Cecil Spaceport will lose money for its first four years, but its management team anticipates generating a small profit in year five.
Funded mainly by grants, the space port — the only horizontal site on the East Coast — is trying to capture 40 percent of the state's market, the management team said in strategy documents the Business Journal obtained Monday.
The “Strategic Business Plan Executive Summary” outlines the group's plan to accomplish something other cities are also struggling to create: a viable and profitable private spaceport. The report was released to the Business Journal in response to a records request.
“We won't be profitable in the short term,” Rusty Chandler said to the Business Journal. “This is for those who come after us.”
For the first five years, operating revenue is projected to grow from $58,783 in the first year to $597,833 in the fifth year of the program. But total operating expenses — while relatively small — will exceed operating revenue up until the fifth year: In year one, total expenses will be $186,876 and will increase to $592,912 in year five, when there is an expected profit of just $5,000.
Total cash flow is expected to be in the red for the first five years, with a loss of $127,092 in year one that grows to negative $2,120,079 in year five.
Still, JAA plans to use as little of its own cash as possible, planning to leverage grants as much as possible.
Cecil is the only horizontal spaceport on the East Coast, but is one of 11 spaceports looking to serve about three viable operators. What is more, there is growing competition from nearby Cape Canaveral to get horizontal launch approval, as well as Houston Spaceport, Midland International Air and Space Port, Spaceport America and Mojave Air & Space Port, which all have their own advantages. For example, Midland has a committed tenant in XCOR Aerospace, one of the leading operators, while Spaceport America — while struggling because of an October 2014 accident — has the benefit of being partnered with Virgin Galactic and SpaceX.
JAA thinks that Cecil will eventually have 40 percent of the horizontal launch market in Florida, said Rusty Chandler, executive director of Cecil, at a Monday JAA Board of Directors meeting. Cape Canaveral could get about 60 percent, although it's possible Jacksonville could get more than it is anticipating, saying that the 40 percent estimate was "conservative."
Despite the competition, the JAA created its own strategic plan to grow and market the spaceport, despite being one of the only spaceports of its kind.
“Cecil and JAA management must essentially predict the future to prioritize capital expenditures, create the most efficient and useful facilities and decide how to fund the entire endeavor with little to no experience to draw from,” the report states. “In addition, the successful spaceport must also be able to quickly adapt to a shifting regulatory and economic landscape.”
Within its business plan, Cecil management outlines the benefits of the Jacksonville spaceport: it's flexibility in leases, open access to operators, IT infrastructure and competitive pricing.
It also details its business model. The spaceport will have four different types of agreements with operators: two that are permits and two that are leases. The agreements range from a one-time spaceport operation permit, that will include a fee to use the spaceport; an escalated spaceport operation permit that will offer reduced prices for multiple launches over a period of time, with a minimum number of launches per year; a signatory agreement that will offer permit price reductions if an operator leases a JAA facility for more than a year; and a spaceport investment and development lease that will offer reduced fees if an operator enters a lease of more than five years and develops a facility to support launch operations.
Right now, Cecil has one operating partner, Atlanta-based Generation Orbit. The company launches a rocket with payload or a satellite into low earth orbit using a Gulfstream IV, following Cecil's designated corridor to the Atlantic, climbing to a certain altitude over the ocean and launching the rocket. However, unlike billionaire-backed companies like Virgin Galactic, the report states that GO's biggest challenge is finding funding resources. Earlier this year, the operator got a win when it was awarded a small business research contract from the Air Force Research Laboratory.
“If sufficient funding can be maintained,” the report says, “the company could see limited launch activity begin at Cecil Spaceport in calendar year 2017.”
As the horizontal space industry grows and Cecil Spaceport grows with it, the JAA has stated that its strategic business development plan is a living document, that can be changed as the commercial space realm grows and Cecil navigates being at the head of a fledgling industry.
While that happens, JAA CEO Steve Grossman made it clear that as long as Cecil is one of the leaders in the industry, it's going to stay competitive — in any way possible.
“We're competing with every other space port,” he told board members on Monday when asked if the agency would work with other groups to develop their own plans. “We're one of the most advanced. I know we like to be cooperative, but this is business. We can let [others] go through their growing pains. We're not out to help Cape Canaveral. Once we get 80 percent of the market share, then maybe we can help.”