- Parabolic Arc
- November 29, 2023
Suborbinomics: The Astronomical Cost of Getting From Point A to Point A
by Douglas Messier
Resplendent in a blue Virgin Galactic flight suit, Richard Branson was in an exuberant mood as he sat at the New York Stock Exchange doing a TV interview on Oct. 28, 2019. His space tourism company had just gone public in a $774 million merger with billionaire Chamath Palihapitiya’s Social Capital Hedosophia special purpose acquisition company.
Virgin Galactic now had an estimated market value of more than $2.2 billion despite never having flown a single passenger or earned any serious revenue in 15 years. Virgin Galactic would have $450 million to complete its flight test program and begin commercial flights — if the company’s Securities and Exchange Commission filings were to be believed — in June 2020. Branson and the Mubadala Investment Company, an Abu Dhabi government sovereign wealth fund, would divide up $274 million to offset about $1 billion in investment made thus far.
The interviewer questioned whether the enormous price of a ticket on Virgin Galactic’s SpaceShipTwo suborbital rocket plane would result in a relatively small customer base for a company.
“The $250,000 is about the same price it cost people to cross the Atlantic 100 years ago,” Branson replied. “It always happens in any industry the rich people help pay for the initial cost of the project, and then in the years to come airlines like Virgin Atlantic are set up and the price comes down and down and down.”
It was a clever riposte that the interviewer had no time to fact check. As misdirection, it worked perfectly; the conversation moved on. As history…not so much. It probably rated a D minus.
Not that the price comparison lasted very long. Eight months after the interview, Virgin Galactic nearly doubled the price of a seat on SpaceShipTwo to $450,000. It was the second time the company raised the ticket price; it rose from $200,000 to $250,000 in 2013.
As usual, the prediction that commercial service would start in June 2020 from Spaceport America in New Mexico’s Jornada del Muerto desert turned out to be yet another mirage in a long history of them. (Passenger flights have always been six or 12 or 18 months away — the numbers have varied, the outcomes haven’t.) The latest estimate is mid-2023.
So, how much did transatlantic travel cost a century ago? And how valid was the comparison? Let’s find out.
In a Class All By Itself
In a way, Branson was right about the $250,000 price of crossing the Atlantic. Actually, he was about 1 percent right, which was the portion of the population that could afford to travel at that price. In other words, the Richard Bransons of the early 20th century who back then were millionaires, not billionaires.
It was much less costly for the other 99 percent of travelers. Further, the wealthy were not the ones driving down prices a century ago. The economics of suborbital space travel being pursued by Branson’s Virgin Galactic and Jeff Bezos’ Blue Origin today are significantly different those that governed transatlantic travel 100 years ago.
Airplanes didn’t fly across the Atlantic in 1919; steamships were the only way to travel. Much like Branson’s Virgin airlines today, the companies divided their passengers by class. Travelers in the second and third classes paid far less for their tickets, but they crossed in much larger numbers. And they cost the steamship companies far less to feed and attend to than the wealthy passengers.
It is difficult to find good numbers for what transatlantic tickets cost in 1919. However, due to the tragic sinking of the RMS Titanic in April 1912, there are detailed prices for what the White Star Line was charging for passage across the Atlantic seven years earlier. Prices for Titanic‘s two Olympic-class sister ships, RMS Olympic and RMS Britannic, would have been similar.
Olympic Class Ticket Prices
|Price||Price||CPI Adjusted Price|
|First Class Suite||£870||$4,350||$131,464|
|First Class Berth||£30||$150||$4,533|
|Third Class||£3 to £8||$40||$1,209|
The U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) was used to calculate what a ticket on these ships would cost today. The index only goes back to January 1913. If we assume that White Star line ticket prices for Titanic‘s sister ships remained the same at that point, we can approximate the cost in current dollars.
A round-trip ticket in a first-class suite would have cost the equivalent of $262,928. An enormous sum of money similar to the $250,000 figure Branson mentioned in 2019, but far less than Virgin Galactic’s $450,000 ticket price today. That money would have paid for the most luxurious accommodations on the seas for a round-trip voyage lasting about two weeks. The Olympic-class ships were built like floating five-star hotels for first-class passengers.
Virgin Galactic’s ticket price covers three days of training followed by a suborbital flight that lasts about two hours on the fourth day.
A trip to space aboard Blue Origin’s New Shepard takes 11 minutes from liftoff to landing after a couple of days of training. Company officials have never revealed what their tickets cost. Blue Origin auctioned off a ticket on its maiden crewed flight with Jeff Bezos for $28 million. Other customers are reportedly to have paid much less.
The Immigrant Trade
So far, we’ve been talking about the uber rich. The vast majority of trans-Atlantic passengers of a century ago paid far less than the millionaires of the day. A one-way third-class ticket to America would cost $40, or $1,209 today. That was not cheap, but it wasn’t bad for a week-long transatlantic journey.
These passengers were much more important for the steamship companies’ bottom lines than the wealthy ones. Historian Daniel Allen Butler, the author of two books about the Titanic tragedy, points out the ocean liners of the day made less money from rich people in first class than the immigrants housed in the belly of the ships.
Until the advent of air travel in the mid 20th Century, the only way to cross the Atlantic Ocean was by steamship, and it was an immensely profitable industry. Not only did businessmen have to travel back and forth between Europe and North America, but the rising tide of westward-bound immigrants represented an unprecedented source of income: by 1900 most of the operating revenue for these ships came from the fares paid by their immigrant passengers.
Wealthy and titled passengers in First Class were nice to have, but the men and women in Third Class were the steamship lines’ bread-and-butter. Hence, competition for that immigrant trade was fierce, particularly among the German and British lines. The advertising value of having the biggest, most luxurious, or fastest ship on the North Atlantic was a powerful draw to potential travelers.
Keeping costs down was the key to profits given the lengths of the voyages. As with air travel today, passengers in first class received better and greater quantities of food, drinks, amenities and attention than those in second and third class. On steamships, the increased attention meant hiring more crew members to attend to first-class travelers’ every need.
Carrying passengers was not the only source of income for steamships. The Olympic-class vessels were Royal Mail Ships that took letters and packages across the ocean. Their holds were also filled with cargo being shipped between Europe and America.
During the 1910’s and 1920’s, the United States passed a series of increasingly restrictive immigration laws culminating with the Immigration Act of 1924 that sharply reduced the number of people coming to America.
Arrivals at the Ellis Island immigration station dropped from 357,803 in 1924 to 164,667 the following year. The Great Depression that began in 1929 and the outbreak of World War II a decade later helped to keep immigration totals low.
Steamship lines adjusted to this new reality by focusing more on the leisure travel market. Meanwhile, competition began to develop in the skies during the 1920’s and 1930’s.
The Coming of Age of Air Travel
Germany’s Graf Zeppelin was launched on Sept. 18, 1928. Three weeks later, the giant airship conducted its first commercial passenger flight from Friedrichshafen, Germany to Lakehurst Naval Air Station in New Jersey. The trip took four days, 15 hours and 44 minutes and carried 40 crew members and 20 passengers.
On Aug. 7, 1929, the Graf Zeppelin left Lakehurst on an unprecedented around-the-world voyage. It arrived back at the New Jersey naval base 22 days later after a flight that covered 32,790 km (20,375 miles). Commander Hugo Eckener and his crew were given a ticker tape parade in New York City.
Passengers paid $3,000 for the privilege of spending three weeks flying around the world. That was the equivalent of $51,359 today — a hefty sum during the Depression, but about one-ninth the cost of a ticket on Virgin Galactic’s SpaceShipTwo.
The Graf Zeppelin spent much of its operating history making commercial flights across the Atlantic Ocean. In June 1934, a one-way ticket from Germany to Brazil cost $590, or the equivalent of $13,040 today.
Hindenberg Ticket Prices
|Year||One-way Price||CPI Adjusted Price|
|Round-trip Price||CPI Adjusted Price|
In 1936, the Graf Zeppelin was joined on its North and South American routes by the Hindenburg. The table above shows the prices for trips between Germany and Lakehurst aboard the latter.
The Zeppelins catered to ultra rich passengers who were attracted to the ships’ luxuries, fast speeds and stable flight high above the turbulent waters of the Atlantic Ocean. They were willing to pay premium prices above those charged by steamship companies.
A first-class ticket between Germany and New York City aboard the top German ocean liners Bremen and Europa cost less than a voyage on the Hindenberg. First class cost $262 one way and $511 round trip in summer 1936. That would be the equivalent of $5,626 and $10,972 today, respectively. Tourist and third class passengers paid far less.
Zeppelins really didn’t pose that much of a threat to ocean liners. Germany only had two of them, with two more under construction. And despite their enormous size, they couldn’t carry very many passengers.
Bremen & Europa Steamship Service
New York to Germany
|Accommodation||One-way Price||CPI Adjusted Price|
|Round-trip Price||CPI Adjusted Price|
|Third Class (East bound)||$106.50||$2,287||$185.50||$3,983|
|Third Class (West bound)||$111.50||$2,394||$185.50||$3,983|
The Graf Zeppelin had a crew of 36 with room for 20 paying customers. The Hindenburg carried up to 50 passengers in 1936, which was expanded to 70 the following year. The RMS Queen Mary, launched in 1934, could carry 2,038 passengers across the Atlantic.
The age of the giant airship for passenger travel came to an abrupt and tragic end at Lakehurst on May 6, 1937. Thirty-six people died as the Hindenburg exploded in flames just short of the mooring mast. Sixty-two people aboard the ship survived the inferno.
The Graf Zeppelin was retired the following month and subsequently scrapped; its aluminum was used to build airplanes. A second Hindenburg-class airship named the Graf Zeppelin II flew 30 times in 1938-39 without carrying a single paying passenger before it was scrapped. The third Hindenburg-class airship was never completed.
The rigid airships never served more than a niche market. Today, they are a historical curiosity, a footnote in the history of aviation. All attempts to revive them since the Hindenberg‘s fatal flight have failed.
The Airplane Emerges
On June 28, 1939, the Pan Am Dixie Clipper flying boat made its first transatlantic trip from Port Washington, N.Y. to Europe. Twenty-two passengers were aboard for a journey that took them to Horton in the Azores and then onto Lisbon, Portugal and finally Marseilles, France. Eleven days later on July 8, Pan Am’s Yankee Clipper flying boat carried 17 passengers from New York to England.
Pan Am Flying Boat Ticket Prices
|One-way Price||CPI Adjusted Price|
|Round-trip Price||CPI Adjusted Price|
|San Francisco to Hong Kong||$760||$16,319||$1,368||$29,373|
Ticket prices for transatlantic service were actually lower than what passengers had paid to fly on the Hindenberg three years earlier. They were significantly costlier than a first-class ticket on the Bremen or Europa. None of the prices came remotely close to the $250,000 that Branson claimed people paid to cross the ocean when airplane service started. The airlines couldn’t charge that much because travelers had other options.
Like the Zeppelins, the Pan Am Clippers carried few people in comparison with ocean liners and catered to a wealthy elite in the midst of the Great Depression. With a 3,500-mile range, aircraft few with 11 crew members, up to 74 passengers (36 for nighttime flights), and up to 10,000 lbs (4,536 kg) of cargo.
Only 12 Boeing 314 Clipper aircraft were built. They didn’t threaten ocean liners. But, it was a start of a transportation revolution that would eventually render transatlantic steamships obsolete.
Airplanes had a couple of key advantages. One was speed. And unlike steamships, Zeppelins and spaceships, they could be rolled off assembly lines quickly and in large numbers in passenger and cargo variants to serve multiple markets.
The numbers for one of the most successful airplanes of the era, the Douglas DC-3, are staggering: more than 16,000 were produced, including 607 civilian transports and 10,048 military C-47 and C-53 derivatives. The company also licensed the DC-3 for production in the Soviet Union and Japan, where more than 5,400 aircraft were manufactured. Popular Mechanics reported that more than 300 aircraft were still flying as of March 2021.
The large production runs allowed Douglas Aircraft to lower unit pricing by spreading development and production costs over thousands of aircraft. Compare that to the Olympic-class ocean liners and Hindenburg-class airships, which were built in groups of three each.
Or compare it to Virgin Galactic’s spacecraft. The company started out in 2004 expecting to spend $108 million developing a fleet of SpaceShipTwos and WhiteKnightTwos that would begin flying passengers in 2007-2008. Instead, Virgin Galactic has spent 18 years and more than $2 billion to produce one mothership and three spacecraft, one of which was destroyed during a flight test in 2014.
The lengthy delays and massive cost overruns have contributed significantly to the rise in ticket prices. There are significant questions about whether Virgin Galactic can ever recoup the cost of the investment.
Blue Origin has never revealed how much the company has spent on New Shepard. But, it might well be a similar amount. Technology developed and experienced gained during the suborbital program is being used for the company’s New Glenn orbital booster.
Much of the demand for DC-3’s resulted from World War II. By the time the war ended in 1945, aviation had been transformed through massive government spending that produced much larger and more capable planes and the first jet-powered aircraft.
That global conflagration, and the Cold War that followed, laid the ground work for the revolutionary passenger jets of the 1950’s and 1960’s. The de Havilland Comet, Boeing 707, Douglas DC-8 and the aircraft that followed shrunk the world and transformed global transportation as prices came down and more people traveled. The era of transatlantic ocean liners gradually came to an end.
The Astronomical Cost of Going From Point A to Point A
The history of transportation has involved a series of technological innovations that have produced ever larger and more capable vehicles that could travel at increasing speeds. In the 19th century, trains and steam-powered ships replaced horse-drawn carriages and sailing ships. Cars and trucks were developed along with the ground infrastructure needed to support them. Airplanes replaced steamships on oceanic and long-distance overland routes. Existing forms of transport adapted to the changes or, like the German Zeppelins, died out.
Suborbital space travel as it exists today doesn’t fit into that historical pattern. The vehicles are not an improvement on existing boosters that launch satellites into orbit. The time spent in space is brief. They have limited payload capacity. Planes, trains and cargo ships serve massive markets for getting people and goods from one place to another. Suborbital flights don’t really go anywhere. They take people from Point A to Point A.
SpaceShipTwo takes off from and lands on the same runway. It has room for only two pilots and four passengers or a load of experiments for several minutes of weightlessness. Later spacecraft will have six passenger seats.
Blue Origin’s New Shepard goes up and down in an 11-minute flight; the booster and capsule land not far from the launch pad. The spacecraft can carry six passengers or a load of experiments. There are no pilots aboard.
Going from Point A back to Point A severely restricts the markets the companies can tap. The main experience these companies are selling is the rocket ride itself and the ability to float for a handful of precious minutes.
Researchers have used New Shepard and SpaceShipTwo to conduct scientific experiments and test new technologies in microgravity conditions. The flights are particularly useful for tweaking payloads before they are sent for long-term stays aboard the International Space Station.
NASA has also announced plans to use these New Shepard and SpaceShipTwo to train its astronauts for spaceflight.
Entertainment and marketing are also markets for these vehicles. It is easy to envision TV programs filming segments, artists shooting music videos, and companies filming commercials in microgravity.
These market segments can bring in significant revenues, but whether they will be enough for companies to be profitable remains to be seen. Virgin Galactic has said that it wants to eventually reduce ticket prices from $450,000 to $50,000, which would greatly increase the number of potential customers. That would require volume: lots of spacecraft safely flying many times.
Virgin Galactic has set the goal of 400 SpaceShipTwo flights annually from Spaceport America in New Mexico. The company would need a fleet of eight spacecraft flying an average of once every seven days with two weeks down for maintenance to reach that launch cadence. Virgin Galactic also wants to establish a network of spaceports around the world capable of hosting similar numbers of flights.
Whether SpaceShipTwos are capable of safely flying that often is an open question. Months have passed between flight tests. One vehicle crashed during a flight test, killing its co-pilot and leaving the pilot hospitalized with serious injuries. Pushing a fleet of ships to meet flight and revenue projections could lead to another bad day, this time with wealthy passengers aboard.
Similar questions apply to Blue Origin’s launch system. The recent in-flight abort of a New Shepard science flight drove home the point that is rocket science. A certain percentage of rocket flights fail catastrophically. The capsule was saved by an escape rocket; if there had been passengers aboard, they would have been shaken up but would have survived.
And therein lies another difference from point to point travel. Nobody needs to go on a suborbital flight. It’s an expensive leisure travel activity. Customers will stay away if the industry develops a reputation as being unsafe. They will put their money into other high-end travel activities.
Suborbital space travel is also unregulated. There are no mandatory safety regulations to protect either passengers or crew members. Customers must sign away almost all their rights to sue before they fly.
A Niche in Time?
Suborbital flights are the cosmic equivalent of taking a tourist boat ride around San Francisco Bay. You sail around Alcatraz, past the San Francisco sky and up to the Golden Gate as the boat’s loud speakers tells you about the history of the region. It’s an enjoyable time, but an hour later you are right back where you started. And you haven’t done much more than take a bunch of pictures.
Suborbital spaceflight is a lot more exciting than that. Its main benefit is to open up space to a much larger group of travelers. Suborbital flights are much cheaper than the tens of millions of dollars that people are paying to fly into orbit aboard SpaceX’s Crew Dragon or Russia’s Soyuz spacecraft. And much easier than meeting the strict astronaut requirements of the world’s space agency and spending years training for a mission.
The question is whether the current generation of suborbital vehicles will have staying power. Or will they be rendered obsolete like the Zeppelins of the last century by their own technological limitations and a potentially revolutionary form of space transportation, SpaceX’s Starship/Super Heavy rocket system?
If Elon Musk is correct in his calculations, the system could radically bring down the cost of launching people and cargo into Earth orbit. The vehicles would make space travel as safe, routine and affordable as air travel is today. Musk also wants to use the system to inaugurate suborbital flights that would carry passengers between distant points on Earth in less than an hour. SpaceX plans to build the rockets in large numbers to spread out the cost of development and operations.
If Musk succeeds, it could significantly reduce the market shares of Blue Origin and Virgin Galactic as potential customers shift their spending to SpaceX flights that would give them much more time in space at the same or even lower prices. Suborbital vehicles might end up occupying a niche in time, like the rigid airships of the last century.
Whether all this will happens remains to be seen. But, if the history of transportation has taught us anything, it’s to expect the unexpected. Time will tell.
Parabolic Arc did a five-part series that looked at selected human flight from the turn of the 20th century through the present day. The link to part 1 is below.