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Interview: Space Odyssey

Published by Sigurd De Keyser on Wed Feb 23, 2005 4:01 am
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altIndiatimes.com: Isn’t space tourism still a frill thrill of the rich?

It became real when Dennis Tito became the first space tourist in 2001, followed the next year by Mark Shuttleworth from South Africa. Owing to cash crunch faced by the Russians, both these efforts cost a fortune — each tourist paid over $20 million. After speaking to Tito, I gathered that it didn’t present particularly great challenges. If a small, frail man well into his 60s can do it, others too can. The only constraint appears to be money. The tourism industry could be worth $10 billion a year. This should attract competition. With more players, the cost will fall substantially.

Which convention are you working on to attract private enterprises to the space sector?

The Space Protocol that UNIDROIT (International Institute for the Unification of Private Law) is working on will allow asset-based financing of space assets, harmonising the national laws of ratifying countries and allowing businesses to use the space asset itself as collateral for loans. One part of facilitating private participation, this is aimed at all aspects of the space industry. Legislative action, as seen in the US and Canada, has opened up the space sector to private participation and spurred a private remote sensing industry. India needs to move in this direction to capitalise on its competitive advantages.

What has impeded private participation so far?

Some people in government trot out the same stale arguments to discourage private participation: national security, high risk, legal liability, lack of expertise, etc. All of these were once advanced for commercial aviation too and look where we are now! With dwindling resources and severe budgetary constraints, governments are finally waking up to the need for private investment. The US has now accepted that entities like NASA cannot operate like a business and efforts to make them that are just too inefficient. They should primarily be R&D vehicles. Obstructions from government entities and lack of capital have been the main hurdles.

But how will law address monetary problems?

Significant investments are necessary. Virgin Galactica announced an initial investment of $20 million and has committed up to $100 million. This venture’s success is crucial for the industry as it could be a market driver. Law has a huge role to play. Lenders largely shy away due to the legal risk posed by the collateral not being on any country’s soil. If the company defaults on repaying the loan, or if the space asset is lost, the lender may not be able to recover the investment. An international law that recognises asset-based financing and provides an enforcement mechanism everywhere would lower the legal risk, increase lending, and push the interest cost down, as interest is directly tied to risk.

How do you assess the pay-offs?

As early as 1998, a NASA report conclu-ded that if ticket prices hit the $50,000 mark, there could be as many as half-a-million tourists per year! That is a significant number. There will be teething troubles, as in any innovative business. Once these are overcome, space tourism will parallel civil aviation in a much shorter time frame. The boundaries of the possible have shifted after the $10-million Ansari X Prize for the first privately built space vehicle was finally won last year.

What kind of private enterprises would make it big?

Initially, it will be daredevil entrepreneurs like Sir Richard Branson (Virgin founder). Once we have a demonstrated commercial business-model, others will step in.

But many plans have come a cropper. Don’t you foresee scepticism?

Some of that scepticism became unwarranted after Tito and Shuttleworth returned safely. There are risks, but one could just as easily die in a car crash! Money is a major factor. The big challenge will be to reduce launch costs by designing better vehicles. This should happen in the near future. The Russians will have to lower their prices if private companies step in. If the cost falls, there will be greater demand. After all, there were people willing to pay to fly on Concorde. Space will be a bigger draw. Several Hollywood celebrities have already evinced interest.

Why don’t you help India leverage the idea?

I had offered my assistance in a pro bono capacity to ISRO a year ago, but haven’t heard back! Because the government completely dominates the space sector, there is no appreciation of the benefits of asset-based financing. With huge competitive advantages, particularly in the satellite sector, India needs to move from technology-demonstration to commercialisation. Private actors alone can do this efficiently.

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