Michael Belfiore reviews the EADS idea of building a suborbital business jet. At the $1.3 billion price tag and unit cost presumably in the high tens of millions, the business case is iffy. In particular, it would probably be a lot cheaper to spin out the Rocketplane XP project out of Rocketplane Kistler and end up with a product that could fly a few years sooner and more seats for the same money.

The Futron study Jeff implicitly cited saying 15,000 customers for suborbital space travel in 2015. If we get 4 providers, it’s hard to see how prices stay much above the marginal cost of the fourth provider. RpK and XCOR might have revised their cost estimates since they were estimated as south of $50,000 back when Space Adventures were selling suborbital seats for $100k each. But let’s be generous and say that EADS rivals are going to push the price down to $100k by 2015. This is lower than the implicit Futron estimate of $140k if flight starts in 2009, spends 3 years at $200k then works it’s way down to $50k in 2021.

At $100k, they could get perhaps $50k in debt payments per seat. They would need 6,500 customers per year to pay 25% interest and 9,400 customers per year to pay back the loan in 9 years. But they are unlikely to get 2/3 of the market if they are fourth to market with a higher price structure. If EADS is indeed the high cost provider, the estimate of how much each flight will contribute to debt repayment is $0. The capacity required to fly 9,400 customers per year at two flights per week per craft with four seats is 23 craft which would add another billion in debt if they are $45 million each.