Sunday, November 1, 2015

Commercial spaceports and ‘Field of Dreams’ business models

Commercial spaceports are popping up all over the United States, Europe, and Asia. The latest one is at Ellington Airport in the Houston, Texas area. NASA and the Houston Airport System announced a joint development agreement for a new spaceport on October 29.

It’s not a bad idea for some. Eventually, sub-orbital tourism and scientific flights, as well as small satellite launches, will become a good business. But one thing seems to be missing from the plans for too many of these spaceports.

How will they make money until the spaceships show up? How many spaceports are being planned and built on a field-of-dreams business model?

In the 1989 movie Field of Dreams, Kevin Costner plays an Iowa farmer named Ray Kinsella. Ray is out in the field one day and hears a disembodied voice whisper, “If you build it he will come.” Ray cuts down the corn field and builds a baseball field. Soon, the field is populated by the ghosts of long dead major-league baseball players.

The movie, which has a heartwarming ending, was a big success.

But that’s the movies. Real-life ventures based on “If you build it he (they) will come” don’t usually work out as well. As an example of that, and potentially a business-school case study for what not to do, look at Spaceport America (SA). An article at Popular Mechanics, Welcome to the ghost town that Virgin Galactic built, tells the tale of unfulfilled expectations.

Located 32 km southeast of Truth or Consequences, New Mexico, SA was supposed to be the cutting edge of commercial space with Virgin Galactic (VG), the company run by flamboyant billionaire and part-time space-whisperer Richard Branson, as its signature tenant.

At this point success for SA remains firmly out of reach. The crash of VG’s SpaceShipTwo on October 31, 2014 in the Mohave desert and a promise of flights within 2 years of building the facility (that promise is now in its 10th year) has left SA without much to show for their commitment.

Now, some of those politicians who listened to Mr. Branson’s corn-field whispers might be looking to get the spaceport off their hands, according to Could Virgin Galactic's Spaceport America be put up for sale?, an article at Gizmag.

Ironically, in the article, New Mexico state Senator George Munoz, sponsor of the bill to sell SA, uses the “If we build it they will come” quote from the movie to describe the expectations of good times that haven’t materialized.

Spaceport America’s plight also gets a mention in an article at The Space Review, Looking back a year and a decade. Most of the article is about other areas of commercial space, but SA gets their moment under the microscope near the end.

Christine Anderson, Chief Executive Officer of Spaceport America, says they are working to get new tenants while they wait for Virgin Galactic, but she doesn’t expect the facility to be financially self-sufficient until at least late 2017 or early 2018. That could be causing a serious pucker factor for the politicians because the next state election in New Mexico is in 2018.

Ms. Anderson is also quoted as saying they need to be resourceful and resilient in the face of these setbacks. Perhaps they wouldn’t need to be quite so resourceful and resilient if they hadn’t put together a field-of-dreams business model in the first place.

Without a business plan that will make money until the day comes when spaceships are flying, many of those spaceports may revert back to being corn fields, deserts, or whatever they were before.

Is there a defence against the dreaded field-of-dreams pitch? Yes there is, and it’s offered here free of charge to business people with dollar signs in their eyes, and politicians with votes in theirs.

If a space-whisperer has this fantastic idea of building an awesome spaceport that will bring in millions and make you a hero for life, ask one question: What’s the plan for making money until the spaceships finally come to the facility?

If the answer is “uh, great question,” smile, show them the door, and watch the movie “Field of Dreams.” You’ll get the feel-good buzz you want for a lot less money and far less trouble.