On April 30, 2013, NASA signed a contract with Russia's Federal Space Agency, Roscosmos, hiring the Russians to ferry U.S. astronauts to and from the International Space Station. The terms of this contract: six astronauts to be ferried, over four years, at a cost of $70.7 million a head.
That's more than SpaceX charges to send up to 4.85 metric tons of cargo into space. It's a lot to pay to send up one 180-pound astronaut.
But there's good news for NASA, and for taxpayers -- and for investors, too. NASA has had it up to here with paying exorbitant taxi fares to the Russians. And pretty soon, we'll be sending our astronauts back to space on our own rocket ships, for much cheaper.
To the Moon, Alice! (Or at least to the ISS.)
Last month, NASA held a joint conference with its two contractors building a private commercial American "space taxi" service to the ISS -- Boeing (NYSE:BA) and SpaceX. It's dubbed the Commercial Crew Transportation Capability project, or CCtCap, and NASA's plan is to pay Boeing $4.2 billion and SpaceX $2.6 billion to develop and operate a fleet of space taxis to shuttle astronauts to and from ISS.
Specifically, beginning in 2017:
- Each company will conduct "at least one crewed flight test per company with at least one NASA astronaut aboard to verify the fully integrated rocket and spacecraft system can launch, maneuver in orbit, and dock to the space station."
- Each company will also prove that all systems aboard its respective spacecraft "perform as expected."
- "Once each company's test program has been completed successfully and its system achieves NASA certification, each contractor will conduct at least two, and as many as six, crewed missions to the space station."
If all goes well, NASA estimates that the cost of sending an astronaut to ISS in an American rocket ship will fall by 18% from what Roscosmos is charging -- to as low as $58 million. But one presumes that this is an average of the cost of the two companies' efforts. Given that Boeing is charging NASA 61% more to send astronauts to ISS in its CST-100 capsule than SpaceX bid for its Dragon V2 capsule, it's entirely possible that some "tickets" to ISS could be even cheaper than the $58 million average.
What it means to investors
This is all great news for taxpayers. But what does it mean for investors? Well, I see three main takeaways:
- "$12 million here, $12 million there ..." You know the rest: Pretty soon, "you're talking real money." And the simple fact that we'll soon be saving upwards of $12 million per astronaut, per ISS trip, is money in NASA's pocket -- money that can be spent buying more spaceships, satellites, and deep-space probes from American space companies such as Boeing and SpaceX, and their peers.
- $58 million? What a bargain! Let's not forget, either, that America isn't the only country paying taxi fare to Roscosmos. Over the years, Canada, Japan, Italy, and nearly a dozen other nations have sent astronauts to the International Space Station. Going forward, Boeing and SpaceX can compete head to head with the Russians in the international space taxi business -- and at list prices 18% below Roscosmos's, it's not hard to guess who will win. That's more money in the pockets of Boeing and SpaceX.
- The best is yet to come. Perhaps the biggest benefit to come out of CCtCap, though, is that once American companies are running shuttles to and from ISS again, all the money that used to go to Roscosmos -- money that the Russian agency was able to invest in its own space program -- will instead be invested here at home. The 2013 NASA space taxi contract, remember, was worth $424 million over about four years. Even after savings from lower per-capita taxi fares, we're talking hundreds of millions in new revenue that will soon be flowing to Boeing and SpaceX.
So what's the real upshot here? As NASA administrator Charles Bolden explained it, getting a commercial space taxi service set up here in America means we won't "ever, ever [have] to write another check to Roscosmos."
But NASA will be writing plenty of those checks to Boeing and SpaceX -- and gladly.