The business of space real estate became a little more real this week when Axiom Space delivered three paying passengers and their chaperone to the International Space Station for an eight-day stay.
Axiom, a company founded by a former NASA official and a long-time NASA contractor in 2016, wants to build and operate a private space station, beginning by attaching its own module to the ISS in 2024. After launching the first entirely private mission to the space station, the company sits at the forefront of several efforts, including one backed by Jeff Bezos, to make the first free-flying private habitats in low-Earth orbit.
The ISS cost a dozen governments more than $150 billion to construct since the first module was launched in 1998, but today it is closer to retirement than birth, and is expected to be decommissioned by the end of the decade.
The space agencies in Europe, the US, Japan, and Canada will still want to perform research in low-Earth orbit, but for political and economic reasons, are unlikely to rely on China’s Tiangong orbital lab. And many private companies, notably SpaceX, Northrop Grumman, and Boeing, have built multibillion-dollar businesses around the ISS. Now, the emerging consensus is that future habitats in low-Earth orbit will be privately built and operated, allowing NASA to focus its resources on the Moon and beyond.
“The US government is not going to build another space station, it’s going to fall to the private sector,” says Kam Ghaffarian, Axiom’s chair and co-founder, who previously led a business hired by NASA to manage the ISS.
A business plan, 400 km above the ground
The first challenge facing anyone who wants to make money keeping people alive hundreds of miles above the Earth’s surface: Getting them there.
The only reason orbital habitats can be imagined as a feasible business is because of SpaceX, which launched Axiom’s crew on April 8 in a Dragon spacecraft on top of a Falcon 9 rocket. Over the last decade, Elon Musk’s company has built the cheapest vehicles for carrying humans and equipment to low-Earth orbit. Whether you want to launch satellites or tourists, getting off the ground has never been easier.
The second and larger challenge for Axiom and its competitors will be getting money back from their investments. The benefits of space travel are notoriously diffuse; some of the biggest motivators are prestige, political signaling, and fundamental scientific knowledge. If it is to replace the ISS, Axiom will have to impose a P&L structure on a floating temple to good feelings.
In 2020, Michael Suffredini, Axiom Space’s other co-founder and CEO, told me his firm could replicate the ISS’s capabilities at an annual expense of $1.2 billion, about half the current operating cost. The most comprehensive estimates of how much a space habitat can earn come from a 2017 federal report, which suggested that by hosting visiting public and private astronauts, supporting satellite infrastructure, making novel products, performing experiments in microgravity, and producing media and advertising, a space station could bring in between $455 million and $1.2 billion a year.
That math doesn’t leave a lot of wiggle room.
Space tourism is low hanging fruit
You can see the challenge in how Axiom has discussed ticket prices. In 2019, when NASA announced plans to open the ISS to private visitors, Axiom said these passengers would pay $55 million each for the mission, slightly less than what NASA pays “per seat” for astronauts. By launch day, however, the company refused to comment on its pricing.
The three passengers are all billionaires, from the US, Canada, and Israel, respectively, who were recruited by Axiom because they were wealthy enough to afford the trip and shared the company’s approach to the mission. Axiom and Michael López-Alegría, the astronaut accompanying the trip, insist the passengers are not “tourists,” that their mission is “not a vacation,” and that they aren’t going to look out the windows. Instead, they are focusing on scientific work they have coordinated with universities and medical researchers.
Of course, many of the dozen tourists who have previously visited the ISS brought their own research projects and didn’t bristle at the title. If today’s passengers simply cared about science and aren’t interested at all in the pleasures of space travel, they could have sent their experiments to space alongside, say, the winners of some philanthropic contest, or actual scientists. There’s clearly a defensive crouch here, following the backlash against recent space tourism projects. (Axiom no longer touts celebrity designer Philippe Starck’s work creating a luxurious interior for its future station.)
“I hope the attention is not on NASA enabling billionaires to go on a joyride, that it is more serious than that and the people who are doing this have serious goals,” Robyn Gatens, the NASA official in charge of the ISS, told Quartz in 2021.
How tourism creates an orbital economy
Achieving those serious goals depends on the potential revenues from a private space station. There won’t be much money coming from NASA while the ISS still exists, and futuristic businesses like manufacturing specialized components on orbit aren’t quite there yet. Taking people up is a comparatively simple (and lucrative) first step that allows Axiom’s staff to practice flying a crew and working effectively with NASA, according to the company’s mission director, Derek Hassman.
For the space agency, tourism is a business model they can tolerate in order to seed the future industry they need. Gatens notes that just 5% of the station’s resources are reserved for visitors and they pay about $30,000 per person per day for their use; a new pricing policy for future missions will raise those fees and add a $10 million charge for visits.
“Private astronaut missions is a way that NASA could facilitate that market…so that industry could get a feel for how big of a market it is,” says Phil McAlister, NASA’s director of commercial spaceflight. “The other important aspect of that is, when the astronauts go up on to the ISS, they will be free to do things on orbit that our NASA astronauts can’t.”
That could include applied corporate research, producing movies or advertisements, testing out technology for Axiom’s future station, and generally finding ways of making money barred to NASA astronauts, who focus on government science priorities and maintaining the station. The hope is that initial private missions will give Axiom and its rivals enough evidence to convince private investors that space real estate is the next AirBnB.
Capital needed for an orbital real estate park
Thus far, Axiom has raised just $150 million over two rounds—a small amount for a company planning to build significant space hardware. Ghaffarian wouldn’t say how much money is required to build out Axiom’s module or a free-flying station, but he emphasized it would be far less than required for the ISS. He points to a more tailored design, the falling cost of space tech, and the know-how gained by Suffredini and other former ISS engineers on the team as the key reasons.
For the next two years, Ghaffarian expects most of his firm’s revenue will come from flying private passengers and astronauts from countries without their own vehicles for human spaceflight. Then, in 2024, the company aims to launch its own module to the ISS, which NASA is supporting with $140 million in development funding. That module would enable more frequent visits, and also expand the station’s capabilities by adding another docking port for visiting vehicles. By 2028, Axiom hopes to separate its module from the ISS to create a bona fide free flying station.
NASA is also backing three efforts that aim to proceed straight to an independent station with $416 million in development funding. Jeff Bezos’ space company Blue Origin is leading the Orbital Reef project, which recently passed a final design review. Nanoracks, a longtime ISS commercial partner, is working with Lockheed Martin on a concept it calls Starlab. Northrop Grumman is basing its unnamed design on the uncrewed Cygnus spacecraft that already ferries cargo to the ISS.
Private space stations have been contemplated before; indeed, Nanoracks’ founder Jeffrey Manber briefly led a consortium that bought the Russian space station Mir at the turn of the century. At the time, NASA frowned upon the idea of a commercial competitor for the ISS, one reason that MirCorp ultimately floundered. Now, the space agency welcomes their involvement. That might be enough to make sure that future visitors to low-Earth orbit will have to choose which station to hang their helmet in.