In recent years, space travel has become readily available to the general populace. The commercial flight to space has been championed by Elon Musk and Richard Brownson. These two billionaires have presented a unique opportunity for people to see space closely without being an Astronaut. Let’s know How does Virgin Galactic Make Money?
Isn’t that cool? Of course, many people would have dreamt about and hoped they would visit the space one day? Here is the opportunity to visit beyond the blue skies and get better limes of the natural space and the wonders of the above bodies.
Virgin galactic is an initiative of Richard Brownson designed to carry people in a commercial pace aircraft designed to carry a limited number of people on a trip to space and back. Generally, the space tourism business has been reported to have gained almost $100 million in deposits from more than 6000 wealthy customers who are ready to take a trip to space. The space is ready to welcome this set of new visitors, but how would the business make money and continue to survive to serve its potential customers.
Although the investors are very concerned after the successful launch of the business, what would be the ease points of the business. The business model of Virgin Galactic then becomes the major question on people’s minds. The primary aim of making money and funding the business is to bring tourists to the space to experience weightlessness and enjoy the view space offered.
The Business Model of Virgin Galactic
Business exists to make money and generate income from the clients the business has over a long period.
- The Role Of The Investors: Although initially, the business leveraged on the help rendered by the investors to get off from the ground zero to a sustainable pace where it is self-sufficient and could run on auto-pilot. Based on a survey conducted in the year 2020, it was realized that at least four people out of ten who are worth over $5 million are interested in buying a flight ticket to space. This survey shows that a rough estimate of about 2.4 million people would be potential clients for the business.
- How Role Of The Tourist: However, being a potential client does not mean that every one of them would love to be on board the Virgin Galactic spacecraft. The primary aim of Virgin Galactic is to make money from tourists who are willing to visit space and experience what weightlessness is like in space. By the end of 2020, Virgin Galactic had over 600 clients who signed up with the business for a trip to space, while in recent times, an additional 700 refundable deposits from the clients have joined the train of the interested clients.
- Other Technology Capabilities: Meanwhile, the business also reported that only a very small portion of these clients had requested their refund, probably due to their net worth. More so, it has been envisaged that the backlog of the request could be potential only in the first year. Although space tourism is not solely based on the Virgin Galactic capabilities and planning, the business proposes to leverage the technology and capabilities of other commercial and government resources to ensure its project goes successfully.
- The Introduction Of Supersonic Travel: Another facility that would be needed to ensure the project is successful is the inclusion of point-to-point supersonic travel, and the concept has been unveiled to be used by its March 3 aircraft. Virgin Galactic then picked up a contract with the engine producer Rolls-Royce to ensure that this concept was very successful.
- NASA Johnson Space Partnership: Besides, it has chosen to ally with NASA’s Johnson Space Center to ensure that the international space station joins the project to ensure commercial participation works out. The relationship between Virgin Galactic and NASA Space Center is expected to provide a range of opportunities for the business and possibly provide private, scientific research.
How Does Virgin Galactic Plan To Make Money?
Virgin Galactic plans to make money through its commercial services in the first quarter of 2022. Although the business did not have any revenue in the past half of 2021, there was a loss of about 55.9 million in the first quarter of 2021, while about $59.5 million was recorded in the fourth quarter of 2020.
- Tickets to the space are within the price range of $200,000 to $250,000, while some selected flights might be very high in price, which might be in tune with millions of revenue for the company.
- By the end of 2021, the company plans to have at least three flights to space with its customers before the end of 2021. More so, it has planned to have at least three test flights to space to ensure the commercial ones would be successful. The commercial trip is expected to begin after the successful launch of the test flights, while it hopes to have five spaceships to take trips to space. Meanwhile, about 270 flights are proposed to be achieved by the company after the fourth year in business.
- The proposed revenue is expected to be about $590 million, while the profit would stabilize at about 70 percent after continuous operation. Furthermore, Virgin Galactic is hoping to create an opportunity where the ticket price is hoped to be reduced and subsequently increases demand for the tickets.
- By 2020 space tourism is expected to have been valued at about $800 billion, based on Morgan Stanley’s report. However, this is a long way project far off into the future; the expectation is that if virgin galactic could capture the market at its early stage, it would generate enough income to run the commercial space travel successfully.
Meanwhile, it hasn’t been established how the organization proposed to obtain revenue from other ventures, but some new facts are flying around about the significant upside for the company.
What’s next for Virgin Galactic?
Last year George Whitesides left his CEO position for the role of Chief Space Office, and his old role has been assumed by the former Disney executive Micheal Cloglazier has become a significant move for the space travel organization. This shows a significant impact as it marks the company’s transition from the development and incubation stage into the commercial phase. Michael’s experience and delivering a luxury experience to customers of business he has handled would be incorporated into the Virgin Galactic business space.
It is believed that Whiteside would focus on the development portion of the business to ensure all processes involved with successful space tourism become very efficient. The ambition of revolutionizing both space travel and traditional commercial aviation is one of the business’s priorities. At the same time, the continuous integration of the March 3 aircraft is one of its first steps to achieving the point to point travel.
However, with the rate of the development and growth achieved in the project, it is perceived that it would take years before the full commercialization of the business reaches its early stage potential. As it stands the Virgin Galactic is an investment opportunity to upscale commercial travel ideas, and its success is based on improved technology and contributions from investors. You should only choose to invest in such a worthy project if you have a high appetite for risk and fan of the revolutionized aviation industry.
At first, the space trip idea sounds unrealistic; however, with Richard Brownson championing the business, it has become the talk of the town. Making money is every business’s purpose and satisfies the customers unless the business is an NGO. With that being said, business only thrives when it makes it again; this is what the business model of Virgin Galactic is based on.
The business intends to balance its books from the customers interested in buying the flight tickets to space to enjoy the amazing view and experience the weightlessness. Although there are other means by which the business hopes to make more revenue, the main income stream is expected to be for passenger commercial flight tickets to space.
Finally, Virgin Galactic has a long hope of potential ways to make money from its commercial space traveling, and the business would certainly explore all the options available to it.
Is Virgin Galactic profitable?
Certainly, Virgin Galactic would be a successful business eventually if it kept its business model on the right path and gained numerous customers. However, during the 19 months of the publicly-traded company being run, it has never profit. Instead, the company has lost about $889.9 million.
How much will Virgin Galactic Make?
On every take-off trip made by Virgin Galactic from earth to space, it is believed that six tourists would be on board. This tour would be paying a whopping sum of $250,000, and the business would generate about $1.5 million in revenue on every trip made by the spacecraft.
How long would the Virgin Galactic flight last?
The length of the trip to space is estimated to last about two and half hours. However, the tourist would only experience weightlessness in space for about roughly five minutes before the aircraft heads back to the earth.