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Accumulation of a financial base in detail

Posted by: Ekkehard Augustin - Thu Jul 21, 2005 11:31 am
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Accumulation of a financial base in detail 
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Post Accumulation of a financial base in detail   Posted on: Thu Jul 21, 2005 11:31 am
In another thread I said

Quote:
According to an article under www.xprizenews.org today Branson has already a number of 7000 customers. If all these people pay 200,000 $ he has got 1.4 billion $ revenues. His former announcement that the first flights only will cost 200,000 $ seems to indicate that it will be less.

But the number shows that suborbital flights are accumulating a significant amount of financial ressources in the private space travel sector.

So the financial barriers are going to be reduced by visioneers and enthusiasts that have enough money.

This can prove to be the required basis for the evolution of a future orbital markets too.



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


and

Quote:
The article "Space Tourism: Next Steps Taking Shape" ( www.space.com/news/050426_tourism.html ) is quoting Will Whitehorn, president of Virgin Galactic as follows: "Whitehorn reported that their business plan projects profitability in the fourth or fifth year of operation"

That far Virgin Galactic's business plan. If they can manage to make that plan reality then this really may be the base for orbital personal spaceflight which they have as long-term goal too according to that article.

This may mean that they will prepare to fund a company or a team competing for the ASP if Whitehorn's fifth year successfully is over before the ASP is won.

But their funds will be available only if the ASP isn't won in January 2010. But there is the chance and perhaps Richard Branson will fund before the fifth year if he expects or can expect things to evolve as assumed by the business plan.



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


In between under www.xprizenews.org the article "Virgin Galactic Update
" ( www.xprizenews.org/index.php?p=993 ) was to be read.

The numbers of that article as well as other numbers published by Virgin Galactic result in the following table:

Code:
order   Seats   Price   Remark         Revenue
first      100   20,000 Founders        20,000,000
           300  100,000 min. Pioneers   30,000,000
         2,500   20,000 rev.=veh.-inv.  50,000,000
        26,100   20,000 rev.>veh.-inv. 522,000,000

first      100  200,000 Founders        20,000,000
           400  100,000 max. Pioneers   40,000,000
         2,000   20,000 rev.=veh.-inv.  40,000,000
        26,500   20,000 rev.>veh.-inv. 530,000,000   

first      100  200,000 Founders        20,000,000
         1,000  100,000 all Pioneers   100,000,000
        27,900   20,000 rev.>veh.-inv. 558,000,000


This table shows that after the first 2900 passengers the total revenue will be equal to the investment into the vehicles in the worst case projected by Virgin Galactic, after the first 2500 passengers in the best case projected and after less than 1100 passengers if all "pioneers" would be customers of Virgin Galactic.

So latest after flying 2900 passengers Branson would have earned back his investment of 100 million dollars which then would be available for a new investment...

This neglects that there are other costs too and it neglects variable costs. It will look different when I include variable costs, pilot costs etc. - this will happen later.

If each vehicle has five seats and one of them is for the pilot then 725 flights would be required in the worst projected case, 625 in the best case and less than 275 in case all pioneers go to Virgin Galactic.

Virgin Galactic's strategy looks like what's called Market Differentiation in Economics - perhaps it must be called Market Discrimination in fact. This accelerates the amortization of the highly risky investment.



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Post    Posted on: Mon Jul 25, 2005 1:19 pm
To provide oversight I have put the flights calculated in the previous post into table.

As I said in that post some costs have been neglected. I seem to remember an article saying that Virgin Galactic has to do another investment of 100,000,000 but I may be mixing two articles because I remember another one about Elon Musk and SpaceX. But if I am right then the article really said that Branson invests into infrastructure another 100,000,000. This includes a runway.

Different to the vehicles this infrastructure can also be used for other purposes than launching the five suborbital vehicles. So they mustn't be covered by the tickets for those flights and shouldn't be calculated here.

But since the at first the infrastructure will be used for those flights only I have calculated the case too that achieving the profit zone means to cover the additional 100,000,000 $. They mean that 5,000 additional tickets at the price of 20,000 $ have to be sold. 5,000 tickets are additional 1,250 flights. I included them into the table by the last three lines.



Code:
tot. flights   flights/year   flights/year   requirements
required       required       possible

725           145            146            2 vehicles, turn-around 5 days
625           125            146            2 vehicles, turn-around 5 days
275            55             73            1 vehicle, turn-around 5 days

1975           395            410 - 460      5 veh.  turn-around 4 to 4,5 days
1875           375            410 - 460      5 veh.  turn-around 4 to 4,5 days
1525           305            365            5 vehicles turn-around 5 days




It seems to be no problem to get revenues within five years which are equal to the investments. This would mean that they have back 200,000,000 after those five years which are available for other projects then...



Up to now this all is a comparison only and only long-run costs are considered. So this is no calculation of profits or the like. To get real insights the variable costs are required. But there are no informations about them. Because of this the next post will include an analysis of them and the results will be made use of.



What do you think about the turn-around-times used in the table? Will they be shorter or longer or around those listed?



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


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Post    Posted on: Fri Jul 29, 2005 11:27 am
Because of the article "Richard Branson and Burt Rutan Form Spacecraft Building Company" ( www.space.com/news/050727_branson_rutan.html ) I changed the assumption that 4 passengers plus 1 pilot will onboard of Virgin Galactic's vehicles to 7 passengers.

Here is the changed table:

Code:
tot. flights   flights/year   flights/year   requirements
required       required       possible

414,3          82,9          146            2 vehicles, turn-around 5 days
357,1          71,4           73            1 vehicle, turn-around 5 days
157,1          31,4           73            1 vehicle, turn-around 5 days

1128,6         225,7          292            4 vehicles, turn-around 5 days
1071,4         214,3          219            3 vehicles, turn-around 5 days
871,4         174,3          219            3 vehicles, turn-around 5 days


Up to here no reduction of turn-around-time seems to be required.



Neglecting all fixed costs except the investment into the vehicles and into infrastructure I got the following numbers about possible variable costs:

Table of Break-Even-Points

Code:
tot. flights  per flight   per flight  per seat    per seat
              veh. only                veh. only   
557,1         33333,33   -133333,33    4761,90   -19047,62
1057,1         81818,18   -  9090,91   11688,31   - 1298,70
1557,1        100000,00     37500,00   14285,71     5357,14
2057,1        109523,81     61904,76   15646,26     8843,54
2557,1        115384,62     76923,08   16483,52    10989,01
3057,1        119354,84     87096,77   17050,69    12442,40


The numbers are rounded and got as follows:

Revenues - Fixed Costs - Variable Costs = Profit

In this

Variable Costs = Number of Flights * Variable Costs of Flight

and

Variable Costs per Seat = Variable Costs of Flight / Number of Passenger-Seats

is assumed.

Revenues are seperated into three levels reported by Sam Dinkin. The first two of these - 100 Founders at 200,000 $ and 300 Pioneers at 100,000 $ - can't cover the sum of Fixed Costs and Variable Costs and so the required Number of Flights has been calculated and multiplied by 7 passengers:

Revenues1 + Revenues2 + Revenues3

This means that the total number of flights had to be separated into three kinds too:

Number of Flights = Number of Flights1 + Number of Flights2 + Number of Flights3

Next the Break-Even-Point has been searched for where Profit = 0 is valid:

Revenues - Fixed Costs - Variable Costs = 0

Let's use the following abbreviations now:

Revenues1 = R1
Revenues2 = R2
Revenues3 = R3
Number of Flights1 = n1
Number of Flights2 = n2
Number of Flights3 = n3
Fixed Costs = F
Variable Costs of Flight = v
Profit = P

R1, R2, F, n1 and n2 are known already and so R3, n3 and v are searched for.

R3 = n3*7*20000

R1 + R2 + n3*7*20000 - F - n1*v - n2*v - n3*v = 0 = P

Then

n3*7*20000 - n1*v - n2*v - n3*v = F - R1 - R2

and

n3*7*20000 - v*(n1+n2+n3) = F - R1 - R2.

Consequently

n3*7*20000 - F + R1 + R2 = v*(n1+n2+n3)

and so

(n3*7*20000 - F + R1 + R2)/(n1+n2+n3) = v.

I used the worst case projected by Virgin Galactic and inserted n3 = 500 to 3000 to get the variable costs for these cases. To n3 I added n1 and n2 to get the tot. flights in the second table.

Obviously the requirements regarding number of vehicles or turn-around-time are increased now. I will handle them in my next post.



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

EDIT: I corrected the number of tot. flights in the Table of Break-Even-Points down by 357,2 because n1 + n2 = 414,3 was wrong but n1 + n2 = 57,1 was correct.


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Post    Posted on: Thu Aug 04, 2005 11:05 am
The following table shows the flights per year required and possible to achieve the break-event-points calculated in the previous post.



Code:
n3      n1+n2   n1+n2+n3   per year   possible   requirements for n1 + n2 + n3   
                                      per yr.

500     57.1      557.1     111.42      73       1 veh., turn-around-time 5 days
1000    57.1     1057.1     211.42     219       3 veh., turn-around-time 5 days
1500    57.1     1557.1     311.42     365       5 veh., turn-around-time 5 days
2000    57.1     2057.1     411.42     456       5 veh., turn-around-time 4 days
2500    57.1     2557.1     511.42     521       5 veh., turn-around-time 3,5 days
3000    57.1     3057.1     611.42     730       5 veh., turn-around-time 2,5 days
14500   57.1    14557.1    2911.42    2920       5 veh., turn-around-time 5 hours




The last row in that table stimulated me to think about a time-table of flights:

Code:
               
time    runway-    launch   back atm   touch-down   ready again
        take-off

09:00   veh. 1            
10:00   veh. 2     veh. 1         
11:00   veh. 3     veh. 2   veh. 1      
12:00   veh. 4     veh. 3   veh. 2     veh. 1   
13:00   veh. 5     veh. 4   veh. 3     veh. 2       veh. 1
14:00   veh. 1     veh. 5   veh. 4     veh. 3       veh. 2
15:00   veh. 2     veh. 1   veh. 5     veh. 4       veh. 3
16:00   veh. 3     veh. 2   veh. 1     veh. 5       veh. 4
17:00              veh. 3   veh. 2     veh. 1       veh. 5
18:00                       veh. 3     veh. 2       veh. 1
19:00                                  veh. 3       veh. 2
20:00                                               veh. 3


Maybe this timetable should begin at 6:00 or 7:00 and end at 17:00 or 18:00 because of safety if Virgin Galactic's vehicles aren't euqipped for noturnal flights.



Now besides the variable cost there are fixed costs too which are still neglected. First there was an article "Scaled.com: Virgin Group Sign Deal with Paul G. Allen’s Mojave Aerospace Licensing the Technology To Develop The World’s First
Commercial Space Tourism Operator" ( www.xprizenews.org/index.php?p=523#more-523 ) which said

Quote:
The licensing deal with M.A.V. could be worth up to £14 million ($21.5 million) over the next fifteen years depending on the number of spaceships built by Virgin.




These are fixed costs which don't vary by number of flights or number of passengers. Assumed they will have to pay the total 21.5 million dollars in the next 15 years for the five vehicles then this would mean 7,166,666.667 dollars in five years. These have to be included into the F in the formular of the previous post. Then the table of break-even-points looks as follows:

Code:
tot. flights  per flight   per flight  per seat    per seat
              veh. only                veh. only   

557.1         21388.89    -145277.78   3055.56    -20753.97
1057.1         75303.03    - 15606.06  10757.58    - 2229.48
1557.1         95520.83      33020.83  13645.83      4717.26
2057.1        106111.11      58492.06  15158.73      8356.01
2557.1        112628.21      74166.67  16089.74     10595.24
3057.1        117043.01      84784.95  16720.43     12112.14




Next the employees' wages etc. are fixed costs too. As the article "Hybrids In The News" ( www.xprizenews.org/index.php?s=Virgin ) says Virgin Galactic will employ 75 pilots. They will need additional employees for administration adn the like. So I calculate 100 employees.

Since I don't know what a pilot and other employees are payed in the US I use a german number. A german flight captain gets 110,000 Euro per year which were 91,157 dolars at the 18th of June this years. I'll assume now that that amount will be payed to each of the 100 employees of Virgin Galactic I assume too - this is much to high and so means that the next table is very conservative. The payments sum up to 45,578,500 in five years and are included into F in the formular. The resulting table of break-even-points looks as follows:

Code:
tot. flights  per flight   per flight  per seat    per seat
              veh. only                veh. only   

557.1        -54575.28    -221241.94  - 7796.47   -31605.99
1057.1          33868.03    - 57041.06    4838.29   - 8148.72
1557.1         67034.27       4534.27    9576.32      647.75
2057.1         84407.06      36788.02   12058.15     5255.43
2557.1         95098.01      56636.47   13585.43     8090.92
3057.1        102340.27      70082.20   14620.04    10011.74




To be significantly more conservative I now add 10% of the already assumed and calculated fixed costs too and get the following break-even-points:

Code:
tot. flights  per flight   per flight  per seat    per seat
              veh. only                veh. only   

557.1        -80032.81    -246699.47  -11433.26   -35242.78
1057.1         19982.11    - 70926.98    2854.59   -10132.43
1557.1         57487.70    -  5012.30    8212.59   -  716.04
2057.1         77133.48      29514.44   11019.07     4216.35
2557.1         89223.20      50761.66   12746.17     7251.67
3057.1         97413.01      65154.94   13916.14     9307.85




Some remarks at this point:

1. All these calculations looked after the upper boundary of Virgin Galactic's variable costs - the costs that vary by number of flights. The highest possible boundary were 20,000 $ because their projections mean that they can achieve the profit zone only when their flights are at that price already. But the flights at the two higher prices wouldn't have covered the costs of the vehicles totally - which is required to achieve the profit zone. Logically the variable costs must be below 20,000 $. So lower boundaries of the variable costs have been calculated by using the break-even-point(s) and then by three steps adding the licence costs, the costs of employees and a safety margin of additional 10% of the already used fixed costs.

2. The assumptions about the costs of employees and the 10%-safety-margin together will be too conservative.

3. The upper boundaries are averaged variable costs - no economies of scale are assumed. This assumption will be wrong because Virgin Galactic's president Whitehorn explicitly said that economies of scale will alow for a price of 20,000 $. This means that the variable costs may be significantly higher at the beginning of the five years and significantly less when they are in profit zone.

4. The sources I used are from different times - the oldest is from 27.09.2004 while the youngest is from ... So some numbers may have changed and there simply is no information about that change.

5. Virgin Galactic's projections explicitly include competitors. So their projections may be projections of market prices - but they may try to get higher prices and and really have higher variable costs than got here.

...



Obviously the variable costs - including propellant costs - are between 21,000 $ per flight and 117,000 $ per flight regarding upper boundary.

The article "Space Tourism: Next Steps Taking Shape" ( www.space.com/news/050426_tourism.html ) said

Quote:
Commercial companies that develop lower-cost versions of the classic government booster and spacecraft concepts. These firms then conduct commercial flights in 4 to 6 years that are funded by passenger ticket sales. Perhaps 50 to 100 astronauts would be flown the first year with the rate topping out at maybe 300 to 500 per year.
The second scenario involves players that do not find the dangers of space flight acceptable. It is recognized that extensive improvements in safety are more important than extensive improvements in affordability. These players are faced with a much greater technical challenge and the need for new innovations and breakthroughs. If successful, however, a far greater market can be realized, starting out at 500 astronauts the first year, increasing to about 3,000 astronauts per year, headed toward 50,000 to 100,000 astronauts by the twelfth year of operations.


500 astronauts would mean 71 or 72 flights per year which is too few in the long run, But 3,000 astronauts were 428 or 429 flights already which may be sufficient if my calculations of costs of employees and the 10%-safety-margin are left away. 50,000 to 100,000 astronauts per year now would be 7,142 to 14,286 flights - which all is fully in the profit zone.



What's interesting regarding accumulation is the profit. When they are in the profit zone the investment into the vehicles is earned back already and a margin of the 20,000 price is profit.
Per year there are 1,433,333.33 $ licence costs, 9,115,700 $ costs of employees I calculated very conservatively and the more conservatively used 10%-safety margin of 1,054,903.33. They sum up to 11,603,936.67 and have to be subtracted from the revenues as well as the variable costs. The variable costs of 117,000 $ per flight is use in the following table

Table of profits
Code:
flights   revenues        variable costs   fixed costs   profit
          140000/flight   117000/flight

500       70000000        58500000        11603936.67   -  103936.67
1000      140000000       117000000        11603936.67    11396063.33
1500      210000000       175500000        11603936.67    22896063.33
2000      280000000       234000000        11603936.67    34396063.33
2500      350000000       292500000        11603936.67    45896063.33
3000      420000000       351000000        11603936.67    57396063.33


So it they can have profits of between 11,000,000 dollars and 58,000,000 dollars per year. This means that they could have accumulated between 122,000,000 dollars and 316,000,000 dollars after seven years of operations.



So far the calculations up to now - in the next post non-calculatinal aspects will be added.

Please feel free to ask questions.



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


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Post    Posted on: Fri Aug 05, 2005 11:01 am
In between I must add some remarks before talking about the non-calculational aspects:

1. I remember having read remarks Rutan made concerning the turn-around-time of Virgin Galactic's vehicles but can't find them. They could help to identify between what margins the number of flights is to be expected.

2. In autumn last year Rutan talked about 3000 astronauts to be flown per year which I already called to be "to few". Since that time there weren't such issues no more. It is possible that he and Branson simply hadn't that concrete and exact plans and data as they have now. All what's available at a more actual level is the number of registered people at Virgin Galactic - and these too are aging because the last were from April if i remember correct.

3. I randomly detected a number of 136 million $ investment - as I understand it - which is significantly below the 200 million I used because of Virgin Galactic's infrastructure. Having recognized that I observed that there was sometimes reported that and sometimes something different. So alternative calculations are possible. But it seems that they all tend to have results comparable to what has been already calculated in this thread. If someone calculates by the differing number I would find that positive.



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Post    Posted on: Mon Aug 08, 2005 11:55 am
Some comments about constraints of the calculations done:

1. No taxes on revenues or profits have been considered. first I don't know the american tax rates and second tax rates aren't that constant.

2. If the fact that Whitehorn has been speaking of economies of scale means that the initial variable costs are significantly higher than the calculated averaged ones then the varaible costs will be reduced significantly until the break-even-point is reached. This would mean that the variable costs are below the calculated average for each used number of flights - in other words economies of scale mean higher profits.

3. In the listed numbers of accumulated capital the 100 million dollars for the five suborbital vehicles are included. Now some day Virgin Galactic will have to replace the five under development currently by others. So when they have back those 100 millions dollars they can invest them into something else but have to make sure that they have back a portion of that new investment that it is required to replace the five vehicles.
Technical and technological progress can result in a requirement of less than 100 million dollars. There is the possibility that the nummber of their customers grows by a rate that the replacing vehicle(s) carry more than 7 passengers - 10 to 15 perhaps - and there is the possibility too that the number of their customers stagnates or shrinks and they wouldn't replace all five vehicles.

4. They already take deposits from their customers - these deposits they can use for their investments and don't need to use their LLC-capital.

5. The article "Jim Muncy’s on the SpaceShow, SS2 info" ( www.xprizenews.org/index.php?p=929 ) contains the issue

Quote:
Having one vehicle
doing two tasks would seem a reasonable approach but I’m surprised that it would be economical for (eventually) daily space tourism flights to use a carrier that is a lot bigger than necessary. The Very Large Aircraft (VLA) is really, really large. Maybe the SS2 is going to be bigger than generally assumed....


If the VLA is the mother ship of Virgin Galactic's vehicles really then this means that they could do unmanned comercial orbital launches by their mother ships - which could get them significant additional revenues from another market segment and would mean economies of scope of the VLA and the runway. Later manned orbital flights could be added. In this the following quote would fit:

Quote:
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.


("Space Tourism: Next Steps Taking Shape" www.space.com/news/050426_tourism.html ).

6. They could apply a similar way of market research to orbital tourism as they have done for the suborbital business or as Prof. Collins and his colleages at the JRS have done - they could ask each of their suborbital customers if he would like to go on an orbital flight and at which price.

7. May be that Rutan has altered his vision of 3000 astronauts within the first five years to a significant larger amount already because of the number od people already registered at Virgin Galactic (29,000 in April 2005).



It seems that the capital required for an orbital project can be accumulated by Virgin Galactic's vehicles without major problems. Missing amounts could be added from Branson's fortune or by gathering orbital customers and letting them pay deposites which in that case will have to be higher. I personally would find it reasonable to use the orbital vehicle funded should be used comercially because of the amount invested - it could be the CXV. The developed vehicle shouldn't go to a museum like SSO.

There is a possible co-investor - Space Adventures. They have sold Soyuz-tickets at 20,000,000 dollars. If t/Space's informations really mean that a CXV-flight will cost 20,000,000 dollars for all 4 to 6 persons together and one of them is the pilot then a CXV-flight would have costs of 3,000,000 to 5,000,000 dollars per passenger - 75% less than the Soyuz-flight. May be they are interested. Deposits could be between 200,000 dollars and 500,000 dollars.



It will be interesting to look for additional new informations which could be used to modify the calculations.



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Post    Posted on: Wed Aug 10, 2005 12:03 pm
What has been applied here up to now is Enterprise Economics and the purpose was to conclude from published informations the boundaries of data not published - the corridor they might to be assumed to be found in. The instrument used is the Break-Even-Point-Analysis - there are informations about the Break-Even-Point itself and from there the calculations have gone down to the basic data which have gone into the calculation of the break-even-point.

The Spaceship Company and the Mojave Aerospace Venture may be possible investors or sponsors/funders for a private CXV too - but there are no data available yet from which boundaries of the funds could be concluded. No costs of production have been published and no informations about what will be done with the licence costs Mojave Aerospace Venture will get. Additionally there may already be additional sources of revenues - contracts etc. - not made public.

Compared to the CXV the investments into SpaceX's Falcons would be covered by what has been calculated in the previous posts - and the current launch costs of around 16 million published for the future Falcon V are below the flight costs of the CXV of 20 million. But the FalconV still isn't manned - this requires development and the launch costs may be increased by an amount which can't be estimated based on the data available no way.

One detail regarding Virgin Galactic's vehicles would be interesting. Whitehorn has been speaking about economies of scale reducing the ticket price down to 20,000 dollars - are these Virgin Galactic's internal economies of scale only? This seems to be probable a little bit since they haven't said yet if they will buy the propellant from SpaceDev or from EAC or from any third company. If it is not SpaceDev it may be EAC - very probably... - but they have to get a contract with them. So no price will be fixed yet. May be that additional economies of scale can be achieved and got regarding propellant price.

If Virgin Galactic can get package contracts from travel bureaus bundling several flights then they could order increased amounts of propellant per order compared to situation where nothing is bundled. The increased amounts may result in economies of scale at EAC or SpaceDev or a third company - which they will partially move over to Virgin Galactic by rebates/sales discounts. This would increase the profit or reduce the price or both partially. And it might assist the growth of the number of passengers.

But may be the opposite is the case and there are contracts already including all potentials of economies of scale at the propellant producer(s) which then would have gone into the published prices.



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Post    Posted on: Wed Aug 10, 2005 2:16 pm
Wow. Okay, after skimming through this thread (can't understand a few things), I realized exactly why GT requires me to take an Econ course as an engineer. I might need a couple more, as well.

One thing to remember: you mentioned that Branson will have to replace the vehicles eventually. I'm thinking that'll come sooner rather than later, as the wear-and-tear on a rocket-powered vehicle that has to undergo re-entry on every flight is pretty rough. They'll also have to replace the engines more often than the vehicles.

Also, the vehicles are perfectly capable of night-time flight -- the only requirements for that are good navigational instruments, a radio, and landing/running lights, with a GPS system a nice-to-have thing. SS2 will almost undoubtedly have all of those, and probably of better quality than most civilian aircraft. However, I seriously doubt they'll do many night flights, as the view of Earth isn't nearly as spectacular at night (big black blob with a few yellowish lights) as it is when you can actually see the Big Blue Ball underneath you. Sunrise and sunset flights, though, will probably be fairly common -- either of those from even sub-orbit is pretty breathtaking, from what I understand.

And, unfortunately, the only thing that we've actually heard about SS2 is that it's supposedly a very sexy design -- which is nearly always a Good Thing with aircraft: a rule of thumb is that the better it looks, the better it flies.

Usually.

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Post    Posted on: Wed Aug 10, 2005 4:03 pm
You are mentioning several details data and informations about would cause modifications of the used formular as well as thresults of the version of the formular used in the previous post.

Regarding the replacement of the motro(s) I remember having read somewhere one single remark that Rutan isn't content with the circumstance that the engine has to replaced after each flight. It wasn't a quote or citation - so I don't consider to be a serious information. But on the other hand there are no informations if the motro/engine is inseperable linked to the propellant or not.

For the claculations it would have marginal consequences only if at all:

a) If the motor/engine is inseperable linked to the proepellant it would be included in the variable costs which according to the thread about costs are the costs which vary directly by number of flights.

b) If the motor is not inseparable linked to the propellant a replacement rate of one motor per flight can be avoided and it wouldn't be included in the variable costs but a part of the fixed costs called jump-fix costs.

c) The costs of the motoor/engine have a low upper boundary - the calculations in the previous posts finally used fixed costs of 11,603,936.67 dollars per year. These would include the jump-fixed costs of the motor if it is going to be replaced once or more per year- If the replacement rate is 500 times per year one motor/engine would cost 11,603,936.67 dollars / 500 = 23207,87334 as upper boundary. But this amount includes wages etc. as well as the licence costs.

All in all this is question data for use in the formular used or its modifications would be very interesting to look into more details.

What are the things you can't understand?



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Post    Posted on: Thu Aug 11, 2005 3:38 pm
The equations and functions that you're using, and the technical terms you're using to describe them with. In other words, things that I'm already paying somebody perfectly good money to teach me starting in 8 days, and nothing at all to worry about -- I could probably figure it out if I felt like putting in that much effort.

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Post    Posted on: Thu Aug 11, 2005 5:47 pm
Alright - I am going to start to explain them tomorrrow. I'll explain the meaning the terms have in Economics and try to imagine a commonly and generally understandable translation plus I'll explain the equations and functions.



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Post    Posted on: Thu Aug 11, 2005 6:36 pm
Bloody hell Space Cowboy you spoilt Ekkehard's string of unanswered posts with your reply, still its probably a record. :)

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Post    Posted on: Fri Aug 12, 2005 3:25 am
Andy Hill wrote:
Bloody hell Space Cowboy you spoilt Ekkehard's string of unanswered posts with your reply, still its probably a record. :)

lol, but atleast, I read them ;), sometimes... some stuff don't need a reaction... or would cost me too much time to start a debate :) (too many numbers :p, maybe if it was provided in an xls, it would be easier :))

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Post    Posted on: Fri Aug 12, 2005 7:06 am
Hello, Sigurd,

I used Excel and will e-mail the spreadsheets if someone is interested.

The calculations and thoughts etc. were private ones merely which I simply offered here. Each post was one step after which I had to do a break in favor of other things.

But the spreadsheets wouldn't explain the thinking and the concept behind the calculations.

I will add the promised explanations etc. to this post by EDIT.



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

EDIT: The explanation of equations and functions will follow later and by another post perhaps.

Terms:



accumulating

applying a way of accumulation



accumulation

gathering a larger and larger amount of something. The term is used regarding capital mainly. The accumulations can be done by several ways - selling shares, getting credits and loans, adding profits to the existing capital etc. In this thread "adding profits..." is under consideration mainly because that way is very autonomous.



administration

department of a company responsible for hiring, sales, maintenance, accounting, controlling, businesses etc.



amortization

process of getting back a credit etc. by repayment



averaged variable costs

the average of several different values of variabl costs which are/were valid at different times or are valid for different products or services. In this thread "different times" is used.



back atm

back in the atmosphere



break-even-point

situation where two or more different dependent variables with opposite sign achieve an identical absolute value. Mostly applied to costs and revenues - marks the boarder between losses and profits then.



bundling several flights

creating a group flights for sales-purposes, resulting in a package contract. Several tickets are sold by one contract.



conservative

not under-estimating costs in this thread.



financial base

minimum amount of financial ressources required for an investment. Some forms of capital are financial ressources - stocks for example. In this thread financial ressource that are capital are used mainly.



fixed costs

part of the total costs of a company which remains constant regardless of the amount of products produced - flights in this thread. Fixed costs are independent of the amount of products.



Founders

the term Virgin Galactic uses for the first 100 passengers who pay 200,000 dollars per seat



fund

capital reserved, provided or made available for a special purpose, project etc.



infrastructure

equipment required to enable production etc.: runway, computer network, road etc. etc.



investment

use of financial ressources or capital to buy or build equipment for the production of products or services - flights in this thread - and/or the infrastructure required



JRS

Japanese Rocket Society



LLC-capital

the amount of capital that is fixed as the liability-capital of the Limited Liability Company



Market Differentiation

breaking up one whole market into several different markets by creating artificial differences via product policy, marketing policy etc.



Market Discrimination

discriminating the group of customers into several subgrouos by setting high prices first to get very high revenues from fewer rich and then reducing the prices again and again to get revenues from increasing amounts of people less rich and the average people at least



market price

price valid all over the market and formed by the market forces - doesn't exist as long as there is no market or if there is a monopoly or a couple of powerful companies



Pioneers

the term Virgin Galactic uses for the second 300 to 400 passengers who pay 100,000 dollars per seat



order

order of groups of customers in this thread: 1. founders, 2. pioneers, 3. all further customers



package contracts

contracts which include more than one seat or one flight but several - perhaps tens or hundreds



price

revenue got by selling a single unit of product - ticket here. In this thread seven tickets form one flight.



profits

difference between the total costs and the total revenues of a company



rebates/sales discounts

reduced price(s) bound to increased amount of sold units per contract



rev.

short form of "revenues"



revenues

income of a company got by selling products - tickets in this thread.



safety margin

margin of caution to cover data unknown or not specified



significant

no or only marginal error to be suspected



So they mustn't be covered by the tickets for those flights and shouldn't be calculated here

"mustn't" used in the sense of "don't need" merely, wrong use of an english word



technical and technological progress

impact of techniques abnd technologies on how much financial ressources are required for an investment or their impacts on costs. Technical and technological progress can save capital or it can save labor (employees) or it can be neutral.



total costs

sum of all costs a company is faced to



total revenue

sum of all revenues a company has got



travel bureau

wrong or improper translation of the german term "Reisebüro" - correct translation is travel agency



variable costs

costs caused by or linked to a single unit of product produced - flight in this thread



veh.-inv.

short form of "vehicle-investment"


Last edited by Ekkehard Augustin on Fri Aug 12, 2005 11:40 am, edited 1 time in total.



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Post    Posted on: Fri Aug 12, 2005 11:36 am
If you email it to me, (as example to xprize@gmail.com) I can host it on the webspace, so all people can download it.

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