After the explosion of the unmanned Antares rocket on Tuesday and then the tragic failure of Branson’s SpaceShip Two, analysts are asking if this is the beginning of the end for private / commercial space flight. It’s a valid question, but perhaps for reasons a bit more basic than the safety and technology issues currently under scrutiny.

“For the industry, the joyride is over,” says attorney Michael Listner of the Space Law and Policy Solutions space law firm. “This is going to mean a lot more regulation. And there is the question of whether the industry will even survive.”…

The Federal Aviation Administration announced Friday that it is investigating the crash, and Listner says the crash means the fledgling space tourism industry will now come under closer regulatory scrutiny.

U.S. commercial spaceflight is governed by a 2004 law giving the FAA oversight of the industry. Virgin Galactic’s main competitor in the promised space plane business is XCOR of Midlands, Texas, which has reportedly presold more than a hundred rides on its Lynx space plane for $95,000 apiece.

They make a few good points here which I certainly won’t argue with. Nothing will hinder or kill off an emerging industry faster than the helpful hand of Big Brother coming in to regulate things For Your Own Good. And the national media attention drawn by these spectacular malfunctions will draw the government’s interest like flies to honey. As to the question of whether or not private industry should or can accomplish anything in the space flight sector, that line of thinking is rather laughable. The private sector innovates and advances at light speed compared to anything the government can manage, and actually is the progenitor of most of the cool stuff the government ever does.

But what will kill off a private enterprise faster than anything else is a lack of a profitable market space. One of the things we’re learning from these explosive events is just how expensive a proposition all of this is. The Antares rocket cost in excess of 200 million and the price tag for SpaceShip Two was in the half billion range. These aren’t daunting numbers for large industrial players. Investments of that size or larger are made on a daily basis. But you do have to have a reasonable prospect of earning your money back.

The problem I’m wondering about here is that there are really only two target customer markets for these ventures. The government is the only viable buyer for services to ferry materials and astronauts to the space station. And while the government is a very regular customer, one change in administration or shift of a few decimal places in a budget committee report can dry up your sales overnight. The only other customers for an entity like Virgin Galactic are very high end, wealthy tourists. Initial ticket sales – even at a quarter million a seat – have been brisk, but one or two explosions can dampen the enthusiasm of your target audience. And even if everything had gone perfectly, there is surely a limit to the number of buyers for a service like this once the novelty has worn off.

I would prefer to see private space travel. The technical aspects of it don’t seem daunting to me either. There will be terrible setbacks in the early days of any new industrial effort, and they can eventually be overcome. But we will have to find other ways to generate a profit from this sort of travel and I’m not sure where the path to profitability goes from here.