Virgin Galactic’s Ban on Selling Tickets to Chinese Citizens

SpaceShipTwo ignites its engines on the third powered flight. (Credit: Virgin Galactic)
SpaceShipTwo ignites its engine above Koehn Lake on its third powered flight. (Credit: Virgin Galactic)

It was a great story while it lasted, one full of spies, technological espionage, Cold War-style fears, and super power rivalry. And then the story turned into something far stranger.

The news broke two weeks ago that Virgin Galactic is turning away would-be space tourists from China. The reason: strict U.S. export restrictions known as ITAR that are designed to prevent the transfer of sensitive technologies to hostile foreign nations. Visions of Chinese spies signing up for flights and stealing the secrets to this new technology filled numerous news stories in the week that followed.

There was only one problem: the story appears to be only half true.

Here’s how Virgin Galactic explained its China policy in a statement to Space News:

In a separate statement emailed to SpaceNews Jan. 31, Virgin Galactic said its flight hardware is controlled by U.S. State Department export regulations but that the passenger experience falls under a special category that is administered by the Department of Commerce.

“Virgin Galactic adheres to both the spirit and the letter of U.S. export controls and has for now chosen not to accept deposits from countries subject to U.S. export and other regulatory restrictions. The U.S. government is giving focused attention to these and related issues, and as those considerations continue, Virgin Galactic may adapt its policies in consultation with appropriate regulators, legislators and other stakeholders.”

So, Virgin Galactic is adhering strictly to the law’s letter and spirit, which seems to prohibit such sales. Or so the statement implies. However, its policy could change in the future as matters evolve.

But, is that really what the law says? Space News did a bit more digging and discovered that the U.S. government had already given focused attention to this issue, and it had come to a decision two years ago.

The State Department in January 2012 ruled that Virgin Galactic could fly non-U.S. citizens, with some exceptions, to the edge of space without obtaining an export license, said attorney Mike Gold, head of Washington operations for Bigelow Aerospace, the North Las Vegas company working on inflatable space habitats for commercial use.

“I can’t speak for Virgin Galactic, but publicly available information regarding the status of their passenger experience shows it was determined to fall under the Export Administration Regulation 99 category, which according to the Department of State’s website allows for Chinese customers,” Gold said.

If anyone would know if the State Department’s ruling has changed or there is  a conflict with Commerce Department regulations, Gold would. He’s extremely knowledgeable about the regulatory environment in DC because his own company is impacted by it. He’s also connected to policymakers, serving as chairman of the FAA’s Commercial Space Transportation Advisory Committee.

Now, could Virgin Galactic be right? Maybe. Could it have reasons of its own to not want Chinese citizens getting a close look at its systems? Possibly. But, it did not mention any such concerns and instead holds government policy responsible.

Then there’s the timing of the story. The news broke in Asia over the weekend of Jan. 25-26, and then quickly spread around the world in  the week that followed. By Friday, Alan Boyle at NBC News — whose parent company, NBCUniversal, has established a media partnership with Virgin Galactic — had written a story repeating the company’s claim that U.S. export controls led to the ban.

So, the question is: Why did this story suddenly become major news when it did?

branson_behind_the_maskIt so happened that Tom Bower’s new biography of Richard Branson, titled “Branson: Behind the Mask,” began serialization on Jan. 26 in The Sunday Times.  The book was published the following day in the United Kingdom.

The first excerpt from the highly critical book concerned the troubled development history of Virgin Galactic’s SpaceShipTwo. One of Bower’s main claims the company still lacks an engine capable of getting SpaceShipTwo with two pilots and six passengers above 100 km (62 miles), which is the internationally recognized boundary of space. The book also raises concerns about the safety of the propulsion system.

Virgin Galactic has denied Bower’s claims that it doesn’t have an engine for SpaceShipTwo, pointing to three powered flights and a video the company released late last year of a full-power, full-duration ground test. However, it hasn’t directly addressed the claim that the ship can’t get to 100 km (62 miles).

Now, was it just a coincidence that the story about the ban on Chinese citizens surfaced just as Bower’s book was being published? Or was it an act of misdirection designed to distract attention away from the serious charges contained in the new biography?

My guess is the latter. The timing just seems too coincidental. Whatever the case, the result was the same. Google searches conducted during that week showed that stories about Bower’s book competed with those about the ban on sales to Chinese nationals. Intended or not, the story certainly distracted the media.

And this fits a pattern. Bower’s previous biography of Branson highlighted many occasions on which the British billionaire successfully changed the subject and successfully distracted the public and media from serious problems in his business empire.

That pattern has been seen throughout the development of SpaceShipTwo. Virgin Galactic and Scaled Composites rolled out the WhiteKnightTwo mothership one year and a day following a July 2007 accident that claimed the lives of three Scaled Composites workers.

WhiteKnightTwo wasn’t remotely ready to fly at that time. Flight tests did not begin for another five months. But, the festivities– which included a carefully selected group of reporters — showed forward progress and largely drowned out most questions about the accident, the investigation into it, and the safety of the engine.

The gathering of 300 future spaceflight participants in Mojave last September came just days prior to the ninth anniversary of Branson announcing the SpaceShipTwo program. Instead of questions about the slow progress and engine problems, media outlets were filled with many positive reports and Branson’s optimistic predictions of spaceflight being only a few months away.

Ironically, selling tickets is actually the least of Virgin Galactic’s problems right now. The company has already sold more than 650 reservations worldwide. Some people have been waiting nine years to fly. To date, SpaceShipTwo hasn’t flown anywhere near space in its three powered flight tests.

If Bower is correct, Virgin Galactic can’t do what it’s been promising to do for nearly a decade for the customers to whom it has already sold tickets. Yet, many in the media have focused on its decision not to add Chinese nationals to the waiting list. NBC News, for example, has ignored Bower’s book for two weeks.

One wonders how long Virgin Galactic’s ban on Chinese ticket sales will last. There are a lot of very rich people in that emerging superpower. And Virgin Galactic’s main rival, Space Expedition Corporation (SXC), established an office in Hong Kong last year to market rides on XCOR’s Lynx suborbital spacecraft.

The prospect of ceding the Chinese market to SXC must be a galling one to Branson, who told Wired magazine last year that his space tourism venture has no competition and that everyone else in the field is five years behind. If Lynx test flights begin later this year as planned, that boast will suddenly look rather hollow.

So, it would not be surprising if Virgin Galactic quietly lifts the ban at some point in the near future after consultations “with appropriate regulators, legislators and other stakeholders.” I would then expect the Virgin publicity machine to go into overdrive publicizing the company’s success in China as it battles SXC for supremacy there.