Reusable Rocket Economics and a $500 billion program to make space travel like the airline industry

David Akin of the University of Maryland has a 53 page presentation that looks at the economics of reusable rockets.

The primary cost drivers are refurbishment and mission operations costs. Refurbishment costs after each launch need to be ideally be kept below 3% of the vehicle cost but definitely at 6% or less for significant cost savings.
The flight rate and production rates have to be high to take advantage of the learning curve.

The 1954 airline industry was moving 5 million tons miles [? not sure if the 1954 number needs to be corrected as the 2003 number did] per year at about $80 per ton [ton mile].
The 2003 airline industry was moving 5 billion ton miles per year at about $20 per ton mile. [Akin number were incorrect]
US air industry statistics.

Right now the space industry is launching about 500-700 tons per year.

$500 billion to scale to 64 launches per day to the level of airlines in 1955

The US spends $60 billion per year on NASA, military and intelligence space programs. This means over $1.8 trillion over 30 years is what would be the expected budget. There is also the commercial space industry and international space efforts. The proposed $500 billion over 30 years would have to be carved out of the existing programs. The International Space station cost over $100 billion. The cumulative budget put into the space shuttle program was over $200 billion.

Strategically investing $500 billion (perhaps in conjunction with China, Europe, Japan and other countries) would provide high frequency reusable launches with demand like the airmail deliveries did for the airlines. It would be an investment in infrastructure like the highway system. The Earth and some orbit infrastructure is discussed but this level of effort would require orbital fuel depots and refueling and orbital and space industrialization.

The Space Review considered a program to fly to low earth orbit 64 times per day, three orders of magnitude higher than current flight rate, and evaluates its impact.
Ronald P. Menich wrote the Space Review article. Ronald worked in the Engineering Economics Group at SpaceWorks Engineering evaluating advanced ETO launch concepts for NASA and Air Force customers. He is Chief Scientist in the Pricing and Revenue Management business unit at JDA Software Group.

Assuming that a particular stage has an average turnaround time of three days, Little’s Law implies that the fleet required for a 64-launches-per-day pace is 192 vehicles. Different stages might have different average turnaround times and therefore different required fleet sizes. Similar calculations govern the required fleet size for the orbital transfer vehicles.

The floating launch platforms would use construction technology derived from deep-water oil drilling platforms, albeit on a larger scale. Suppose that the initial investment could be covered by $300 billion in net present value (NPV). Suppose further that operations costs, ongoing facilities costs, vehicle replacement costs, costs of failure, and other costs for the thirty years of operations equate to $200 billion of NPV.

Thus, assumed initial investment plus operations costs for thirty years total $500 billion NPV. The payloads launched during this thirty-year period sum to 6,375,273 metric tons (7,012,800 English tons). The average costs equate to $78 per kilogram ($36 per pound) or $713,000 NPV per launch. Assuming that current launch costs are $5,000 per pound, this system would reduce launch costs to less than 1% of the current value.

The amount of payload delivered to the space station by the launch system would be so huge that it is fair to say that this single system alone would transform mankind into a spacefaring civilization and change forever the way we live. If we assume that a person plus supporting equipment (e.g., life support) equates to 225 kilograms (500 pounds), then the average cost is less than $18,000 in NPV, and though prices charged would undoubtedly be higher, this cost level would bring space travel within the financial capability of thousands or millions of people. With so many people visiting the space station, an entire revenue-generating space economy would likely arise, with people visiting the station for pleasure, business conferences, permanent habitation and other purposes.

The anticipated $500-billion total thirty-year investment required to achieve this, though not small, is by comparison much lower than the federal defense budget for a single year and approximately 13% of the federal budget for a single year.

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