Why SpaceX's Falcon 9 isn't the world changer you expect

Elon Musk's upright landing rocket could made a difference, but don't expect the space economy to blast off as a result.

by Adam Gale
Last Updated: 25 Apr 2016

Say what you want about the space industry, but at least it dreams big. Even the language we’ve derived from space travel – moonshots, lifting off, blasting off, stratospheric, going into orbit – alludes to a scale and grandeur greater than the merely terrestrial. It promises vast wealth and the chance to change the world, which is why billionaires Elon Musk, Jeff Bezos and Richard Branson have all poured much of their personal fortunes into space businesses.  

In the battle for hype, Musk wins hands down. His company, SpaceX, has built a solid business supplying the International Space Station (ISS) for NASA, while Bezos’ Blue Origin and Branson’s Virgin Galactic remain firmly on the ground, catering for the as-yet non-existent space tourism sector.

The hype may just be justified, of course. SpaceX had a much-paraded breakthrough recently when its Falcon 9 vehicle landed upright on a drone ship, bringing it one step closer to the holy grail of space travel: reusable rockets. Could this be enough to transform the $330bn (£233bn) space industry and turn Musk’s ‘other company’ into the next Google?

The holy grail of space

Consider the implications of reusable rockets for a moment. At the cheaper end of the market, a SpaceX launch currently costs the princely sum of around $62m. Why? Because each rocket is used only once. If planes were disposable, then air travel would be the preserve of billionaires too. Yet Musk is not alone in the space community in believing that reusable space vehicles could reduce the cost of a launch by as much as hundred times.   

‘When you start to change the price to that degree, you then start to release this latent demand for launches,’ explains Greg Sadlier, head of aerospace at London Economics. ‘You will then stimulate a new space age of exploration and smaller scale, higher volume space missions.’

Cost wouldn't be the only driver, either. Reusable space vehicles would also bring much needed reliability, says Gerry Webb, general-director of launch broker and consultancy Commercial Space Technologies.

‘If you get back any stage you can reassess it. Over the years, aircraft reliability gradually went up and up, and that’s what will happen once recoverability is built into space launchers,’ Webb says. Combined with the price drop, ‘that would ultimately change the business to an even greater extent than introducing the jet engine changed the air business.’

The possibilities opened up by such a change are vast. Ubiquitous satellite broadband could connect the ‘next five billion’, who as yet don’t have internet access (thus sadly doing away with the need for Google’s internet balloons or the Facebook plane). A thriving space hotel business, meanwhile, could arise for the well-heeled who’ve tired of St Tropez and safaris.

More meaningfully, perhaps, mines on the moon or on near-earth asteroids could bring in a new age of abundance - and make some people an awful lot of money in the process. ‘We’re going to see the first trillionaires in space,’ entrepreneur Peter Diamandis famously said.

A technical hitch

It’s easy to see why there’s such excitement about Falcon 9 and reusable rockets then. Except, of course, Falcon 9 isn’t really a reusable rocket. It’s still a two-stage launcher designed to deliver SpaceX's Dragon craft into space, and only one stage is designed to be recoverable (rather like the space shuttle, only commercial) – something that Sadlier says would reduce costs by around 30%, not 99%. ‘It’s an amazing innovation, but it’s kind of a baby step.’

Baby step – not a term you’d normally associate with Musk. The entrepreneur has an uncanny ability to generate excitement about his businesses, matched only perhaps by the late Steve Jobs. Yet while Tesla is actually making serious inroads in the automotive market, it’s harder to justify the hype around SpaceX.

It may seem special (along with Blue Origin and Virgin Galactic, it’s probably the only space business most people have heard of), but if you dig a little deeper it quickly comes down to Earth a touch. ‘Without the ISS and NASA’s Kennedy Space Centre, SpaceX would have no business,’ explains Linda Billings, space consultant and former editor of Space Business News. ‘SpaceX got started with grants and other subsidies from NASA and now does business as a government contractor. There’s nothing revolutionary about that.’

In fact, in 2014 SpaceX was only NASA’s 6th biggest contractor, taking in $573m – or 3.7% of NASA’s budget, far behind CalTech, Lockheed Martin, Boeing and Orbital Sciences. Even the recoverability of Falcon 9 isn’t that groundbreaking. Aside from Blue Origin’s New Shepard, which landed after a space launch in November, the Russians are also well on the way to developing recoverable modules for their Angara rocket.

Playing the long game

Musk is not trying to reach for the stars in one dramatic flourish, of course. Much as with Tesla, the plan appears to be to build a viable commercial business with existing tech, then use that to develop more revolutionary technology so that the next generation of rockets can be completely reusable. In that sense, it’s on track, but it’s not exactly unique – and the hype so far exceeds the reality, impressive though that is.

In a way, though, that could be its greatest strength. Musk creates hype because he understands how to make previously uncommercial technology both desirable and cost-effective. The result is that the excitement around SpaceX will always be higher than that around, say, launch market leader Arianespace (a European consortium led by Airbus), just as the excitement around Tesla will always be greater than that around GM’s latest electric car.

And that excitement will continue to translate into funding from private investors (it’s taken at least $1.2bn so far, including $1bn from Fidelity and Google last year) or, indeed, public investors if and when the firm undergoes an IPO.

Having access to funding doesn’t mean SpaceX will change the world, of course. Indeed, not everyone is convinced that any of the space players are going to revolutionise 21st century life. ‘Since I entered the space business in 1983, I’ve been hearing claims about big money to be made in space tourism, the space launch business, space mining, space manufacturing,’ says Billings, who served on the US National Commision on Space under Ronald Reagan. ‘The longer I’ve been listening the more sceptical I’ve become about the more extreme of these claims.’

Others remain optimistic, whether about the likes of Falcon 9 or indeed about Reaction Engine’s Skylon space plane, a revolutionary British technology that delights enthusiasts but never seems to have enough funding for a prototype. As with any other futuristic technology, we’re just going to have to wait and see.

‘The great paradox of space is that it’s incredibly high tech and futuristic, but actually moves quite slowly in terms of our expectations,’ concludes Sadlier. ‘But we need to believe. You need long term dreamers, especially dreamers with enough capital behind them to make stuff happen... because without long term planning, nothing will happen.’ 

Keep watching the skies then - just don't expect anything too dramatic to happen any time soon. 

This article has been amended. It originally stated the Falcon 9 was a three-stage rocket rather than a two-stage rocket.

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