. Key elements of this
suborbital architecture, a reusable vehicle with vertical
takeoff, vertical landing rocket, separable Crew Capsule with a
pusher escape system, are also key elements of our orbital
architecture designed to take people to low-earth orbit and the
International Space Station.
Let me now address the markets for suborbital spaceflight.
First, we believe that people are the game-changing element for
spaceflight. We can't tell you all the activities that people
will do in space, but we are certain the number of people and
activities will increase greatly as the cost comes down and
safety improves.
Research and science is a valuable secondary market. We are
poised to offer the research community flexible, repeated
access to space on dramatically-accelerated timelines for a
fraction of the cost. Research tools once limited to a few
investigators will be within reach of a wide array of federal
agencies, industry, and even college and high school students.
These suborbital systems have significant promise for STEM
education for our Nation's youth, with routine flights, the
ability for schools to tuck small, untended experiments and
payloads along for the ride is within reach, giving hands-on
space experience previously unimaginable.
Other markets for suborbital spaceflight are likely to be
developed that we cannot yet image. Who would have thought that
ten years ago there would be over 500,000 apps for something
called a smart phone? The barries to entry to develop an app is
minimal. There is no need to spent billions on developing the
network or the phone itself. Similarly, scientists, school
kids, and others can develop apps for suborbital spaceflight at
little to no upfront cost compared to traditional spaceflight
activities. The sky is truly the limit.
Let me now address the regulatory framework. Commercial
spaceflight is in its infancy, and there is no one-size-fits-
all approach to regulation. Each company is developing a
different system. Blue has a vertical takeoff, vertical landing
vehicle with a capsule that returns under parachute. Others
have vehicles with wings and wheels. What is appropriate for
one type of vehicle may not be appropriate for others.
The current question of how and when the FAA will regulate
the safety of spaceflight participants is the greatest
uncertainty affecting the development of this industry. I want
to take this opportunity to thank you for the passage last year
of an extension of the learning period to the full eight years
from the date of the first paying passenger flight as per the
original intent of the CSOA. While the final bill extended this
only until October, 2015, we appreciate Congress's recognition
that the learning period serves a valuable purpose and will
work with you to extend the learning period to at least eight
years or longer.
We believe the best path forward would be to continue the
informed consent approach indefinitely, allowing individuals to
make their own decisions on how best to manage their own safety
and inherent challenges of spaceflight.
Regarding our interaction with the FAA and the development
of regulations, there are two primary ways in which we interact
with the FAA. The first is through the formal NPRM regulatory
process, and the second is through our individual applications
for permits and licenses and FAA oversight of our flight
activity. We have found that on the whole both have worked
well. The FAA has shown itself receptive to real world input as
data is being gathered and flight activities continue.
We look forward to the FAA's planned monthly telecoms as an
opportunity for dialogue between the FAA and industry, allowing
for open and frank discussions about technical design and
safety.
In conclusion, we believe suborbital spaceflight offers
great promise and opportunity for the Nation's economy,
scientific research, and STEM education. As private commercial
developers, we are not looking just to government but are
investing private funds to enable this bright future. NASA and
other government agencies can capitalize on this private
investment and take full advantage of these new capabilities.
Thank you for the opportunity to be here today, and I look
forward to your questions.
[The prepared statement of Mr. Alexander follows:]
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Chairman Palazzo. Thank you. I now recognize our next
witness, Mr. Nelson, for five minutes to present his testimony.
STATEMENT OF MR. ANDREW NELSON,
CHIEF OPERATING OFFICER, XCOR AEROSPACE
Mr. Nelson. Thank you, Chairman Palazzo, Congresswoman
Edwards, and Members of the Subcommittee. Thank you for this
opportunity to speak about the reusable suborbital markets and
how this industry can be a catalyst for new jobs and economic
growth given an efficient government and appropriate regulatory
stance. It is my belief that suborbital reusable launch
vehicles are critical to America's future innovation-led
economy, the education of our children, and our national
security because reusability is the transformative step needed
for affordable and responsive space access, which is an enabler
of these noble objectives.
XCOR's long-term vision of the future space industry starts
with the premise that there are robust opportunities for self-
sustaining, profitable space businesses in low-earth orbit and
near-earth resource exploration. But numerous challenges must
be solved to realize this vision, and failures will occur along
the way.
But free of regulatory uncertainty and excessive
constraints, government can enable industry to once again
embrace the risk-taking spirit that built our country. The
potential payoff is similar to the railroads, the air
transportation system, or the internet. In other words, the
next great American-led trillion dollar enterprise, the
commercial space enterprise.
The first technical hurdles to overcome are fully reusable
propulsion systems and thermal protection systems, and we
believe suborbital RLVs are the ideal proving ground for these
technologies. This has been XCOR's focus for over 12 years, and
it will continue.
XCOR was founded by individuals who dreamt of going to
space and pursue their dreams, giving up lucrative jobs in a
lot nicer places than Mojave. In 1999, after they were laid off
from an entrepreneur rocket adventure, they chose to follow the
ethos that Henry David Thoreau expressed when he said, ``Go
confidently in the direction of your dreams and live the life
you have imagined.'' And in so doing have arguably created one
of the most innovative and determined aerospace companies the
U.S. has seen in the last 50 years.
We XCORians have pursued the American dream without benefit
of great personal wealth but with significant determination and
character, and we are now building reusable rocket engines for
ourselves and others like United Launch Alliance, and we are
building the Lynx for reusable suborbital vehicle that is
scheduled to start flight tests in the new year.
In two years XCOR and our partners have sold over 200
flights on the Lynx, and 50 of these sales have come in the
last three months, demonstrating increasing sales velocity as
we near first flight and the incumbent network effects you see
in most markets. Our typical buyers have net investible assets
of 1 to $2 million or more but many less wealthy enthusiasts
are buying also, and many people are buying multiple flights.
Industry and the research community are also buyers, and we
project these markets to eventually surpass the personal
spaceflight markets.
For over ten years XCOR has played a leading role within
the industry by actively collaborating with the FAA. For
example, we helped create the definition of suborbital rocket,
was instrumental in crafting and leading the campaign to pass
the first Commercial Space Launch Amendments Act in 2004, and
XCOR has direct and productive contacts with FAA/AST staff in
Southern California, Florida, Washington, DC, and elsewhere. We
believe that Congress should enable the FAA to move more staff
into the field where operations are occurring so we can
facilitate the improvement in safety.
In earlier testimony you heard others speak of the eight-
year learning period, and we, too, support the restoration of
full learning period starting with the first commercial
suborbital human spaceflight for revenue. At the same time XCOR
strongly supports a new FAA initiative to use its existing
authority to engage with industry on safety concerns,
experiences, and best practices.
We are greatly concerned with the potential expiration of
learning period because this could lead to unfettered
regulation based on paper analysis and speculation rather than
actual flight data and experience. Recent statements by at
least one senior elected official have suggested the current
licensing regime may be repealed in the final months of this
Congress, and any sudden such changes or reliance on
speculative regulations would have a chilling effect on the
industry and the thousands of jobs we represent collectively
and the jobs we plan on creating in the near future.
So such a change would also cripple our chances to be
competitive internationally. The industry and FAA have been
successful in persuading foreign governments to consider
adopting the U.S. system of regulation, licensing, and informed
consent. Suddenly changing from this environment to a
speculator regulatory regime will cause countries to forego the
adoption of the U.S. system and create local rules, and local
rules can create an uneven playing field for us in those
foreign markets, impacting jobs in various states represented
by the Members of the Committee.
Another impediment to export markets is the U.S.-designed
and built manned suborbital RLVs is the ITAR. Their strong
international interests and demonstrated demand for suborbital
RLVs, however, ITAR causes inherent uncertainty with customers
which inhibit U.S. job creation.
We encourage the Subcommittee to take a leadership role to
explicitly identify manner suborbital RLVs as a Commerce
Control List item and open up the free world to U.S. commercial
space products, services, and competitors.
I thank the Committee for the opportunity to present these
thoughts for the record, and I look forward to your questions.
[The prepared statement of Mr. Nelson follows:]
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Chairman Palazzo. Thank you. I now recognize our final
witness, Dr. McCandliss, for five minutes to present his
testimony.
STATEMENT OF DR. STEPHAN R. McCANDLISS,
RESEARCH PROFESSOR, THE JOHNS HOPKINS UNIVERSITY
Dr. McCandliss. Mr. Chairman, Congresswoman Edwards, and
Members of the Committee, thank you for inviting me to answer
your questions on suborbital research investigations regarding
decision metrics, infrastructure, and capability requirements,
student involvement, and future directions for suborbital
research.
Regarding the questions on decision metrics, I would like
to point out that scientific peer review panels are for NASA
are assembled by each of the four science divisions; geospace,
heliophysics, planetary, and astrophysics to conduct research
from suborbital platforms.
Panels look for some way cool advancement of their
scientific capabilities that is enabled by some new technology,
and they seek to build a technically-adept workforce. Relevance
to overall NASA strategic plan is a requirement. For
heliophysics investigation that might be a new high resolution
imager or for astrophysics it might be a device that can image
planets about nearby stars.
My own work, we are building a new high-efficiency far
ultraviolet spectrograph that is six times more sensitive than
anything we have flown before, and it can observe more than 40
targets at once in the area of the size of the moon.
To pass the muster of the highly-oversubscribed peer review
there has to be some capability of the chosen vehicle, usually
the altitude, which provides the only way to do the research.
If you can do it from the ground, you are not going to fly.
Regarding suborbital infrastructure and capabilities, the
commercially-operated launch provider, NSROC, run by orbital
sciences, with oversight from the NASA Sounding Rocket Project
Office, provides a staple of 11 different launch vehicles to
experimenters picked by peer review, and they also provide a
host of very mature modular subsystems to fly, to provide
missile flight safety, de-spin and separation, high-speed
telemetry, altitude control, recovery, fine point and command
uplink for real time control of the payload.
Experimenters have access to full integration and test
facilities at Wallops in Virginia, including ground station,
shaker table, spin balance, and moments of inertia
measurements. In addition, the NSROC Sounding Rocket Project
Office holds project management reviews, and all these things
are necessary to ensure that things will be carried out safely.
The message is one-size-doesn't-fit-it, as we heard
earlier. Some experimenters want to fly as high and as long as
they can. Some want to fly tailored trajectories at specific
altitudes. It all depends on the science. For our observations
I require a vehicle that will provide 400 seconds of time above
100 kilometers with a precision real-time pointing system so
the student can make target adjustments during flight.
Student participation in sounding rocket research is a
longstanding hallmark of the program. Some would argue it is
the most important product. Students become an integral part of
the science and technology they develop. They work in an
apprentice mentor relationship with senior researchers, where
much know-how is passed on in oral form from one generation to
the next much like a guild of old spaceship builders. And there
is the slide example.
In our astrophysics program we emphasize hands-on
experience with optics, mechanics, electricity, magnetism,
vacuum systems, computer programming, data acquisition, design,
testing, calibration, integration, trouble shooting, mission
planning, communication, and publication of results. Within the
short tenure of a graduate student, they become scientists with
a fundamental regard for systems engineering and are highly
prized by the aerospace community.
Many of the Ph.D. and undergraduate students go on to fill
key roles in the development of instrumentation for a host of
space-based missions. However, as of late, excuse me. The
number of sounding rocket students receiving Ph.D.'s has fallen
as the displayed example shows. It is directly correlated with
the decreasing number of lost opportunities over the past 40
years and symptomatic of a reduced production of technically-
adept leadership.
Regarding future challenges and opportunities, the
challenge for developing reusable suborbital vehicles as
meaningful research platforms will be to identify those
appropriate niche markets, both commercial and scientific,
where human-in-the-loop or an in-situ access module provides
some unique capability that will pass the muster of the peer
review. From my perspective the current crop of reusable
vehicles on the books falls well short of our requirements.
My astrophysics sounding rocket colleagues and I agree that
generally new funding opportunities to advance the core
capabilities of the expendable sounding rocket community are
more likely to generate meaningful scientific, technical, and
programmatic impact for future space-based missions run by
NASA, DOD, and even private concerns.
There is a logarithmic gap in the launch portfolio between
the $3 million it costs to develop a sounding rocket and $200
million it costs to launch an Explorer mission. The missing
piece is a commercial launch capability in the $10 million
range that is capable of placing 250 to 500 kilograms into low-
earth orbit, Virgin Galactic Launcher-1, or the Falcon-1 from
SpaceX.
Establishing this capability can reduce risk and cost for
future Explorer missions, Flagship missions, to reduce
development times for increasing technology readiness levels,
and most importantly, by expanding the technically-adept
workforce. There is no substitute for experiment, experience.
Expanding the suborbital program and filling the logarithmic
gap in the launch portfolio is key to maintaining our
leadership in space science.
Thank you.
[The prepared statement of Dr. McCandliss follows:]
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Chairman Palazzo. Thank you, and I thank the panel for
their testimony.
I now recognize myself for five minutes for questions.
My first question is pretty much a two-part question. It is
going to be directed to Mr. Whitesides, Mr. Alexander, and Mr.
Nelson.
How does the SRV industry currently collaborate with the
Federal Aviation Administration in developing draft guidance
for test flights and current operations? And what is the proper
role for industry in developing future regulations?
Mr. Nelson. George and I have talked on so many panels
together, I think we could probably finish our sentences a lot
of times. So we collaborate with FAA on draft test flight
processes and procedures much as the rest of the industry. It
is important for us to have the integration of local staff so
they can understand what we are planning to do. There is
regular meetings and especially through the licensing process,
they want to understand how our vehicle was built and designed,
as well as how we are intent on testing it.
Mr. Alexander. I think I would like to add that we have got
a very good working relationship with the FAA. Their staff are
knowledgeable, but what they need is access to our plans and
procedures, and that comes through that regulatory interaction
through the process of applying for experimental permits and
licenses and through the oversight of the activities that are
regulated by the FAA.
That interaction is the most important piece in terms of
both understanding from industry's side how things are operated
but for the FAA to understand what is going on in the industry
such that the industry provides a real education opportunity
for them to see what is really going on.
So the back and forth, in order to develop regulations
later, to develop draft guidance, to develop test procedures
and things like that, they need to see what is actually going
on in industry, and it is through that application process that
they get that back and forth.
We do think that the FAA is setting up a monthly telecom to
have a dialogue with industry. That is going to be another
opportunity for industry collectively to interact with the FAA
to talk about technical details. We think that that is going to
be very valuable as well.
Mr. Whitesides. Mr. Chairman, in the interest of time, I
will leave it with them.
Chairman Palazzo. Nothing to add? Thank you, and this is
pretty much for all you all again, so maybe you all decide who
is going to go first.
When will the companies begin commercial operations, and
what type of flights will be the first to produce revenue for
your company?
Mr. Whitesides. Why don't I start? Mr. Chairman, our goal
is to start powered flight by roughly the end of the year and
to go into commercial operation by the end of 2013. So we are
looking at roughly an 18-month timeframe for the start of
commercial operations.
We have always base lined starting flying with commercial
customers with our customers who in some cases have been
waiting to fly for several years. We have recently talked about
inserting some of the NASA payloads that we have been
contracted to fly earlier on. So that is in discussion, but our
baseline is to start with our commercial customers.
Mr. Alexander. We are still in the development phase for
our new Shepard suborbital flight system, and as we get deeper
into our flight test program we will start accepting
reservations and then having plans for when we first fly. We do
think that passengers and scientific research will be the first
revenue-generating activities.
Mr. Nelson. We hope to commence our flight test program the
end of this year, early next year with a flight test program
that would end late 2013, and if things go as planned, so we
will be at the end of 2013, flying paying participants.
We do expect that there will be some science missions that
are unmanned, that are automated that could be flown
potentially earlier than that as well.
Chairman Palazzo. Ms. Christensen, your forecast paints a
rosy picture for the future of this industry. Can you tell the
Committee why we should believe there is a real market out
there for these vehicles, and what is your level of confidence
in the demand forecast?
Ms. Christensen. Mr. Chairman, my objective in
characterizing the industry, my team's objective has been to be
as data driven and accurate as possible. We are an independent
firm. Our business model is to provide rigorous analysis. We
have released a 100-page report that identifies the many, many
dynamics of the market that we identified, the uncertainties,
the assumptions that we have made, and where those assumptions
might vary.
I will note that our findings are very much aligned with a
broad dataset derived from interviews and research, and we have
laid that out as fully as possible.
Chairman Palazzo. Thank you. I am out of time.
I now recognize Ms. Edwards.
Ms. Edwards. Thank you, Mr. Chairman.
As you know, I have been both a healthy skeptic of the
industry and the potential but also quite curious, and I
haven't made it any great secret that I would want to be one of
those, I want to be number 537 if there is room. It does seem
to me that on a Congressional salary it is highly unlikely that
I could afford the deposit.
But it raises a question, Ms. Christensen, about the
profile of the individuals who want to leave those deposits and
fill out this industry because they are clearly high net-worth
individuals because they have the financial capacity for that,
but it seems to me that we are so accustomed to getting on
boats and planes and our automobiles, and there is a comfort
level attached to that, and this is somewhat different and
experimental, and so what happens with those individuals that
you think will fill out the industry if the flight itself
doesn't kind of meet that comfort zone for people who are not
necessarily scientists and researchers but they just want to
experiment a little bit?
Ms. Christensen. We identified that question of how
consumers, how spaceflight participants will actually respond
to the experience as one of the major uncertainties that we are
looking at. I can tell you that based on the survey that we
did, and we focused on high net-worth individuals, most of
those individuals viewed spaceflight as either extremely or
somewhat inherently risky, and many of the individuals that
were interested in taking suborbital flights had that view as
well.
So to the extent that that speaks to that question, that
population does appear to have a sense that that is part of
the--and we also in our survey articulated to them elements of
the experience, such as what it might be like, both the
positive and the, you know, you might feel ill, and so that was
part of the process of informing survey respondents in getting
their answers.
Ms. Edwards. And Mr. Whitesides, if you could help me
understand, in any of these sort of risky behaviors, there is a
potential that there is a mishap that is going to happen. I
mean, that happens with cars, and I wonder if your company or
others have established any plan as to how you will conduct
investigations or determine root causes should there be a
mishap, and what do you think the relative role of the Federal
Government should be in the event of such an occurrence? And I
think, for example, of an agency like the National
Transportation Safety Board. Is that something in terms of the
Federal Government that we have to stand up to have some
capacity for investigation that it doesn't now have with
respect to spaceflight?
And I know that there is, there clearly is an expression of
concern about a regulatory environment that might constrain
development, but what is the right level of regulation that the
Federal Government has to engage itself in, in order to oversee
what is in essence a consumer-driven market?
Mr. Whitesides. To start with the first question,
Congresswoman, I think it is a great question, and the answer I
think is that in terms of mishaps it depends on the type of
mishap. So for very serious mishaps, the NTSB, I believe, will
work with AST, and NTSB has assigned an investigator who is
becoming proficient in essentially our sector. He has come out
to Mojave, he has met with many of our companies, and I think I
speak only for myself but I view him as really a very highly-
skilled individual who seems to understand the issue.
So that engagement has begun. I think AST also has its own
set of plans and for a serious mishap we, I think, would
obviously defer to the NTSB's leadership of that investigation.
For other mishaps, which frankly occur, lesser mishaps, you
learn things continually through the flight test program, some
of those I think the flight test team can handle themselves.
They will just learn something. It is a minor issue, and that
is the point of flight test is to improve the vehicles to the
point that we are comfortable flying customers.
Part of the reason that we have certainly taken many years
to prepare these vehicles is because we have been in flight
test for years, and we will not fly people on these vehicles
until we feel comfortable that it is the time to do so.
I think in terms of your last question, I think the
government and in particular the Science Committee, who
essentially crafted the 2004 amendment to the CSLAA, developed
the right posture for this moment of time, and I think we
obviously support that at this time.
Ms. Edwards. Mr. Chairman, if I could just ask a final
question of Dr. McCandliss, and it actually has to do with the
scientific environment. It is tough for me to imagine how you
balance having a sort of sterile, more laboratory environment
with also commercial passengers that satisfies the needs that
scientists have to do research. Is that a concern of yours?
Dr. McCandliss. Yes. For our own purposes we require to be
outside the cabin. So being inside the cabin would not be where
I would want to be, I mean, we conduct research essentially in-
situ. So it is incompatible really with the human spaceflight
aspect.
Chairman Palazzo. Before moving on if I could just ask Ms.
Christensen, again, on part two of my question, on your
industry forecast, what is your level of confidence in the
demand forecast?
Ms. Christensen. My level of confidence is strong in our
baseline forecast. We built that up using a very substantial
array of data through critical lens. There are certainly
uncertainties embedded within that ranging from consumer
response to research outcomes and so on, but just as a
calibration note, I will say that our baseline of about 4,500
seat equivalents, you can look at that in light of the number
of sold reservations to date, which is about 925.
So that as a calibration point I think is indicative of
that it is a realistic forecast.
Chairman Palazzo. Thank you.
I now recognize the gentleman from Texas, Mr. Smith.
Mr. Smith. Thank you, Mr. Chairman.
Let me direct a couple of questions to Mr. Whitesides, Mr.
Alexander, and Mr. Nelson. You all mentioned a while ago, Mr.
Whitesides for Virgin Galactic, that you expect to be in
commercial operations in about a year and a half. Mr. Nelson,
you said the same things about XCOR. Mr. Alexander, you didn't
give a specific time, but I gather you are about a year behind
that or 2-1/2, three years away from commercial operations?
Mr. Alexander. I would say we are later than what you heard
from the others. Yes.
Mr. Smith. Okay, and Mr. Whitesides, you had over 500
deposits, I think, Mr. Nelson, over 200, and Mr. Alexander, you
were on the cusp of getting them.
I guess my first question is this. In regard to your
revenues, what percentage of your revenues do you think or
expect or project to come from paid passengers versus
scientific research? Mr. Whitesides?
Mr. Whitesides. Congressman, I believe that certainly the
initial bulk of the market, I think, is in the individuals.
Mr. Smith. Paid passengers. Okay.
Mr. Whitesides. Yeah. For us at least.
Mr. Smith. Mr. Alexander?
Mr. Alexander. I would agree with that, that people is the
real market. We believe that the research market is secondary,
but we are likely to fly research, you know, activities before
we fly people.
Mr. Smith. Okay. Mr. Nelson?
Mr. Nelson. Initially we see the participant market being
the driver, however, we do see the research market, especially
industrial research, surpassing that market, we feel 4 or five
years in, as the value proposition is known and becomes known
to industrial players outside the government market.
Mr. Smith. Okay. Now, you have two passengers, I think, Mr.
Alexander has three, Mr. Whitesides, eight, two are pilots, I
think, and of the two, Mr. Nelson, with XCOR, one is a pilot. I
guess on a scale it looks like that Virgin Galactic is going to
have more revenue just on the basis of more passengers, but
when do you project to make a profit, Mr. Whitesides?
Mr. Whitesides. We expect to be cash flow positive within
about a year of the start of commercial operations.
Mr. Smith. Okay. Good, and Mr. Nelson?
Mr. Nelson. On a GAP basis as well as regular accounting,
we are profitable last year. We have additional revenue streams
from other parts of our business. We hope that occurs again
this year.
Mr. Smith. But as far as commercial space.
Mr. Nelson. Commercial space, we expect in the first 12
months to be profitable.
Mr. Smith. Good. I hope you are right and wish you well in
that regard.
Let me go to the FAA for a minute. You asked--answered a
question a while ago about your relationship with the FAA, but
my question is this. What FAA regulations are of most concern
to you?
Now, Mr. Whitesides, you sounded like a while ago that you
were okay with the current regulations. You were worried about
the future new changes in regulations, but in general, what
regulations, present or future, are of most concern to you?
Mr. Whitesides?
Mr. Whitesides. Congressman, you captured it exactly, in
fact. We believe that the current regulatory posture of AST is
a good one, and our preference would be to maintain the
original eight-year intention of Congress.
Mr. Smith. Okay. Great. Mr. Alexander?
Mr. Alexander. We completely agree. We believe that the
informed consent approach that this committee originated in
2004, really allows the individual to make the choice as to
what level of safety or what level of risk they want to accept.
Just as someone who climbs a mountain has a choice of whether
to do that or not.
Mr. Smith. Okay. Mr. Nelson?
Mr. Nelson. I have nothing more to add. They said it
perfectly.
Mr. Smith. Last quick question is this. Oh, is my time up?
It is not up. Last quick question is this. How do you view
yourselves, the three of you all who are about to engage in
commercial operations, do you see yourself as competitors, as
rivals, and if you see yourself as rivals, do you also see that
each of you in your own way is adding sort of a value added to
the enterprise and to the overall commercial operations in
space?
Just in reverse order. Mr. Nelson first.
Mr. Nelson. I have been asked this question before,
Congressman, and the current stage we are in is coopetition. We
are competitors, but we also have to cooperate. It is a very
early stage of the industry, and so things like regulatory
frameworks and this sort of thing we are in dialogue with
through the Commercial Spaceflight Federation and the FAA.
But, yeah, certainly this is a competition, but we have
very different value propositions, very different experiences.
Just like going to Disney or someplace where you have six
roller coasters you want to ride all six roller coasters, and
we are seeing that with our customer base.
Mr. Smith. And that is the value added strength in numbers
maybe?
Mr. Nelson. Absolutely, and certainly we have--I have said
many times that we are very happy that Sir Richard Branson
stepped into this marketplace because to the public face that
was a wonderful thing. It made it acceptable to say I want to
fly to space.
Mr. Smith. Okay. My time is up, but, Mr. Whitesides, real
briefly if you can give your view of that.
Mr. Whitesides. I think on a personal basis we view each
other as brothers in arms doing historic work and obviously
once we go into commercial operation, then we will compete like
any good capitalists.
Mr. Smith. Okay. Good. Thank you, Mr. Chairman.
Chairman Palazzo. Thank you. I now recognize the gentleman
from California, Mr. Rohrabacher.
Mr. Rohrabacher. Thank you very, very much, Mr. Chairman.
Yes. That last question was really pretty interesting, Lamar.
Nobody said robber baron or bureaucrat so I am glad to hear
that those two mindsets has not dominated your industry. I
think it is fascinating that we do, your industry now is being
heralded as a potential trillion dollar, new trillion dollar
enterprise for the future. It wasn't that way back in 2004,
when we were working on the Commercial Space Act, and let me
note that informed consent was just mentioned. Getting that
principle established for this industry was a horrendous task.
I mean, this Congress went--that was an issue that almost
prevented the development of this new trillion dollar
commercial industry, and it took a lot to get our colleagues to
accept that. There were people who were skeptical about it as--
and by the way, I don't think you are skeptical. I think that
you are going to be the first one on that rocket. I know I am
not skeptical, but I wouldn't go up there on one of those
rockets. I will stay on my surfboard, thank you.
About your industry, how much of your industry is based on
technology that was developed for the American Space Program,
and how much of it is new that you are putting into this
program yourself? How much new technology is coming from your
enterprise? How much of it was based on things that the
government developed for NASA over the years?
Mr. Nelson. From an XCOR perspective the key parts of our
technology we developed ourselves, and in fact, we have relied
much more on the automotive industrial base to make the engines
fully reusable and to be able to last thousands and thousands
of rocket flights.
Mr. Rohrabacher. Uh-huh.
Mr. Nelson. Now, granted, we all stand on the shoulders of
great individuals in people and the organization of NASA, and
but some of the core key technological developments were done
internally or----
Mr. Rohrabacher. And the real things that makes this, that
makes your industry possible had actually been developed
without a direct federal subsidy. Is that correct? Or I am not
saying running the business but in terms of developing the
shape of your craft and the design and the whole concept, or am
I wrong there?
Mr. Whitesides. You are correct, sir. Certainly in our case
our technology is primarily based off the SpaceShipOne Program,
which was financed by Paul Allen and, you know, to date our
entire program has been privately funded.
Mr. Rohrabacher. So we have a tremendous new industry that
basically has emerged based on the enterprise and the
creativity of a group of profit-seeking entrepreneurs as
compared to, for example, I understand there was very little
government involvement in your enterprise, but there was a lot
of government involvement in the Volt. Wasn't--the recent car
and so we are lucky we didn't have the government having the
same kind of influence on you industry that it had on the
development of that type of automobile.
Let me ask you a little bit about suborbital space and some
of the challenges that you face. I see there is technical
challenges, which you are moving forward on. We are trying to
handle the regulatory channels, challenges now, and this is
just as big a hurdle as the technology challenges, and then the
financial and the market challenges are the things that you are
going to have to face as entrepreneurs as any other
businessmen.
But right now if we don't have the right type of regulatory
and don't continue with some of the leeway that we gave you in
the Commercial Space Act of 2004, would you say that that would
be a death blow to your industry, or would this just a setback,
or might it be positive?
Mr. Alexander. I appreciate the question. I think if we
were to have imposed today's aviation regulatory environment on
the Wright Brothers, they never would have gotten off the
ground, and that is the big fear, that we will take all the
lessons learned but take them in the wrong way and impose
strict regulations that don't take into account the changing
way of doing human spaceflight that this industry represents.
Mr. Rohrabacher. That was a very good answer. I have got a
couple seconds left, and I would just like to note that in two
hours if your industry is successful, in about two hours we can
be on the opposite side of the world. Eventually we are going
to have a system which can deliver passengers to the other side
of the world in two hours or packages. That seems to me to be
something that has tremendous potential for benefit. It also
would lead to cheaper, it may lead us to a cheaper, as you have
already mentioned, way of delivering satellites into orbit, and
I wonder if we all remember that Lindberg got a contract for
delivering the mail and eventually it helped him then as a
private operation to show, to build a plane that went across
the Atlantic.
And so there is just a great deal of exciting things that
lie ahead for your industry, and we are counting on you, but we
need you back here to make sure that we know what we need to do
so we are not in the way.
So thank you very much, Mr. Chairman.
Chairman Palazzo. You are welcome, and for the panel's
information we are going to go into a second round of
questions. Everybody is agreeable to that?
Okay. Dr. Stern, I know you have been quiet over there, so
we have got one just for you. What is the necessary price point
at which K through 12 STEM educators could begin to use SRVs in
their curriculum?
Dr. Stern. Well, that is a great question. As you know, the
primary barrier to schools using spaceflight have been the long
time it takes to fly things. A lot of things that happen in the
Shuttle Program, for example, a sixth grade class would start
it, and they would be in college by the time some other sixth
grader was carrying it out, and then the prices were so high
that it just wasn't within reach of the normal school system.
In these vehicles, however, the price points are quite low.
If you take, for example, George's company's cost of $200,000
to fly an individual. You say I want to fly a shoebox-sized
experiment, say it weighs a pound, for a class, then that ratio
of $200,000 to one pound would cost, it is about $1,000, which
is quite affordable. The school could have a car wash, a bake
sale, what have you, and afford to have the students fly
something in space, and that is really revolutionary in terms
of the access, and that is one of the reasons that educators
are so excited about this industry is because they are going to
get access to space on rapid time scales and at costs they can
afford.
Chairman Palazzo. How soon do you think we will actually
see secondary students engaging in these types of scientific
projects?
Dr. Stern. I think you will see that very shortly after the
commencement of commercial activities, but it is really up to
the individual companies to make their case to the school
systems around the country that they are open for business.
Chairman Palazzo. I mean, because it is just so important,
yes, especially kids at that age to get them excited about
science, technology, engineering, math. So hopefully they will
just embrace that dream and carry it out and make a career out
of it, which will also help us become more competitive with
some of our global competitors.
My next question is for Dr. Stern and Dr. McCandliss. How
will research universities benefit from these new vehicles, and
could we see the number of undergraduate students that fly
their own experiments grow as a result of cheaper options for
suborbital flights?
Dr. McCandliss. Yeah. The more flights you have, the more
opportunities you have. The question will become where will the
funds come from to build the instrumentation. The cost of
launch is really a small part of what it costs to develop the
scientific instrument and fly it on a launch vehicle. There are
costs associated with engineering, design, development,
testing, and then ultimately integration with payload.
So who is going to bear those costs? That is the question.
Dr. Stern. Mr. Chairman, if I might add, I think we have to
wrap our heads around a different way of doing business when we
think about suborbital. Just like mainframe computing,
spaceflight has been very rare since its inception, and just
like PC computing, it is about to become routine.
So when Steve and his colleagues and individuals in my
community typically think about spaceflight, we think about
inventing a new experiment. Well, that is not the way to think
about it in suborbital. You want to think about an individual
experiment that in an educational sense does a good job, flying
again and again and again, being handed from school to school
to school every day of the year so that you divide that cost by
365 days in the year or by many school systems all performing
the same experiment the way that we all used to do classic
physics experiments as undergraduates, and we didn't invent new
experiments. We carried out the cookbook, and in that mold
where private industry develops or universities develop
curriculum experiments that get handed from student to student
so that you don't have to reinvent the wheel, and you can take
advantage of these low price points for the launch, then we can
really see this kind of space access revolution, which I think
is upon us.
Dr. McCandliss. I think most educators would say that
cookbook experiments have their place in an educational
environment, but it is not going to advance the science.
Chairman Palazzo. I now recognize Ms. Edwards.
Ms. Edwards. Thank you, Mr. Chairman.
Mr. Nelson, in your written testimony you advocate for a
full eight years of data gathering before, and I quote,
``Unfettered regulation may begin.'' Does that mean also that
space participants would continue in this period to fly under
informed consent? Some say that is ``fly at your own risk.''
You said it. And I recognize the need for the industry to kind
of get its sea legs, and we are not anywhere near yet the level
of experience achieved in aviation, but it seems that this is a
pretty lengthy time.
What do you hope to gain and what experience do you hope to
gain over the eight years of licensed flights, and why would a
lesser time period not provide similar results?
Mr. Nelson. Thank you, Congresswoman. It is a very good
question. Between the Wright Brothers' first flight and the
introduction of the DC-3, which is recognized as the sort of
breakthrough safety vehicle, there was approximately 30 years
of experience gained with hundreds of different types of
aircraft, systems, engines, flight environments, customer
types, and businesses. We see that when you, even though
technology now expands and develops quicker, we still need a
period of time to operate and to practice and to learn. And as
we better understand how we will make these vehicles as safe as
we can and still remain economically viable, we need to take
that time.
To answer your question about after the eight-year learning
period and we start to have the beginning of a regulatory
environment and certification standards, we still want to fly
with informed, under informed consent, meaning it should
continue indefinitely as my colleague to my right mentioned.
The reason for that is is because in order to have a
statistically-significant database to go through the assured
safety ten to the minus six safety levels that are normally
associated with even general aviation, you need thousands and
thousands and thousands of flights, and it is important for us
to have that experience.
Thank you.
Ms. Edwards. Thanks. I just want to remind us all that
nobody paid to go on the Wright Brothers flights. I don't
recall that as part of the history books, and I wonder, Dr.
McCandliss, I want to go back to something that you mentioned
earlier, which is this question of whether you really do need
for, real science, and I am not talking about, not that the
high school scientists for an education purpose aren't really
great, but I am talking about our Ph.D. scientists at Johns
Hopkins and our other research institutions. The kind of
environment that you need in order to perform the science that
you could then have peer reviewed. The environment that has
been described on the vehicles that we are talking about, do
you think that that is at a, projected to be at a capacity
where you would be able to do that kind of experimentation,
developing instrumentation that is really sensitive in an
environment that also contain human payloads or human people?
Dr. McCandliss. Yeah. It will depend upon the type of
science that you are talking about. Now, for things like
physiological research to see whether or not people will be
able to keep their lunch down----
Ms. Edwards. I am talking about high, you know, sort of
really high technology instrumentation.
Dr. McCandliss. Right. For our own purposes for say NASA
science programs where we have strategic plans that we are
trying to advance and discover secrets of the universe for lack
of a better term, we require a good strong base of researchers
who are savvy and can carry out a lot of the tasks that are
associated with building instruments, which as everybody down
the line here knows is a very painful process to get everything
to work all at once. There are a lot of Frankenstein moments,
you know, where you finally have breathed life into the
instrument, and it lives, and everyone is very happy. But there
is a lot of sweat and pain that goes up to that.
Ms. Edwards. I only call our attention to it because I do
think it raises a question about how we are going to be able to
carry the passengers that want to fly and have left deposits
with what we need to do scientifically.
Dr. McCandliss. Ms. Edwards----
Ms. Edwards. And before you get there, I just wonder also
if you could clarify for the record that even though you work
with an NTSB partner who is on your site, NTSB does not
currently have any legislative, statutory authority in
commercial spaceflight. Isn't that correct?
Mr. Whitesides. To be honest, I am not an expert on this
subject, but my impression is that if there was a mess up, I
believe it has been represented to us that the NTSB would work
with AST on that investigation.
Ms. Edwards. I feel certain that the NTSB doesn't have any
current legislative authority.
Mr. Alexander. The FAA, AST and the NTSB have an MOU
jointly signed by the two parties. Whether they have statutory
authority or not, I can't speak to.
Mr. Nelson. And just a couple weeks ago they actually did
sort of an accident practice out in Mojave with NTSB local
first responders and participants from the industry as well as
the airport and fire and rescue. So I know that they are
actively engaged in the subject matter of which you speak.
Ms. Edwards. Thank you. Mr. Chairman, maybe there is some
point at which we could actually bring the NTSB in and FAA and
ask some of these questions. I mean, our witnesses, you know,
they are terrific, but they aren't in a position to answer
those questions.
Thank you.
Chairman Palazzo. I now recognize the gentleman from
California, Mr. Rohrabacher.
Mr. Rohrabacher. Thank you very much, Mr. Chairman. Let me
just note that by eliminating the burden of informed consent,
what we actually did is we eliminated the weight, the
unnecessary weight of having extra lawyers on every flight, and
that I think has made a major difference and would have made a
major difference in the Wright Brothers as well. It isn't so
much as a subsidy as it is the elimination of an unnecessary
factor, especially if you consider people should be free to
decide for their own selves if they would take risks in their
lives.
As my father was a Marine fighter pilot and guess what?
When he signed up, he knew exactly what the risks were, and he
was willing to do it, we put lawyers into the whole system of
the military because was he able to make that informed consent?
Well, of course, he was.
When we should put the regulatory regime onto your industry
as compared to other industries in the past. I would suggest
that eight years more experience in finding out what your
industry is going to be all about, we don't know right now
whether the suborbital space is going to lead to satellites
being launched or how far you are going to be able to take
passengers, whether it is going to be a ride up and a ride down
or whether it is going to be a ride to the other side of the
world. We don't know those things yet, and this is a softball
question for the panel, but wouldn't it be more dangerous to
put regulations in place right now before we have gathered all
of the statistics on the differential type of flights that you
are going to be making over this next 8 years?
That is a softball question. I am sure somebody can answer
it there.
Dr. Stern. Well, I will speak from the standpoint of the
research community, and the power of these vehicles to
transform our ability to do frontline research and to do
education, two very different things, is in the frequency of
flight. It is not that they are going somewhere new. It is that
they are going there every day. So we can go to the upper
atmosphere every day or we can, for example, look at
physiological changes and how people adapt to zero gravity with
much larger groups of people than a few select astronauts to
fly hundreds of thousands of people.
It is the frequency of flight that is key, and if the
regulatory environment hampers, impedes, or stifles that, then
we won't get the research benefits, and we probably won't have
the tourism benefits either.
Mr. Rohrabacher. Anybody else want to answer that?
Mr. Nelson. In the past I have used a hypothetical example,
and I guess I should do the research on it, but, you know, we
have wiring that runs by cryogenic tanks. In aircraft you don't
have wires that run by cryogenic tanks. If they were going to
regulate aircraft wiring on our vehicle, that could potentially
create a safety hazard.
So we would have to go through a various process to get it
waived, get it changed, et cetera, but by creating regulations
that we don't have experience around, then you perhaps create
an environment of just I just described.
Mr. Rohrabacher. I think that we should have faith in our
entrepreneurs and our frontiersmen and our explorers, at least
for a limited period of time so that they can push back the
frontier, and then we can come in when--and reach our
compromises and reach our argreements as to how much regulation
is needed to make sure our society functions as a whole.
One last question for Mr. Stern. What type of training is
necessary for researchers to fly along with their payloads into
suborbital space, and are there companies that offer this type
of training, or is it provided by the government or provided by
these companies themselves that are providing the
transportation?
Dr. Stern. Yes, sir. That is a very good question, and I
will speak from the standpoint that my firm, the Southwest
Research Institute, has already invested our own money to
purchase nine spaceflight tickets on XCOR and Virgin Galactic
for the purpose of research missions, early research missions
not paid for by the government but from our own funds. So we
are already in the process of doing that. I am the principle
investigator of that program and therefore, going through our
training process.
The training falls into three categories. The first is to
understand how to operate your own scientific gear, just as you
would on a sounding rocket flight, which I did many times after
peer review. The second is the same kind of training that the
space tourists take just to be familiar with the environments
and the cabin and the vehicles themselves, and the third kind,
which I think is unique to the research community, is really to
make sure that you are going to be effective in a short period
of time. Time management, distraction management, et cetera.
Earlier, Ms. Johnson asked a question, excuse me, Ms.
Edwards asked a question about the efficacy of research
flights, of research being done on tourist flights, and I am
sure that is going to happen in the early days, but I think
that we are going to see a real market differentiation. In
fact, we already worked with Virgin Galactic to buy the first
charter flight, which is all researchers, and I think that that
is where you will see, just like cargo doesn't fly in the
cabins with people, there are cargo flights, and there are
passenger flights. You will see the development of research
birds and specific research flights where everybody is down to
business, and that will be separate from honeymooners or what
have you and the tourist line that are going for a peak
experience.
Mr. Rohrabacher. Mr. Chairman, I would like to thank you
for holding this hearing. This issue and this new industry is
key to prosperity, it is key to national--and I would suggest
that while they are working to make a buck and develop this new
type of enterprise, it will have tremendous applications that
will make our country safer. We will see a technology transfer
from a private company into the defense arena rather than the
other way around, and so we wish then Godspeed and lots of
success.
Thank you, Mr. Chair.
Chairman Palazzo. Yes. Thank you, Mr. Rohrabacher, and I
guess we need to start talking about how soon we have to put
our Kodell request in for the most successful company with the
best safety record.
I do want to thank today's witnesses for their valuable
testimony and the Members for their questions. The Members of
the Subcommittee may have additional questions for the
witnesses, and we will ask you to respond to those in writing.
The record will remain open for two weeks for additional
comments and statements from Members.
The witnesses are excused, and this hearing is adjourned.
[Whereupon, at 3:47 p.m., the Subcommittee was adjourned.]
Appendix I
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Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Ms. Carissa Christensen
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Responses by Dr. Alan Stern
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Responses by Mr. George Whitesides
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Responses by Mr. Bretton Alexander
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Responses by Mr. Andrew Nelson
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Responses by Dr. Stephan R. McCandliss
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