Can Spaceport America recover, or was taxpayers’ money lost in crash?

By Rob Nikolewski │ New Mexico Watchdog

Friday’s crash of Virgin Galactic’s spaceship is a setback for Spaceport America, the $218.5 million facility that New Mexico taxpayers funded in southern New Mexico.

The question is, how big a setback?

A co-pilot, Michael Alsbury, died in the crash of SpaceShipTwo, and the pilot, Peter Siebold, was severely injured.

“I’m very concerned about what kind of effect this will have on New Mexico and the Spaceport,” said state Rep. Luciano “Lucky” Varela, D-Santa Fe, and chairman of the influential Legislative Finance Committee. “The whole issue about the Spaceport is something we’re going to have to keep our eyes on.”

As the National Transportation Safety Board combs over the wreckage in Mojave, Calif., questions about the financial sustainability of Spaceport come into sharper focus.

Virgin Galactic is the futuristic facility’s anchor tenant and its owner, British billionaire Richard Branson, has had to push back the date for the company’s plans for an inaugural launch numerous times, even before Friday’s crash.

“Many people expected this vehicle to already be flying 10 passengers and generating revenue out there,” said Greg Autry, an assistant professor at the Marshall School of Business at the University of Southern California who has followed and studied the nascent commercial space industry. “Clearly this is going to delay the operation of this vehicle at least a year, I believe, maybe longer. And that’s got to be a huge problem for Spaceport America.”

Just last week, Spaceport executives told members of the state’s Legislative Finance Committee the facility could face a $1.5 million budget shortfall in fiscal 2015 if Virgin Galactic didn’t start sending customers into suborbital space by next July.

Under the terms of its contract, Virgin will pay the Spaceport Authority between $25,000 and $75,000 per launch. Early in the project, Branson predicted a couple of launches per week, with the number rising to 700 per year by 2015 from Spaceport America,in the remote desert of southern New Mexico just west of the White Sands Missile Range.

New Mexico Watchdog left a message with Spaceport America executive director Christine Anderson on Monday morning to get more information on the potential $1.5 million shortfall but has not received a call back.

Monday morning, Anderson posted Spaceport’s monthly newsletter on the facility’s website. She made no mention of financial challenges posed after Friday’s crash, writing, “The coming months will be challenging but this is but a speed bump in this incredible journey. We must maintain our resolve, purpose and resiliency as we chart the course ahead.” Click here to read the entire five-paragraph statement.

“If this thing doesn’t get assured to the public that, despite what happened over the weekend, (Spaceport officials) can establish a practical and workable Spaceport program, taxpayers aren’t going to be all that enthusiastic about it,” Varela told New Mexico Watchdog. “I hope we can resolve it.”

LOOKING FOR REASONS: Officials at the National Transportation Safety Board are trying to determine the cause of Friday’s crash of that killed a Virgin Galactic co-pilot and severely injured the pilot.

After $218.5 million in sunk costs, state and local officials — especially in towns and counties near Spaceport — hope the investment will still pay off.

Asked if Friday’s crash has shaken the confidence of locals, Bruce Swingle, county manager in Sierra County said, “I hope not. This is a big deal for this region … I believe (Spaceport) will pan out. I don’t think interest is eroding.”

“We’ve made a huge investment out there,” said state Senate Pro Tem Mary Kay Papen, D-Las Cruces. “We can’t just say, ‘One crash, so King’s X.’ I just don’t think we can do that.”

USC’s Autry thinks commercial space still has a robust future.

“This market exists,” Autry said. “In the early years, the Wright Brothers crashed and that wasn’t the end of the aviation industry … This won’t be the end of the commercial space industry.”

While Virgin Galactic, led by the flamboyant Branson, is in many ways the face of Spaceport America, it’s not the site’s only high-profile tenant.

Another billionaire, Elon Musk, signed a three-year lease last year with Spaceport to test reusable rockets for his SpaceX venture and, according to Anderson, has already spent $2 million in infrastructure improvements.

UP Aerospace is also a paying customer at Spaceport and, just days before the Virgin Galactic accident, a Tucson-based company called World View Enterprises, entered negotiations with Spaceport officials. World View intends on sending customers 20 miles into the stratosphere in cutting-edge balloons.

“We’re on the cusp of this next generation of transportation for humans,” Anderson told New Mexico Watchdog in an interview last month, confident that state taxpayers will see a return on their investment. “We appreciate the advancement the people of New Mexico made in us and we’re trying to make it a success.”

“It’s too early to tell,” Varela said. “It depends on what extent the public accepts it and utilizes it. We’ve looked at horizontal launches, we’ve looked at vertical launches and any other uses of the Spaceport … In the environment we’re in right now, it’s questionable to what extent it will benefit New Mexico.”

“It may be an asset that could be very hard to pay back,” said Autry. “But now that you have one, I would do what you could to help Virgin at this point and make your investment turn out to have some value. I would not dismiss this as an unsalvageable investment at this point. I think they’re going to get it together.”