"NASA, floundering under the weight of its promise to return to the Moon by 2024, has been forced to take on some extra work to pay the bills: playing host to private tourists aboard the International Space Station."

That's how RT recently described the plan from the National Aeronautics and Space Administration to permit Boeing and SpaceX, the two contractors building spacecraft to transport American astronauts to the International Space Station (ISS), to carry tourists to ISS as well. And if Russia's state propaganda outlet  sounds a bit snarky, that's understandable. After all, once Boeing's and SpaceX's spacecraft have been certified to carry astronauts into orbit, NASA won't have to rent rides on Russian rockets anymore -- at $82 million a seat.

The truth of the matter, however, is a bit more complicated than RT makes it seem. It also has important implications for investors, so let's dig in.

International Space Station over Earth

Image source: Getty Images.

ISS: Open for business

Two weeks ago, NASA made a startling announcement: For the first time ever, it will "open" the International Space Station (ISS) to visits by "private astronauts." Beginning in 2020, the space agency will permit at most two private astronauts per year to visit ISS for up to 30 days at a time.

Importantly, though, at no point in its announcement does NASA actually use the term "tourist." Rather, the agency makes it clear it's opening ISS to use by non-NASA employees conducting "approved commercial and marketing activities" -- especially activities connected to "NASA's mission," furthering the development of "a sustainable low-Earth orbit economy," or "requiring the unique microgravity environment to enable manufacturing, production or development of a commercial application."

In short, NASA is selling anything but a pleasure cruise. We're talking strictly business trips here.

ISS for the leisure class

This is not to say that space tourism aboard ISS won't ever happen. In fact, from 2001 to 2009 the private U.S. company "Space Adventures" facilitated visits by seven space tourists (most American) to ISS, using seats purchased on Russian Soyuz spacecraft to get them there at prices ranging from $20 million to $40 million a head. Last year privately held Axiom Space began marketing a similar program, offering a 10-day visit aboard ISS for $55 million. (Axiom eventually hopes to build its own "space hotel," independent of ISS, for this service.)

But this is not what NASA is doing.

Covering costs

Unlike the visits organized by Space Adventures, the private astronaut missions sponsored by NASA will fly aboard U.S.-built spacecraft, most likely SpaceX's Crew Dragon and Boeing's CST-100 Starliner. And this is where we get into the dollars and cents of the story.

According to RT, the cost of visiting ISS will be "over $50 million." But not all of this money will go to NASA -- in fact, far from it. According to NASA, the ticket to get to ISS on a Boeing or SpaceX rocketship will cost $58 million. But that money will be paid to the operator of the spacecraft. NASA is only planning to charge about $35,000 per day to reimburse it for the cost of maintaining life support, as well as for food, air, and other supplies consumed while on board. All in, NASA will collect only a little more than $1 million per private astronaut, per 30-day visit.

Suffice it to say that's hardly sufficient to pay for a moon program.

The upshot for investors

So what will NASA's new ISS exploitation program accomplish? Two things. Firstly, because NASA currently envisions only sending up about four astronauts at a time on Crew Dragon (which can seat seven), any "extra" passengers carried along for the ride, and paying separately, should help to defray the cost of each crew transport mission -- lowering NASA's total cost.

Second, and more important, NASA intends this program to gauge commercial interest in sending private astronauts to ISS. Now that this is a possibility, NASA wants to know how many companies might be willing to pay for it -- and how much. This will become increasingly important as the agency decides such crucial questions as:

  • How long to keep ISS in service? Key ISS partner Russia has spoken several times about wanting to terminate its involvement in the space station, and if it does so NASA will be keenly interested in figuring out how to keep the station operational past 2024 without Russian's financial contributions.
  • Whether to allow private companies such as Axiom and Bigelow Aerospace to attach their own modules to ISS to house private tourists?
  • Is there sufficient commercial interest in space to justify authorizing private companies to set up their own space stations in orbit, separate from ISS? As the agency explains, "a robust low-Earth orbit economy will need multiple commercial destinations, and NASA is partnering with industry to pursue dual paths to that objective that either go through the space station or directly to a free-flying destination."

In short, far from profiting from the privatization of the International Space Station, NASA charging $1 million per "tourist" is really just a way of defraying its costs, while providing private companies the opportunity to do some market research on interest in commercializing Low Earth Orbit.

Far from complaining about the cost, investors should be thanking NASA for advancing the cause of space exploration, and colonization, on the cheap.