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Increasing Cost of ISS Threatens US Commercialization Efforts in Space

Recent changes in NASA’s pricing model for commercial users of the International Space Station has some companies baffled. On Feb. 25th, NASA announced a revision to their Commercial Marketing Pricing Policy first published in June of 2019.

NASA said the changes to their pricing model were a result of “discussions with stakeholders, the current market growth, and in anticipation of future commercial entities capable of providing similar services.”

Some of these price jumps include an Upmass rate, or cost to transport 1 kilo of cargo up to the ISS, increasing from $3,000 to $20,000 per kilo, a Downmass rate, or cost to bring 1 kilo of cargo back down from the ISS, increasing from $6,000 to $40,000. The cost of one hour of crew member time jumped from $17,500 to $130,000.

These changes took effect immediately, and have taken many companies by surprise.

“NASA has not done a good job communicating with the stakeholders,” said Jeffrey Manber, chief executive of Nanoracks. “We are in discussions with customers and suddenly we are being notified of a major increase.”

Nanoracks, in particular, has been forced to suspend talks with two potential customers, who can’t afford NASA’s new rates.

Manber referenced the Federal Government’s 2021 Consolidated Appropriations Act as a possible cause for NASA’s price jump, where NASA requested $150 million for LEO commercialization efforts and was provided with only $17 million.

Something that could have huge effects across the industry.

While NASA hikes its fees, China and Russia have just announced an agreement to build a lunar space station.

Despite having sent the first man into space, Russia’s space exploration has deteriorated recently as a result of corruption and lack of financing. This swiftly improves Russia’s stake in the space economy, and attempts to close the gap between themselves and Washington and Beijing in the pursuit of the Moon and Mars.

A memorandum has been signed by both countries to design a lunar station that will serve as a "complex of experimental research facilities created on the surface and/or in the orbit of the Moon".

This is an interesting partnership to say the least, and we’ll be keeping an eye on this one.

In addition to the changes at NASA, the private sector is also in motion.

George Whitesides, a longtime chief executive of Virgin Galactic, has left the company to pursue opportunities in public service. Whiteside will remain chair of Virgin Galactic’s new Space Advisory Board, which also includes former astronauts Chris Hadfield and Sandy Magnus.

Whitesides’ involvement started at Virgin in 2010 after serving as chief of staff at NASA headquarters. In July 2020, Virgin Galactic created a new position called “Chief Space Officer” for Whitesides, where he oversaw much of the company’s long term plans for orbital spaceflight and high-speed point-to-point travel.

Concurrently to Witesides’ departure, Virgin Galactic chairman and billionaire investor Chamath Palihapitiya, sold his remaining 6.2 million shares of the company on March 2nd and 3rd, for a reported $213 million. Palihapitiya is responsible for taking the company public through a SPAC deal in 2019.

Virgin Galactic shares have dropped more than 25% in the week following the sale, and have lost more than half its value since its all-time-high early February, dropping from $62.80 to below $30 in a matter of weeks. The shares are still in the black since 2021 began, and have increased 15% total over the past year.

Palihapitiya plans to reinvest the money from this sale "into a large investment I am making towards fighting climate change."

"The details of this investment will be made public in the next few months. I remain as dedicated as ever to Virgin Galactic's team, mission and prospects," Palihapitiya said in a statement to CNBC.

As nations and commercial enterprises continue to make waves in the space Economy, we’ll keep our finger on the pulse for you. Subscribe to the Flight Crew Newsletter for updates.

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