It’s Starting to Make Sense

I had never quite understood how Virgin Galactic plans to make money flying rich guys into space from the booming metropolis of Upham, New Mexico, conveniently located east of Truth or Consequences. Today, Virgin Galactic CEO George Whitesides and the company’s senior project manager, Mark Butler, came by to argue for passage of a State Senate bill that will limit the ability of passengers to sue manufacturers and suppliers involved with the project. Virgin Galactic is an operator, not a manufacturer, and it got liability limitations through a law enacted in 2010.

The Journal will have a story about that issue on Wednesday’s business page.

Meanwhile, Whitesides and Butler began to describe what is happening in Upham. Their business finally started to make a little sense to me.

What we know is that perhaps two years from now people willing to pay $500,000 each can climb into a six-passenger space vehicle that will give them a ride lasting, perhaps, two hours. It will take an hour or more for a specially designed but conventionally powered airplane to get the spacecraft to about 52,000 feet. The plane will drop the spacecraft, and about two seconds later a rocket will fire for a little more than a minute, propelling the craft out of earth’s atmosphere. It will linger in zero-gravity for about five minutes, then come back down. About 30 minutes later, the six passengers will be back in Upham.

Richard Branson, the head of the Virgin Group, which owns, among other things, Virgin Atlantic airlines, was once asked how one becomes a millionaire. It’s simple, he replied. Begin as a billionaire, then start an airline. Virgin Galactic sounded to me like a Branson effort to become a thousandaire.

That is, until today. I’m not sure the plan will work, but I’m beginning to see how it might work.

These wealthy people will spend from three to five days at Spaceport America getting ready to take their flight. There is training involved, safety drills, experiences on the ground designed to help people understand what they will experience in flight, instructions on what to look for while in flight (the view will be 1,000 miles in all directions), and lots of talk about the risks involved. These people are expected to bring friends and family members along to watch the flight from the ground.

What to do with all these people? First, Butler builds a spa and resort. Then, let your imagination go wild. How about archeological experiences? How about ranching experiences? How about flight simulators for the kids? How about day trips to Santa Fe? How about night-time astronomy sessions? How about uniforms for the passengers and commemorative shirts for everyone else? For the short week the passenger is involved, there will be hundreds of ways to design profitable extra experiences for the visitors.

Then, Whitesides said, think about what the technology Virgin Galactic is developing could become, once the company knows what it’s doing. Make a bigger, stronger craft and you can start delivering many passengers at a time from north America to Tokyo in an hour, taking the space route.

Branson is one of the world’s richest people because he sees these possibilities before the rest of us do. This is going to be a lot of fun to watch.