Elon Musk has big plans for Mars, for the moon -- and as it just so happens, for Earth, too.

As we learned at Musk's brief talk in Adelaide, Australia, last week, SpaceX is hard at work designing a new rocket ship to replace all its existing rockets (and even to replace one that it hasn't flown yet). Dubbed the BFR, or Big Falcon Rocket, this 106-meter-tall, 4,400-ton rocket will be large enough to carry as many as 100 colonists at a time to Mars.

Perhaps the biggest impact of BFR, however, may be felt back here on Earth.

SpaceX BFR pictured landing off Shanghai

Just 39 minutes from NYC to China? How cool is that? Image source: Getty Images.

Have spacesuit, will travel -- to Shanghai

It was toward the end of his talk in Adelaide that Musk dropped this bombshell: Casting about for a way to monetize SpaceX's research, and raise the funds it will need to finance Musk's Martian ambitions, SpaceX's CEO struck upon an inspiration. He could build the BFR -- and use it to transport passengers and cargo around Earth at supersonic speeds.

By blasting BFR through the atmosphere and into the exosphere, where air resistance is minimal, SpaceX thinks its "spacecraft" can reach speeds as high as 18,000 mph. Arcing through a ballistic flight path (a la ICBM), BFR could circle the globe in a matter of minutes, then turn on its tail, fire retrorockets, and touch down at a complementary spaceport to disembark its passengers -- and Musk says he can do all of this for "about the same [ticket price] as full fare economy in an aircraft."

It's at this point that Earth shook with the collective vibrations of a whole lot of airline CEOs sitting up and taking notice.

A wake-up call for legacy airlines

After all, United Continental (NASDAQ:UAL) depends on long-haul flights across the Atlantic and Pacific Oceans for more than 30% of its annual revenue. Delta Air Lines (NYSE:DAL) depends on international flights to Europe and Asia for 22% of its business. Why, even American Airlines (NASDAQ:AAL) does more than 16% of its business in Europe and Asia, with additional revenue coming from flights to Latin America.

SpaceX just nailed a bulls-eye on the airline industry's business model.

Musk is proposing to shake up the airline industry with a potent threat: Big Falcon Rockets, each carrying perhaps 850 passengers at a time (the pressurized cabin of a BFR will be as big as a full-sized Airbus A380 superjumbo jet), taking off at regular intervals to traverse the globe in as little as 4% the time it takes an airplane to make the flight.

In one illustrated example, SpaceX depicts a hypothetical New York-to-Shanghai trip beginning with a 6:30 a.m. boat ride from New York, launching from an offshore barge half an hour later, and ending with a rocket ship touching down at a landing pad off Shanghai at 7:39 a.m. NYC-time.

Granted, nitpickers will insist on adding the ferry time to and from launchpads to the total "door-to-door" duration of a BFR trip. But that time's basically analogous to the taxi rides to and from airports that travelers already make today. As for the flight, 39 minutes from NYC to Shanghai sounds pretty good -- about 4.3% as long as the 15 hours it takes today. And the posited trip time from NYC to London -- 29 minutes -- isn't much worse, at about 6.8% the time it takes to fly there today.

Indeed, Musk says BFR should be able to fly passengers to "anywhere on Earth in under an hour," complete most "long distance trips" in "less than 30 minutes," and do it all for "about the same" price as a regular plane ticket.

How are the airlines supposed to compete with that?

Will SpaceX kill the airlines?

Here's how: One big objection to Musk's plan is acceleration. Rocket launches routinely subject astronauts to anywhere from three to five gravities' worth of force when accelerating into orbit. G-forces on re-entry are similarly intense. Granted, Musk says that with the trajectories he has mapped out, G-forces should average no more than two or three Gs -- roughly equivalent to "a mild to moderate amusement park ride on the ascent and then smooth, peaceful, and silent in zero gravity for most of the trip until landing."

Even if that's true, though, rollercoaster rides aren't generally recommended for wide swaths of the population -- pregnant women, the elderly, small children, and people with heart conditions, to name a few. This limits the utility of BFR somewhat, and ensures Delta, American, and United will have a captive audience of customers for decades to come.

Another obstacle to widespread adoption of BFR for passenger transport is the need to launch and land at sea. On the one hand, this approach does limit risks to the population (from exploding rockets). On the other hand, if Musk's BFR is only permitted to take off from and land at floating launchpads, this will limit BFR's usefulness to travel between big coastal cities. New York to Shanghai flights might be attractive (for those who can handle the Gs). But New York to Des Moines? Maybe not so much.

What it means for airline investors

Long story short, even in the worst possible case (from an airline's perspective), Musk's BFR really only poses a threat to the long-haul air transport revenue at Delta, United, and American. Shorter, regional trips within a continent's interior should remain safe from competition.

At least, they should remain safe until Musk builds his first Hyperloop. At that point, all bets are off.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.