The space race is back. But this time it's not a battle between the USA and the USSR but rather a race between private companies to become the coolest brand in space travel.
On Friday, Richard Branson's Virgin Galactic auctioned off the chance to sit with "The Great Gatsby" actor Leonardo DiCaprio aboard a space flight. The winning bidder paid $1.5 million for a seat on the spacecraft that has yet to make its first commercial flight.
Virgin Galactic plans to start commercial flights later this year or early next year. Branson will be among the firm's first commercial travelers to lower Earth orbit.
Virgin Galactic might have the eccentric billionaire behind it and Virgin's brand, which has been successful in the music, aviation and other industries, but it isn't the only company looking towards the final frontier.
"We wouldn't be as creative on branding if Virgin wasn't in the market," XCOR Aerospace's Chief Operating Officer Andrew Nelson said at last week's Space Tech Conference.
Earlier this year Unilever (UN) bought 22 flights on XCOR's Lynx spacecraft for its Axe Apollo brand body spray promotion.
According to Nelson, XCOR and Virgin have about 100 customers that plan to fly on both vehicles, because each ride offers slightly different experiences. XCOR's Lynx craft seats two — the pilot and passenger — giving customers a cockpit view of space. Virgin's aircraft seats eight, two pilots and six passengers.
Both companies may be competitors for investment and corporate partnerships but they applaud each other's success, as it helps make commercial lower Earth space flight a reality.
Tesla Motors' (TSLA) Elon Musk is revolutionizing electric cars. Another of his firms, SpaceX is revolutionizing space flight with last year's successful launch of its Dragon capsule to the International Space Station. SpaceX isn't geared toward tourism but is focused on taking the mantle from NASA for resupplying the ISS. SpaceX, which has a multibillion-dollar contract with NASA, has paved the way for other companies to receive funding.
Nelson believes that in four to five years low Earth orbital space flight could be a $2 billion to $3 billion per year industry. XCOR, which currently charges $90,000 per flight, expects that to drop to $50,000 to $60,000 in the next 10 to 15 years.
"We want to provide lower cost access to space," Nelson said. "It's kind of like the Internet, who knows what people will do with it. Space will become a place where commerce is done.
New applications for space flight are constantly being discovered. Nelson gives the example that crystals used in oncology grow bigger in microgravity conditions. Cargo on the space craft could include various types of scientific projects.
He believes customers could range from businessmen looking for fast point-to-point travel, researchers, or thrill seekers looking for excitement. Countries like South Korea have been vocal about their desire to have a space program, without building up infrastructure, and trips on XCOR or Virgin could give them that opportunity.
XCOR is currently raising money as part of a Series B venture investment round. Nelson thinks XCOR could be the third company to go public, after SpaceX and Virgin Galactic. No one has filed to become public yet.
Virgin is taking a different approach to customers and investments. The company is more focused on high net worth individuals as its target audience. Companies are backing the brand and investments are flowing in. Aabar Investments, a wealth management firm from Abu Dhabi, has invested a total of $390 million for a 38% stake in Virgin Galactic.
"They invested in (Virgin Galactic) partly because it's exciting but also because they think it will make money," Will Pomerantz, VP of special projects at Virgin Galactic, told IBD at the conference.
Other major players in the developing space race include Orbital Sciences (ORB), which manufactures satellites and rockets for the defense industry and NASA, and Boeing (BA), which has worked with NASA since the beginning of space exploration with its Gemini, Mercury, Apollo and Skylab projects.
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