By Damian Reilly
A move to raise the UAE's satellite launching capability would prove transformative, says Damian Reilly.
“We are all in the gutter, but some of us are looking at the stars,” said (who else?) Oscar Wilde.
When he said this, he was not referring to the announcement by a Gulf investment fund, during probably the biggest financial crisis the world has ever known, that it had purchased a 32 percent stake in an enterprise that will send members of the public into space. But he could have been. The credit crunch, it seems, and the ensuing global depression, are conversation topics in Abu Dhabi, nothing more.
Aabar Investments has paid $280m for its stake in Sir Richard Branson’s Virgin Galactic space venture, which values the company at $900m, at least eighteen months before it fires its first wealthy passengers into space.
Amid the fanfare, it would be easy to miss the announcement that Aabar will also throw $100m at helping Virgin Galactic develop its satellite business. But this could be the smarter part of the deal.
Involvement in space tourism might be just about as fun an experience as the corporate world has to offer. It is probably even more fun than owning a Premiership football club. But even if everything goes to plan, it is unlikely to generate the sort of profits to turn heads in a place as wealthy as Abu Dhabi, at least not any time soon.
So far, 300 people have signed up for space flight at a cost of $200,000 a go. If twenty percent of that price is profit for Virgin — and 32 percent of that profit now goes to Aabar — then sometime over the next two or three years Aabar can expect to receive a cheque for about $3.8m. Which, if translated into the cost of running another of Abu Dhabi’s glamour projects, Manchester City Football Club, would probably be about enough to buy England captain John Terry’s right foot. You would need something like another $60m to buy the rest of him. Which would be a lot of space flights.
Satellites, on the other hand, is an entirely different proposition. Virtually every country on the planet wants to put satellites in space, but only ten of them has the capability to launch them. Those countries are Russia, America, France, Japan, China, Britain, India, Kazakhstan, Israel and Iran.
Any other country wishing to launch a satellite of their own has to do it through one of these countries (for example, the UAE’s first government satellite was planned to be launched at the end of July from Kazakhstan), at considerable cost.
A ten year old NASA report (the most recent one Arabian Business could find), puts the cost of launching a satellite at between $50m and $400m. It says that in 1998, almost $3bn was spent worldwide on launching satellites. Given that this figure will have swollen by many multiples since then, the lure of being involved in cutting edge satellite technology, and launching satellites, makes wonderful economic sense.
The UAE’s foray into space, so to speak, is not new. For years, there has been high level talk of establishing agencies to dictate UAE space policy. Ras Al Khaimah, as recently as last year, was being suggested as a destination from which space tourist flights could be launched.
A move now by Abu Dhabi, however, to make the UAE one of the few countries with the capability to launch satellites would not only be a very smart piece of business, but also transformative. The profit margins on launching other country’s satellites are huge. Astronomic, even.
Damian Reilly is the editor of Arabian Business English.