Copyright © 2014 Albuquerque Journal
Virgin Galactic’s Halloween catastrophe in the Mojave Desert laid bare the vulnerability of Spaceport America’s reliance on a single anchor tenant for success.
The Oct. 31 crash of Virgin’s SpaceShipTwo rocket means the launch of space tourism flights from southern New Mexico won’t happen until at least 2016, even with the company’s determination to restart flight tests with a newly built vehicle in six months.
And the longer it takes for Virgin to launch commercial operations, the more pressure builds on the New Mexico Spaceport Authority to recruit more operators to generate the revenue needed to keep the Spaceport open and assure its long-term economic viability.
ANDERSON: “We are pursuing new tenants”
At a Legislative Finance Committee hearing in Santa Fe the day before the crash, Spaceport Executive Director Christine Anderson said the facility would face a $1.5 million budget shortfall in the fiscal year, starting next July if Virgin Galactic didn’t start flying next year.
“Now it looks like they won’t fly at all in fiscal year 2016, so we’re facing an even larger budget shortfall,” Anderson told the Journal this week. “We’re still calculating the impact, but we expect to ask for a special appropriation from the Legislature.”
In the aftermath of the crash, Anderson said the Spaceport Authority is developing a strategy to attract more Spaceport customers.
“We have a plan,” Anderson said. “We’ve been working on it all week, but it’s pretty fresh. We’re still developing it.”
That would be welcome news to industry experts, who even before the Virgin crash said state leaders had done too little to recruit more space companies, thus turning New Mexico’s $212 million facility into a one-trick pony whose fortunes would rise or fall with the anchor tenant.
“It’s urgent for the state to show leadership in this crisis, because Virgin’s crash is a very big event in the history of the Spaceport, even if it didn’t happen in New Mexico,” said Patricia Hynes, director of the Space Grant Consortium at New Mexico State University. “What happens to Virgin Galactic is beyond our control. What is in our control is what we do with that facility.”
Up Aerospace’s SpaceLoft 8 rocket launches from Spaceport America. Jerry Larson, president and CEO of UP Aerospace says the Spaceport’s business plan has been “too narrow” from the start. (Greg Sorber/Albuquerque Journal)
Jerry Larson, president and CEO of UP Aerospace – which has been flying payload rockets to suborbit from Spaceport America’s vertical launch pad since 2006 – said the Spaceport’s business plan has been “too narrow” from the start.
“They’re focused on one tenant and one type of launch method,” Larson said, referring to Virgin’s strategy of horizontally launching a mothership from the Spaceport runway to carry the passenger rocket into the sky before shooting into space.
“The Spaceport’s vertical launch pad has been more of an afterthought, with few funds put into developing that part of the facility,” Larson said. “They constructed the Spaceport with all their eggs in one basket.”
That strategy began under Gov. Bill Richardson, who signed Virgin Galactic as the facility’s anchor tenant. Since then, the horizontal runway, Virgin’s terminal building and hangars have been built around that company’s needs.
The Virgin installations are round, for example, rather than modular, which makes it difficult to add on more buildings and hangars as new tenants move in, similar to how it’s done at airports, Larson said. That makes it more costly to recruit other tenants, because the Spaceport will have to add infrastructure to accommodate them.
That building is for Virgin’s exclusive use. The company is currently paying lease fees, but it’s still remodeling the interior and has yet to move in.
Anderson said the Spaceport strategy was indeed designed around Virgin Galactic.
“It’s very true,” she said. “It was developed around that partnership and Virgin’s needs, and the Spaceport has since spent its time on developing all that. Now we have a facility that’s designed for one anchor tenant and we should have others. We all know that.”
But with Spaceport construction now complete, officials are able to channel time and resources into building more infrastructure to accommodate other companies, and on marketing to recruit more businesses.
“Up to now, we were focused on building the Spaceport, which was a humongous task,” Anderson said. “We have to now adjust our business strategies.”
The Spaceport Authority expects to request capital outlay funds in the next legislative session to build more hangars and to further develop infrastructure at the vertical launch pad. Anderson also expects to hire the facility’s first marketing director next year to recruit more companies.
Christine Anderson, executive director at Spaceport America, looks out from the mission control center. Anderson says the facility’s budget was facing a deficit even before last month’s crash set back Virgin Galactic’s plans for flights from the spaceport. (Greg Sorber/Albuquerque Journal)
Competition galore
Still, the state has already lost significant ground to other states as competition heats up in the emerging commercial space industry. New Mexico is up against places like Texas, California and Florida, where deeper pockets and decades of involvement in the space industry offer competitive advantages.
In 2012, for example, XCOR Aerospace in California chose to relocate its operations in Texas instead of New Mexico – where it originally wanted to be – after the Midland Development Corp. in West Texas offered a $10 million deal for XCOR to set up headquarters at the Midland International Airport. XCOR, like Virgin Galactic, is building a rocket to send paying passengers into suborbit.
Texas state officials are aggressively recruiting more space business. Gov. Rick Perry recently committed $15 million to help Space Exploration Technologies, better known as SpaceX, to build a new, $100 million orbital spaceport at Brownsville along the Gulf Coast.
And more states are looking to enter the race, with nine spaceports now licensed by the Federal Aviation Administration nationwide and about 10 more under consideration.
Stuart Witt, CEO and general manager of the Mojave Air and Space Port, said New Mexico needs to aggressively reach out to space businesses.
“If it were me, I’d be out there like the village idiot recruiting and cutting deals,” said Witt, who spoke with the Journal the week before Virgin’s spaceship crashed in Mojave. “If Spaceport America’s model is to get Virgin Galactic up and operating and then declare victory, well that’s one strategy. But it’s not the model here in California or in Texas.”
Witt said Gov. Perry is now calling XCOR one of his “success stories” in recruiting companies from California.
“It’s a very competitive environment now,” Witt said. “New Mexico needs a marketing campaign.”
To stay competitive, the Spaceport should have been actively marketing to companies globally for years, Hynes said.
“The spaceport environment is getting more competitive and, as other states go out and recruit more operators, getting more companies at Spaceport America will only get harder,” said Hynes. “We don’t have a recruitment team going out and seeking companies to come here. We’re just sitting here watching the world go by.”
WhiteKnightTwo, christened VMS Eve after Richard Branson’s mother Eve shown mated with SpaceShipTwo, christened VSS Enterprise at Spaceport America in New Mexico. (Courtesy of Mark Greenberg/Virgin Galactic)
Anderson said that’s not true. While the Spaceport hasn’t had a marketing team or specific budget to recruit other companies, she and other executives have worked to bring in more operators, with negotiations now underway with five different companies. Arizona-based World View Enterprises, for instance – which wants to send paying passengers into the stratosphere on a high-altitude balloon – said in October that it’s negotiating with New Mexico officials about operating at the Spaceport.
“We are pursuing new tenants,” Anderson said. “It’s confidential, but I believe we have a good shot at getting at least one more tenant within a year.”
Spaceport America executives are also co-founders of the Commercial Space Federation, which has 40-plus industry members.
“We meet twice a year and, as a founding member, we see all the prospective people and companies in the industry,” Anderson said.
The Spaceport does have one other tenant, SpaceX, which plans to conduct high-altitude testing at the Spaceport’s vertical launch pad for a new, reusable rocket it’s developing.
But for now, the only one actually flying from the Spaceport is UP Aerospace, which launched its latest rocket to suborbit on Oct. 23.
NM advantage
On the positive side, if New Mexico does step up recruitment efforts, it now has an internationally recognized, state-of-the-art facility that offers many competitive advantages, Larson said. That includes exceptionally good weather for flying, restricted ground and air space next to White Sands Missile Range, plus support services available from that facility, wide open space with little urban infrastructure nearby and an altitude at 4,600 feet above sea level.
“I believe there a lot of other uses for the Spaceport beyond space tourism if the state broadens its business plan,” Larson said. “They can potentially bring in a lot of revenue, and expand and grow, but they need a strategic business vision.”