Reserve Your SpaceShipTwo Seat Now — Big Price Increase Coming Soon

Comments

 Sir Richard Branson and daughter, Holly, look through the window of a SpaceShipTwo shell. (Photo credit: Mark Greenberg/Virgin Galactic)

Sir Richard Branson and daughter, Holly, look through the window of a SpaceShipTwo shell. (Photo credit: Mark Greenberg/Virgin Galactic)

Although Virgin Galactic has promised to eventually lower prices on its suborbital space tourism flights aboard SpaceShipTwo, it looks like prices are actually going up 25 percent in the near term.

In an interview broadcast Monday night on KABC-TV 7 News Los Angeles, Branson said a seat on the suborbital space plane would now cost $250,000 — an increase of $50,000 from the price the company has been advertising for eight years.

Now, does that seem a bit counter-intuitive, wouldn’t it? Absolutely. But, this is actually a clever marketing move. How so? Now, you really didn’t think I’d tell you before the break, did you?

Read on.

So, for the last eight years, nearly 600 people — let’s call them the early adopters — have put down between $20,000 and $200,000 for their trip into space. Some people have actually been waiting eight years for said flight. And some of those folks have become rather impatient. But, that’s a story for another day.

Others — which we’ll call late adopters, or ladopters — have been holding off, waiting for some sign that SpaceShipTwo will be something other than the world’s most expensive glider. Now, what might possibly convince them otherwise?

Oh, maybe — just maybe — a spectacular powered flight of SpaceShipTwo under the Mojave sky. Like the one that took place on Monday. Yeah, that would help a lot.

But, what would really seal the deal? Oh, a large price increase just on the horizon.

Kah-ching, baby! That’s coin in the register. Money in the bank. Cash on the barrel. (What the hell does that mean, anyway? Cash…barrel…what?)

But, I digress.

Expect the number of paid Virgin Galactic passengers — which was (I think) somewhere around 575 last I heard — to see a considerable spike in the weeks to come as people rush to avoid the pending price hike.

4 Responses to “Reserve Your SpaceShipTwo Seat Now — Big Price Increase Coming Soon”


  1. 1 Iterator

    The quote is actually “For a short while, it will be $250,000, and once we send a thousand people into space, we’ll start getting the price down.” (http://abclocal.go.com/kabc/story?section=news/bizarre&id=9084265 ). If you correct 200,000 of 2004 dollars for inflation, you end up with $240,000, so the effective price-increase is 4%. I personally find your reporting a bit sensationalist, Doug.

  2. 2 Aerospike

    it’s an opinionated “news” blog about (primarily) the commercial side of space exploration. Not even all posts are actual news, while others are just relayed press releases without any input from Mr. Messier.

    So I really don’t get it why more and more people complain about his style of writing/reporting. For me personally it is especially his sometimes sarcastic tone that keeps me coming back again and again. If I want boring news I could easily read them elsewhere (although PA is also my goto place for “spacenews” in general, the only thing I have to check elsewhere is the scientific stuff: Astronomy etc.).

  3. 3 Iterator

    I didn’t complain about his blog in general. I only visit it from time to time, so I don’t have any strong opinion. My comment was about this particular piece, which I saw referenced in several places. It’s fine if he wants to be sarcastic/dramatic/whatever, I just wanted to provide a counter-point.

  4. 4 Douglas Messier

    I only saw the report on the television, didn’t see the entire quote on the site. So, I appreciate seeing it more in context.

    Inflation is interesting rationale because it’s usually businesses that are actually providing services for a number of years that can claim that inflation has driven their costs up and salaries have increased and so on. These guys haven’t flown a single person in over 8 years, but still the prices go up even before the first customers steps on board.

    It’s true that doing what they thought they were going to do in 2009 will be more costly in 2014 just due to inflation. Rather than eat the cost of their delays, Virgin is going to pass them on to the customers who fail to sign up prior to the price increase that takes effect next week. Saying that you are doing it for the benefit of your existing customers is better than admitting that Virgin didn’t meet any of their schedules and is now facing higher costs.

    The price increase also will cover the additional costs associated with research and development. Stretch a four-year project over nine years — including spending a small fortune on engine development — and your costs are vastly higher than you planned. Raising ticket prices can help cover those costs.

    As for the stated rationale — fairness to current customers — that’s where things get really interesting. The reality is that you’re just not buying a ticket on a space plane. And how bothered one is by the fairness issue depends upon where you stand in the Virgin Galactic customer pecking order.

    Customers have put down as little as $20,000 or as much as $200,000 to reserve their flight. There is a middle level, which I believe is at 50 percent ($100,000). How much you put down and when you paid determines when you will fly. The 100 percent folks will be among the first 100 customers. Others are further back in the pack.

    Your payment level also determines what sorts of benefits you will receive while you wait for your flight. The more you pay, the more access you will get to special Virgin events, Richard Branson, and other goodies. Virgin has striven to create a community of exclusive fliers who network and party with each other, but within that group there is a hierarchy in terms of services they receive. In other words, you get what you pay for.

    Now, let’s consider two customers who signed up eight years ago, one of whom put down 20 percent and the other who paid full price. The former will pay the remainder of the balance before he or she flies, because in a couple of years from now. So, in inflation adjusted 2015 or 2016 dollars, that’s not too bad. But, he or she will be way back in the pack, probably in the 200s among the first 600 to fly. So, the fairness issue isn’t much of a concern. Anyone who comes in at 20 percent will be behind him or her on the flight manifest. Anyone who comes in above that level will fill one of the open slots.

    Fairness is probably a bigger concern to someone who paid full price in 2005 and will have waited nearly a decade by the time he or she flies sometime next year. Someone coming in paying full price in the next week will pay the exact same amount, except in inflation adjusted dollars. How much that bothers someone with that level of disposable income is difficult to say. Probably depends on the individual.

    The bigger problem for Virgin has been dissatisfaction among customers who are tired of waiting to fly and became frustrated with frequent reassurances and the aggressive cross-selling of other Virgin services and properties. Some of that has bubbled to the surface publicly from time to time, but much of it has remained hidden. I’m guessing that yesterday’s flight probably quieted a lot of that discontent.

    Now, Virgin could always take the opposite approach of providing discounts or comps for customers who have been waiting so long. This happens frequently in restaurants when it takes an hour to get a plate of spaghetti. I don’t think Virgin can afford to do that (600 discounts!), nor does it want to set that precedent of caving in.

    So, raising costs for the next bunch of customers addresses those issues to some extent. It also puts late adopters — who have been waiting to see if Virgin could fix its little problem and light the candle on SS2 — on notice that they’ve got a week to sign up or face a large price increase.

Leave a Reply