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A scientific economic estimation

Posted by: Ekkehard Augustin - Sun Dec 05, 2004 6:15 pm
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A scientific economic estimation 
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Post    Posted on: Thu Jun 02, 2005 8:13 am
Hello, idiom.

no - as I answered to Peter Campbell I never have been thinking of doubling ecah 18 months in the aerospace industry.

I only say that it can't be said currentlx that in the space vehicle industry economies of scale ar impossible that reduce the costs by a factor of 1,000 - and I don't say that they will occur if there is sufficient demand.

It's a difference if such economies of scale are possible really and if they will become reality. Economies of scale are a phenomenon on the side of the costs only - they are a behaviour of costs and a property of production. Costs and production are valid only at the supply side and they are internal to the supply side - demand has no impact on the phenomenen and the behaviour. What demand has an impact on is if potential numbers of economies of scale can be made actual economies of scale.

In this thread currently the talk is about potential economies of scale and their possibility. Additionaly there is talk about potnetial demand.

The difference between potentiality and actuality is essential - nearly as essential as the difference between price and costs and between supply and demand.

I will try to include that into the post setting this thread back on focus and on rails.

Peter,

one word: you seem to take all this as if Economics were considering their subjects like Engineering is considering it's subjects - if you are doing so really then you are in huge error. In Engineering all can be tested, experimented and numbers can be calculated precisely and exactly - this is impossible in Economics. In Economics pnly chances, vectors of expected values etc. can be estimated. Estimations are never exact and precise number like you seem to know them from Astrophysics or Engineering -you never will get such numbers from any Economist. The numbers published by the FED and Alan Greenspan or by the MIT or the Brookings Institution or by the german Expert's Council for Economical Analysis (as I translate "Sachverständigenrat zur Begutachtung der Wirtschaftlichen Entwicklung") here or the six german Economical Research Institutes which publish very lot of numbers each spring and each autumn look like precise numbers but aren't ones. What the newspapers etc. publish is part of studies 100, 200 or 300 pages thick

And to estimate economies of scale - which Collins did - is very much harder. Collins is speaking of the future which menas that there can't be evidence. The document SawSS1June21 posted is suggesting that Ford achieved economies of scale reducing the costs by a factor around 1,000 within 19 years and regarding harddisks I myself got economies of scale simply by the difference between the harddisks I could buy ten years ago which had a capacity between 20 MB and 600 MB and the harddisks I can buy now at nearly the same price having a capacity of 40 GB to more than 300 GB. This increase in capacity reduces the requirements to save data on floppxy disks or CDs to store more new data on the harddisk. This reduces the time required to do my personal manual work by that PC very much. You yourself can observe these economies of scale as well as me myself if you have used harddiscs of quite different capacity already and work as much by your PC as I do.

To remeber - this thread is not ment to convince you but to explain the thinking and the basises of people like Professor Collins. And it offers and supplies safe ground for confidence and trust in Collins' estimation and udesrtanding for other numbers quoted from Burt Rutan etc.



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Post    Posted on: Thu Jun 02, 2005 7:25 pm
Ekkehard Augustin wrote:
- this thread is not ment to convince you but to explain the thinking and the basises of people like Professor Collins.
I wish you would post SOME details on how Collins justified the $20,000 lunar trip. All you have said so far is "economy of scale", using about a million words to do so!


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Post    Posted on: Thu Jun 02, 2005 9:55 pm
He's good at that. Economies of scale are, however what are needed. You need massive infrastructure to gets things done--aka the Russian model.


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Post    Posted on: Fri Jun 03, 2005 6:45 am
Hello, Peter,

it still seems as if you have an improper image of what Collins has done.

I imagine that an engineer calculates costs - and potential economies of scale eventually - by calculating the costs of production of a concrete designed and built spacecraft and the costs of the materials, parts, elements, components of that spacecraft. And it tends to look as if you mean by "justify" such a calculation - but really this hasn't been done and isn't required for what Collins' estimation.

What I imagine above and what you seem to mean is calculation of costs for pricing - it is Enterprise Economics. But what Collins has applied is Political Economics. The .jpgs I sent you per e-mail and quoted in a previous post don't refer to the product itself but to the production equipment, process etc.. Machines are considered, plants etc. And Collins will have had in mind the machines to produce spacecrafts as well as the spacecrafts themselves as macines to produce spaceflights - this is far off what I imagine above.

Collins doesn't justify his estimation by the way an engineer calculates the costs of a spacecraft for pricing purposes, management purposes, project purposes etc. - he doesn't consider projects.

The details Collins has used don't have been published in that journal I quoted.

It seems that the "million words" are required really - they explain what Collins has done. And it is worth the words to look for potential or possible sources of economies of scale of SSO - whcih should be started when I have set back this thread on focus and on rails.



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Post    Posted on: Fri Jun 03, 2005 1:10 pm
Ekkehard Augustin wrote:
Collins will have had in mind the machines to produce spacecrafts as well as the spacecrafts themselves as macines to produce spaceflights
Well then, I would really like to know what machines and space craft he has in mind. Because the ones I have in mind will be MUCH more expensive.


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Post    Posted on: Fri Jun 03, 2005 2:25 pm
Hello, Peter,

please remember what I explained in the Off-Topic section in the thread about images behind posts about my image(s) - I never have in mind concrete vehicles but families and/or ranges of vehicles or - mathematically spoken - vectors of vehicles.

These families, ranges or vectors of vehicles are the supply-side of markets in total merely if applied to this section. And really this Collins too has in mind - the supply-side of the market but the internal costs of that side. He adds the demand-side of the market by estimating the future number of customers at 5 million regarding travels to the moon in 2030.

Collins is estimating the future and this involves that from time to time new spacecrafts will be developed - similar as Rutan is developing a "SpaceShipTwo" currently after he first had developed SpaceShipOne.

In the posts for setting this thread back on the focus and on the rails I will have to explain something about this - may be it is a repetition but that will be alright because in between there had been a more detailed talk here about economies of scale. Please don't ask me now and this moment what the "something" I will have to explain is because it is urgently required that I previous to it must point to something of high importance. In the announced post I will provide a better answer to your post.



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Post    Posted on: Fri Jun 03, 2005 3:30 pm
Hi Ekkehard,

Please don’t post another 5,000 words about general economic theory, because I won’t read it. DO post any explanation you may have about what kind of technology will enable the required economy of scale. Keep in mind that during the same time memory and disk drives have seen HUGE cost reductions, monitors and power supplies have seen small cost reductions. The difference is in the technology, not economics.


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Post    Posted on: Fri Jun 03, 2005 3:57 pm
A SIMPLE THEORETICAL COMPARISON OF LUNAR TRAVEL TO EXISTING TRANSPORTATION SYSTEMS ALREADY HAVING THE BENEFIT OF ECONOMY OF SCALE

FLY A COMMERCIAL JET

Mean distance to the moon: 240000 miles
http://www.moonpeople.com/html/themoon/distance.html
Round trip is 2x240000 or 480000

According to Yahoo travel, round trip from Los Angeles:
Cancun $254
Honolulu $424
Vegas $75
NY NY $253
Miami $303

total air fare $1309

total miles for all round trips: 19383
http://www.fv01.dial.pipex.com/air_calc.shtml

Miles per dollar: 14.8
(19383/1309)

Fly an A300/767 to the moon: $32432
(480000/14.8)
Travel Time: 800 hours (33 days)
(480000/600)

DRIVE A CAR

1994 Honda Civic Automatic 36 MPG
http://www.fueleconomy.gov/feg/findacar.htm

American Auto Association Gas Price Index: $2.10 per gallon
http://198.6.95.31/

Miles per dollar: 17.1

Drive my Honda to the moon: $28070
(480000/17.1)
Travel Time: 8000 hours (333 days)
(480000/60)

Commercial Aviation began sometime in the '30s, making it ~70 years old.

We have said already in this forum that the auto industry is more than 100 years old.

I don't believe ANY scientist, engineer, or technician would responsibly predict that a nascent commercial space enterprise could achieve, let alone SURPASS, the efficiency of automobile transportation in a mere 25 years. The fact that an expert in an unrelated field does make such a prediction contributes to the attitude that we technical folk have towards what publi calls the "bean counters". It simply has no material basis in the science of transportation, the mechanics of spaceflight, or the principles of thermodynamics involved in such an undertaking.


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Post    Posted on: Fri Jun 03, 2005 4:16 pm
SawSS1Jun21 wrote:
DRIVE A CAR

1994 Honda Civic Automatic 36 MPG
http://www.fueleconomy.gov/feg/findacar.htm

American Auto Association Gas Price Index: $2.10 per gallon
http://198.6.95.31/

Miles per dollar: 17.1

Drive my Honda to the moon: $28070
(480000/17.1)
Travel Time: 8000 hours (333 days)
(480000/60)


You wouldn't want to drive your Honda Civic from the UK where petrol costs about £4 a gallon the trip would cost about £53,333 ($96,610). Almost cheaper to go Virgin Galactic, no wonder all the space stuff is in the US. :)

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Post    Posted on: Fri Jun 03, 2005 5:20 pm
SawSS1Jun21 wrote:
Drive my Honda to the moon: $28070
(480000/17.1)
Once when I told a friend that my VW had 120,000 miles on it, he remarked that that was half way to the Moon. It didn't last the full 240,000 miles though, even with a new engine.

After including wear and tear, a car can be driven 2 or 3 miles for $1 http://www.irs.gov/newsroom/article/0,, ... 32,00.html That makes the cost at least $160,000 for a round trip to the Moon.


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Post    Posted on: Fri Jun 03, 2005 5:58 pm
Yeah, I know that maintenance costs, etc. are not included.

I was really trying to show that the energy required in itself was going to be more than $20K in even the most unrealistically optimistic of cases.

We don't even consider the expense of constructing a ribbon of polymer/carbon composite/nanotubular fiber or whatever the hell you would make a translunar highway out of.

And who is really going to drive 24/7 for nearly a YEAR even if it does mean a jaunt on the lunar surface?

$20K to the moon is simply not practiceable (in this half century) for a homo sapien passenger. Perhaps in stasis/suspended animation and via space elevator. None of those technologies will exist by 2030, and even if they do, energy cost increase over the intervening period will eat up the difference, such that $20K still will not be enough.


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Post    Posted on: Fri Jun 03, 2005 8:09 pm
Hi SawSS1Jun21,

I agree with everything you say.

I really would like more detail on how the cost was arrived at, but all I know so far is that Ekkehard Agustin says that Matthias Hohensee says that Patrick Collins says that 5,000,000 people could go to the Moon in 2030 for as little as $20,000 each.


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Post    Posted on: Sun Jun 05, 2005 12:56 pm
Hello, Peter,

may be you should read 10. first, then 3., 5., 6. and 2. .



Hello, SawSS1June21,

11. is a direct answer to you.



Refocussing this thread:

Contents of this post

1. Short look back into the history of this thread
2. Quoted Numbers
3. Ability of economies of scale to reduce costs by a factor of 1,000
4. Differences in terminology between Engineering and Economics detected
5. Subject
6. About the estimations of Whitehorn, Rutan and Collins
7. Check of SSO or Virgin Galactic's vehicles for economies of scale
8. Orbit
9. Moon
10. Answer to your last post adressing me, Peter
11. Answer to your posts, SawSS1June21



1. Short look back into the history of this thread

The thread started with quoting Professor of Economics Collins that in 2030 - in 25 years - sunorbital flights will have a price of 10,000 $ while lunar trips will have a price of 20,000 $ then.

Next these estimations have been made plausible by using numbers Prof. Collins has used, numbers provided by Virgin Galactic and by applying certain growth rates, mathematics of finance and the mathematical function of growth.

Then numbers provided by Rutan have been added - I posted a quote and a link to an
article.

That time economies of scale have been discussed first. To this a first discussion was
added about what technology is and which impacts it has.

It has been clarified that Collins considered two or three markets seperately but that these markets can use the same technologies and that one person can be a customer at
more than one of these markets only.

At that point imaginability turned out to have an impact on the discussion the first time - imaginability of the concrete numbers.

After that I felt the necessity to point out that estimations like those done by Collins are considering the future and that they are not simply extrapolations but that high
sophisticated methods are used.

That were the first time that it turned out that different definitions about what a technology is are involved.

Another quote of Burt Rutan has been added together with a quote of Space Adventures. The quote of Space Adventures has been discussed a little bit.

Cross financing has been mentioned then - after economies of scope too had been
mentioned earlier without going into the details.

Virgin Galactic has been quoted again with the number of 29,000 registered interested
people and 100 real contractors. This has been done to calculate short-run growth.

Finally a prediction of Virgin Galactic's president Whitehorn has been involved - the prediction mentioned economies of scale.

The problems again and again are problems with imaginability, believability and appearance of improbability - problems of personal kind with all this. There are doubts but no mistakes or errors are worked out - which would require very lot of time and work as I know.



2. Quoted Numbers

Table of amount of customers
Code:
                              07.12.04   19.12.04   21.12.04   19.04.05   
Collins' estimation           - / -      - / -      - / -       - / -     

Virgin Galactic:
Branson, Whitehorn            7000       13000      - / -       - / -     
growth since ...                     
previous date                 - / -       85,70%    - / -       - / -     
previous date
per month                     - / -      171,40%    - / -       - / -     
first date                    85,70%     - / -      - / -       - /       

found by my own theoretical experiments:                                                   

grwoth period   growth rate                  
month           0.5%          - / -      - / -      7018         7159     
double-month    1.75%         - / -      - / -      7031         7279     
month           2,1875%       - / -      - / -      7153         7799     
double-month    4.375%        - / -      - / -      7077         7710   
month           0.5%          - / -      - / -      - / -       13262     
double-month    1.75%         - / -      - / -      - / -       13459     
month           2,1875%       - / -      - / -      - / -       14175     
double-month    4.375%        - / -      - / -      - / -       14162



                              25.04.05   2030
Collins' estimation           - / -      5000000

Virgin Galactic:
Branson, Whitehorn            29000      - / -
growth since ...                     
previous date                 123,10%    - / -
previous date
per month                      30,78%    - / -
first date                    314,29%    - / -

found by my own theoretical experiments:                                                   

grwoth period   growth rate                  
month           0.5%          - / -      4850957
double-month    1.75%         - / -      4997873
month           2,1875%       - / -      4956277
double-month    4.375%        - / -      4956277
month           0.5%          - / -      4850957
double-month    1.75%         - / -      4997873
month           2,1875%       - / -      4956277
double-month    4.375%        - / -      4956277


please take 21.12.2004 and 19.4.2005 as half month or full month



Table of prices estimated

Code:
Collins                 - / -       - / -      - / -         - / -       

Moon                    - / -       - / -      - / -         - / -       
suborb.                 - / -       - / -      - / -         - / -       



Rutan        date of    currently   2010       2013/2014     betwe.2017   
             quote                                            and 2020     
suborb.      07.12.04   100000      - / -      - / -         - / -       
suborb.      24.01.05    30000 -    - / -      - / -         - / -     
                         50000                                                     
suborb.      02.03.05   - / -       - / -      - / -         30000 -     
                                                             40000
suborb.      07.03.05   - / -       - / -      - / -         - / -       
                                                                                 



Virg.Gal.:
Bra.,Wh.                initial     sev. ys.                                             

suborb.      07.12.04   200000      <<100000   - / -         - / -       
suborb.      24.05.05   200000      50000      25000         - / -       



Space Adv.              curr. off. 

act.         02.03.05    12048 -    - / -      - / -         - / -       
                        20 mio.



Collins                 - / -    2030

Moon                    - / -    20000
suborb.                 - / -    10000



Rutan        date of    longer   ultimate
             quote      run      goal
suborb.      07.12.04    7000    - / -
suborb.      24.01.05   10000 -  - / -
                        12000         
suborb.      02.03.05   - / -    - / -
                       
suborb.      07.03.05   - / -    10000 -
                                 15000



Virg.Gal.:
Bra.,Wh.                               

suborb.      07.12.04   - / -    - / -
suborb.      24.05.05   - / -    - / -



Space Adv.             

act.         02.03.05   - / -    - / -
                     


Some of the years are calculated as if operations will begin in 2005 - despite the fact
that they tend to begin in 2008 at Virgin Galactic. The operations of Virgin Galactic are delayed by regulations obviously and The vehicles will be ready after two or three years earliest.

But this has no impact on economies of scale in case of real costs as well as it has no
impact on degression of real cost which are all no dollars, Euros or so.

Especially such delays cannot be incorporated into Collins' estimations - because the delays weren't known then. Additionaly that estimation is an estimation of an order of magnitude - which can be seen by the fact that the number of customers is given in full millions. Factual numbers mostly look like 4997873.

From this table it seems that the estimations in the longest runs are between 7.000 and 40.000 for suborbital flights - with majority at the range of 10.000 to 15.000.Collins is at the bottom of this range. Burt Rutan, Richard Branson and Will Whitehorn have been calling their numbers the result of economies of scale - and I myself said that Collins has based his estimation on the phenomenon of economies of scale too.

This caused a discussion about the question if economies of scale in general or at all can reduce costs by the factor of 1,000

Both these tables only show potentials but no actual amounts.

Please note that Burt Rutan as an engineer gets nearly the same results as Bransons and Whitehorn (is one of the bother an engineer?) and the Economist Collins.



3. Ability of economies of scale to reduce costs by a factor of 1,000

At least two examples have been used to show that economies of scale can reduce costs by the factor of 1,000 - one were harddisks and the other (previous to harddisks) were the car market. I am looking for actual informations. SawSS1June21's documents include numbers of cars which I calculated further.

Here are some links to actual amounts of cars including one about revenues:


Already in traffic:

www.vda.de/en/aktuell/statistik/jahresz ... index.html



Produced amounts:

www.vda.de/en/aktuell/statistik/jahresz ... index.html



Added to the amount already in traffic:

www.vda.de/en/aktuell/statistik/jahresz ... index.html



Revenues:

www.vda.de/en/aktuell/statistik/jahresz ... index.html

I will continue lokking for numbers but I suppose that costs are considered to be a business secret because of market competition.



4. Differences in terminology between Engineering and Economics detected

There is agreement that two different terminologies are involved here:

Peter, you said:

Quote:
Well I guess we have different ideas of what is existing technology. Scale and scope refers to mass production of Virgin SS1 type vehicles, or small incremental mprovements in infrastructure
.

and

Quote:
We are just going around in circles about the definition of technology vs. scale. When production of a million 16 megabit DRAMs for $100 each changes to a million 256 megabit DRAMs for $100 each, I call that a technology innovation and you call it an economy of scale.


This is one significant source of misunderstandings, errors etc. which has to be removed some way.

These two quotes of your posts, Peter, mean that you are applying engineering
terminology while I apply economical terminology. To this I pay attention permanently - we both should do so.

It would be very helpful if we both would be aware that the other has an eductaion in another discipline and so try to learn the other terminology, the meaning of terms the other is applying. Especially we should ask for it if we fear that there is a misunderstanding.

It is not acceptable if it is tried to make the engineering terminology dominate here.



5. Subject

I myself said:

Quote:
The cars each of us buys or can buy have a price of around 10,000 Euros at least - assumed a fabric-new car is bought. If only one single of these cars were produced and not millions of them then this one single car would cost around 10,000,000 Euros.

But the technological principle how the motor of a car works hasn't been changed since a hundred years - it still is the old Otto-motor. The only other principle I know of is the Wankel-motor which has nearly no market share.


SawSS1June21, you said:

Quote:
I have to say, Ekke, if you know where I can buy a brand-new car for $3200 then PLEASE LET ME KNOW!!! I have nearly 100K miles on my Honda Civic and could use a cheap replacement. Otherwise, I would say that it doesn't look like economies of scale have done very much for the automobile market in the last century.


I myself wrote too:

Quote:
... an example only which also could be replaced by the PC market where 20 years ago 128 K had costs at which I can get 120G currently - factor of more than 1,000.


Peter Campbell (campbelp2002):

Quote:
I have said this AGAIN and AGAIN and AGAIN! The ENTIRE electronics industry has benefited from the breakthrough technology of integrated circuits


The first quote of my own post refers to a post in which it has been said that large or huge cost reductions have been achieved by technological breakthroughs only.

So I took the car market as an example - but concentrated on one detail of a car - the motor. A motor is not a car - a car is a motor plus gears plus axles pluswheels plus a chassis plus seats plus a steer plus suspensions plus ...

But I concentrated on the motor - the Otto-motor only which hasn't been replaced by another technology since 100 years.

SawSS1June21 argued based on the car market then. This means that each of us has been talking about a different thing.

In the second quote of a post of mine I used storage as an example and concentrated on harddisks (120 GB). Peter, you answered by talking about the electronics industry and integrated circuits - which both are not restricted to harddisks. Again both are talking about different things.

Both talks are examples of inaccuracies which urgently must be avoided - even to avoid "million words".

By the way - you refer to my jpgs only in one special case - did you read them really?
You have been complaining about million of words - as if you don't like words. In difference to Engineering in Economics there is nothing that can be seen or touched like a vehicle or a michine else.

So Economists can't use oscilloscopes and the like, no such instruments etc. but only use statistics and mathematics as a substitute which is inappropriate but the only possible choice and use words. So the .jpgs are full of words - it can't be prevented. If you don't like words then you never can understand Economics.

We can't caluclate something by formulars - except in Enterprise Economics. We only can involve formulars to describe a phenomenon and to use it as a required base for the application of statistics. But we can't use formulars in Political Economics like it is done in Physics or Engineering - it is impossible. There are no natural constants in Economics and nothing that can be measured surely and really.

There is another inaccuracy involved which seems to be resposible for the requirement of this post


6. About the estimations of Whitehorn, Rutan and Collins

Under "4. Differences in terminology between Engineering and Economics detected"
there is a number Peter has quoted: Virgin Galactic/Whitehorn estimate that after eight or nine years of operation the numbers can be reduced down to 25,000 $.

Peter,

you say that you don't belive the factor of 1,000 - where do you see that factor? I really want an answer.

Currently I only can assume that you divided the 25,000,000 dollars invested into SSO by
the 25,000$ Whitehorn has been speaking about - there really is factor of 1,000.

Please explain, what you are speaking about:

Does a flight by SSO really cost 25,000,000 dollars?

As we know there were three flights to 100 km altitude and higher by one and the same SSO without investing additional 25,000,000s.So the 25,000,000 dollars should be divided by 3 flights at least - which results in 8,333,333 dollars per flight only. This is degression of costs - and after 1,000 flights these costs were at 25,000 dollars per flight. They are fixed costs.

The 25,000,000 dollars don't include propellant costs I suppose. These propellant costs are the variable costs which still have to be added. But we don't know the number.

But if the number of flights is 10,000 or 100,000 then the fixed costs per flight are down to 2,500 dollars or 250 dollars only. May be that Rutan and Virgin Galactic get the propellant at less than 22,500 dollars.

So the factor of 1,000 is there already WITHOUT economies of scale but with degressioin of costs only.



Peter,

again I cannot but ask what you are talking about:

Whitehorn, Rutan and especially Collins are speaking about tickets and their costs and price. If you really did the above calculation - 25,000,000 divided by 25,000 - then you compare the investments costs gone into SSO with the tickets!

Which is extremely inaccurate (5. Subject). The numbers of Collins, Rutan and Whitehorn don't refer to the vehicle no way - explicitly. Neither they do refer to flights - they refer to the tickets which means that they refer to the customer.

As we know SSO has three seats. One seat is for the pilot and two seats are for
customers. Which means that two tickets for one flight of SSO can be sold and they get 50,000 dollars per flight of SSO - the factor is 500 but not 1,000.

But SSO won't be used anymore - Virgin Galactic gets larger versions of it. They can carry five people - one being the pilot, four customers. So they get 100,000 dollars per flight of one new vehicle - the factor is 250 only.

To recall SSO again - 80% of the 25,000,000 will be development costs while 20% only
will be production costs: 20,000,000 development cost, 5,000,000 production costs. Rutan lincenced out his technology to Virgin Galactic - may be that this is his strategy to get back the 20,000,000 dollars development costs and to seperate them from the production costs.

Alright - it is known that Branson pays 20,000,000 dollars per vehicle - which is 5,000,000 less than the 25,000,000 investment costs of SSO. It includes improvement costs which will have to be subtracted - special thought: the 20,000,000 include costs which may be caused by the larger scale.



Peter,

you compare a vehicle to tickets and you compare the investment costs of a retired vehicle to tickets which are calculated and sold for flights on new vehicles.

This way mustn''t calculated no costs, no prices, nothing and never: it is chaotic
and would break down each company.


7. Check of SSO or Virgin Galactic's vehicles for economies of scale

Because it has gone into the details of economies of scale at last - by theory and by
examples (Otto-motor, cars, harddisks, ICs) the discussion seems to be at the point
where SSO could be checked for sources of possible economies of scale:

1. Burt Rutan himself has said that a larger vehicle than SSO should be used - because economies of scale would make the flights cheaper. I already demonstrated twice by the example of cubes or cubic containers what is meant.

2. SSO used an engine newly developed by SpaceDev. I don't know if that engine has to me made totally new for each flight. So let's consider both cases:

a) If the engine hasn't to made new for each flight there is one engine required for one vehicle but five engines for five vehicles - which will cause degressions of costs at least.

b) if the engine has to be made new for each flight then three flights require three engines - but 100 contractors mean 25 flights and thus 25 engines! So the engine tends to be a candidate for economies of scale.

But if all the currently registered 29,000 people really fly then this will mean 7,250 flights = 7,250 engines. Then economies of scale of the engine are to be expected.

3. Not only SSO and the new vehicles for Virgin Galactic use nozzles but the other vehicles under construction at SpaceDev, Rocketplane, Bristol Spaceplane, Starchaser etc. use nozzels too. And with each ordered vehicle for the market increasing economies of scale of the nozzles are to be expected.



8. Orbit


The article "Space Tourism:Next Steps Taking Shape" ( www.space.com/news/050426_tourism.html ) is quoting Virgin Galactic's president as follows: "'Our long-term goal is to develop commercial space tourism into an orbital business which could in the future carry payloads as well as people into orbit,' Whitehorn stated."

So Virgin Galactic could be the first private company to buy a CXV from t/Space. t/Space explicitly said that they can imagine to construct and build the CXV based on private funds only - it only will take more time because they have to do more efforts to get private funds.

T/Space have said that the CXV will require 400,000,000 dollars investment. These are fixed costs.

If there were 5,000 flights by the CXV then the fixed costs per flight would be 80,000 dollars. If the CXV would carry one pilot and four passengers then this would mean
fixed cost of 20,000 dollars per passenger. At 10,000 flights these were reduced
down to 10,000 dollars.

To this again propellant costs would have to be added which depend on the weight of the passengers and so are variable costs.

If the CXV carries one pilot and eight passengers the fixed costs per passenger at 5,000 flights would be 10,000 dollars and at 10,000 flights at 5,000 dollars.

Again all these are degressions of costs but not economies of scale.The ticket price don't seem to tend to be extremely high - but as far as I know t/Space haven't said anything about propellant costs. And so an important information is left yet - as well as in the case of SSO.



9. Moon

Currently no lunar vehicle for touristic flights to the moon are under development and so no company or team has published investment costs like those of CXV.

But this vehicle too would have fixed costs which have to be divided by the flights and then by the number of passengers.

If the vehicle would never land on Earth once it is launched but kept waiting in the orbit after return then there will be

- propellant costs for achieving escape velocity out of orbit only plus
- propellant costs for lunar orbital insertion plus
- propellant costs for achieving lunar escape velocity plus
- propellant costs for earthian orbital insertion.

The first one and the last one will be significantly higher than the two others. And as far as I know all these are less than the launch costs from earthian surface. To achieve a normal orbit a vehicle must be accelerated up to 8,4 km/s - to escape velocity less than 3 km/s are left So the difference of propellant cost compared to launching from surface into the orbitmight be less than the differnec of propellant costs between suborbital and orbital flight.



10. Answer to your last post adressing me, Peter

Quote:
Hi Ekkehard,

Please don’t post another 5,000 words about general economic theory, because I won’t read it. DO post any explanation you may have about what kind of technology will enable the required economy of scale. Keep in mind that during the same time memory and disk drives have seen HUGE cost reductions, monitors and power supplies have seen small cost reductions. The difference is in the technology, not economics
.

Peter,

you compare different things - which mustn't be done in talking about economies of scale. Scale refers to the amount of production of one and the same product. By comparisons to other products it can't be concluded and it mustn't be concluded if there are economies of scale in one of the products or if not. To look for economies of scale comparisons of two different amounts of the same product have to be done - and it have to be the capacities of the equipment to produce these product. Which you really didn't.

This means that your result really is wrong. In contrary to you I myself compared two different capacities and amounts - 20 MB-harddisks to 120GB-harddisks for example. Time memory I never mentioned - may be you misunderstood something.

Your comparison doesn't say anything about economies of scale - the different technology do have to do only with the products themselves: Some of them are produced at numbers leading to huge economies of scale and others at numbers leading to small or nio economies of scale only. The SAC-curves and LAC-curves simply are different.

This very long post has the only purpose to set the thread back on focus and on the rails

You can concentrate on reading

"3. Ability of economies of scale to reduce costs by a factor of 1,000" where
I only provide some links concerning the car market,
"5. Subject" where I explain fundamental causes why the thread is going an unfortuante way,
"6. About the estimations of Whitehorn, Rutan and Collins" which
explains the estimations and the thoughts behind them..

"2. Quoted Numbers" may be clarifying.

I have done it because there is no other way - the book "Microeconomic theory" I have been quoting to explain economies of scale has around 500 pages of text around diagrams and mathematics and if you go to a library of the Faculty of Economics of a university you will remark that all books about economic theory are like this and that books about estimations and statistics in Economics as well as books about Political Economics are like this too.

The subject of Economics can't be seen or touched as a machine or a space vehicle can. No instruments like oscilloscopes can be used - only statistics and mathematics are available as tools plus computers. There is no way to measure the subject(s) as the velocity of a space vehcile can be measured: Economics without "million of words"
are impossible - this includes economies of scale as well as finances and Financial Barriers.

If you don't read it all then you never will understand it all. I started this thread without knowing that you would be interested in it. You answered and showed interest and you got answers - but if you don't read the explanations and thus don't understand. Why do you talk about it?

And if you would have read it you would have known previously what I would answer to your comparison - and you would have avoided that comparison. (take care - your current behaviour might reveal something you don't want to be revealed. :) )

You asked after explanations of Collins' estimations - but you don't accept the answers. It seems you don't want to understand - you don't try it.

If you don't read it all you never will understand Collins' estimation, economies of scale etc.

If you ask for explanations and then deny to accept them - then it's yoour own fault if you don't understand and it's an inconsequent behaviour. You are ignoring explanations etc. - your behaviour has a tendency to be ignorant.

Do you consider Engineering to be valid only but Econmics to be invalid concerning Finanical Barriers of personal spaceflight, econmies of scale of vehicles etc.? And if you do so - is the reason then that vehicles etc, are made by engineers? Please really answer both these questions. I cannot but say already now that a yes in both cases would prove arrogancy if you don't argue by a complete chain of objective, logical arguments including arguments why Economics should consider itself not to be valid for the costs and finances of space vehicles etc. - please keep in mind that I am an Economist and can judge it independently: If I don't agree I argue and if I agree I'll say that too. You have no chance - you must argue economically too.

May be that I have a wrong image of what you want - but then please say what you want instead of words. By formulars and numbers only the subject(s) of Economics can't be described, defined, explained etc. no way.

The numbers provided by Collins are the results of applying statistics and what I explain again and again here - nothing else. Do you ask for the methods of economical research?

Next this is a public forum, public thread and public discussion - if YOU don't read someone else might read though. You and me are not alone - there are nearly 800 people registered at the message board.

What I say is a talk to the public too - and I wouldn't use that much words if you would ask more questions and seriously try to understand.



11. Answer to your posts, SawSS1June21

Hello, SawSS1June21,

you wrote:

Quote:
I don't believe ANY scientist, engineer, or technician would responsibly predict that a nascent commercial space enterprise could achieve, let alone SURPASS, the efficiency of automobile transportation in a mere 25 years. The fact that an expert in
an unrelated field does make such a prediction contributes to the attitude that we technical folk have towards what publi calls the "bean counters". It simply has no material basis in the science of transportation, the mechanics of spaceflight, or the principles of thermodynamics involved in such an undertaking.


Nobody has predicted anything - Collins has done an estimation. An estimation is something quite different than a prediction

Why do you consider Collins to be an expert in an unrelated field? Spaceflights cause costs, have prices, a market is evolving, there is demnand and so on - and so the field isn't unrelated.

Collins no way does mix into the methods of construction, technological calculations and so on.

It sounds a little bit as if you are annoyed - but there is no reason for this. You look at it all under the view of an engineer while Collins looks at it under the view of an Economist. Both looks have their justifications - and none of them can be used as an argument against the other because the subjects are different. The subject of Economics are costs, etc. - which necessaryly include the costs of space vehicles, engineering etc. - but this science never tells engineers how to do something and which view to apply for construction etc.

Please have a look into "4. Differences in terminology between Engineering and conomics detected" especially

Regarding your words about the costs of a lunar flight "8. Orbit" and "9. Moon" are answers.





Dipl.-Volkswirt (bdvb) Augustin (Political Economist)


Last edited by Ekkehard Augustin on Mon Jun 06, 2005 7:33 am, edited 3 times in total.



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Post    Posted on: Sun Jun 05, 2005 3:27 pm
Peter,

The "estimations" using mathemethics provided by Ekkehard are NOT linkable to technology.

It uses the "current available" data and statistics, to see the "possible" changes (in cost) to the future.
It calculates the "inventions" and things that will suprise us of new technology in it.
Ekkehard can't tell you what it will be, neither do I or anyone else.
But Mathemathically those inventiones are included into the numbers, compared to how they happened in the past with already available technology.

Of couse those numbers are "estimations", it's not about beeing right or wrong here with the "numbers", changing them should be done with changing the formula, cause it's the mathemathical formula that makes those predictions.

You can notice ANY industry is going up linear, exponential, etc etc using a similar way (or it should be replaced by a new, better industry, or no longer needed).


So in the end.. many of those comments are unrelated to what Ekkehard is talking about... It's not economics related.. and you can "NEVER" link to to future inventions, cause that are "wild" guesses.
While this estimation is also a "guess" and when the available data becomes more and more it will be more accurate step by step.
In the end.. it really will be like the computer industry predication of the count of transistors in a cpu doubled each 2 years etc. (moore's law)

"Gordon Moore made his famous observation in 1965, just four years after the first planar integrated circuit was discovered."

He couldn't know what technology it will be... but "mathematically" he predicted it, with the "available data from 4 years time".

if you look at the statics from intel:
http://www.intel.com/research/silicon/i ... graph3.gif

You'll see it's not 100% accurate 2 times the numbers of transistors each year, but it's close to it.

So yes, the estimation can be "wrong", but step by step it will be more accurate.
And the inventions to lower the space vehicle costs can be mass producation techniques to make the vehicles at a lower cost etc.. When a very "advanced" engine, can be mass manufactured at a low cost, the research would have been expensive, but the final result will be relative very cheap mass produced engines.
The same for "all" other space vehicle parts.
And no, I don't know what it will make better and cheaper ;)

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Heavier-than-air flying machines are impossible. - Lord Kelvin, 1892


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Post    Posted on: Sun Jun 05, 2005 6:54 pm
Would your calculations have estimated $20,000 to the Moon today, if you had done them 25 years ago? If so, then I should be able to go the Moon today, 35 years after Apollo, for $20,000. If not, why not? What changed to make this year the magic turning point? The X-prize? Nothing any of the X-prize teams have done was impossible 35 years ago. Canadian Arrow is recreating the V2 engine, a 1940's design for crying out loud! Public interest in a lunar trip was just as high then as it is now. Maybe higher! PanAm had thousands of reservations for a trip to the Moon, just like Virgin Galactic does.

It is irresponsible to publish ridiculous claims like $20,000 to the Moon within 25 years. When the promise is broken, it will kill space flight in the public mind a little more and the alt-space people look like a bunch of weirdoes living in a fantasy world.


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