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U.S. Air Force Buys Into SpaceX Point-to-Point Starship Delivery Service





Rich Smith 

Four years ago, SpaceX CEO Elon Musk made a startling announcement: The Starship megarocket, that he initially designed to carry humans from Earth to Mars, might have a future right here on Earth
 as well.

Launching from a sea platform floating off Long Island, New York (for example) at 7 a.m. and flying at an estimated 18,000 miles per hour, a Starship rocket could arrive off the coast of Shanghai, China by 7:39 a.m. (NYC time) -- just 4% of the time it currently takes international airlines to make the trip.

A lot of air travelers might find that prospect appealing. And there's one thing we know for sure: The U.S. Pentagon most definitely finds it appealing.


© Elon Musk Pentagon, your package has arrived -- on a rocket ship.
A threat to airlines?

SpaceX's plans pose a threat to the business models of certain airline companies, which face the possibility, within just a few years, of having to compete not only with a service offering faster transportation than their own airplanes can provide -- but with a transportation company that builds its own "airplanes" (i.e., rockets).


Still, as I explained at the time Musk laid out his point-to-point plans, this isn't an existential crisis for airlines. Starships need to launch from locations somewhat removed from population centers (because of the sonic booms), and ideally from launch pads on the ocean, meaning that a point-to-point Starship transportation service can really only service international routes between various coastal cities. It wouldn't be much use for regional trips within a single country.

The high g-forces of a rocket launch could also limit Starship's utility in passenger service, as not all passengers (the very young, the very old, the infirm) might be able to stand the strain of high-speed rocket launches and landings.
An opportunity for the military

But from the perspective of the military, that might not be a deal breaker.

As Ars Technica reported last week -- and The Wall Street Journal also reported just this week -- the U.S. Air Force "justification book" explaining its request for $200 billion in defense spending in the fiscal year 2022 budget mentions its plan to invest $47.9 million into a "rocket cargo" project for the transport of cargo around the globe.

Although the Air Force doesn't mention SpaceX, or Starship, by name, it does say it wants to "test the capability to leverage a commercial rocket to deliver AF cargo anywhere on the Earth in less than one hour, with a 100-ton capacity ... with full reusability." And right now, SpaceX's Starship is the only rocket in development anywhere on Earth that promises to rocket 100 tons of cargo from point to point in less than an hour.

So you don't need to be a mind reader to figure out who the Air Force is talking about.
What it means to SpaceX

Now, the Air Force isn't talking about giving $48 million to SpaceX directly. Rather, its plans involve such items as developing "loadmaster designs to quickly load/unload a rocket," "characterization of potential landing surfaces and approaches to rapidly improve those surfaces," and mapping out "novel trajectories" and other ways to reduce "adversary detectability" (i.e., play hide the rocket from the bad guys). But even so, the idea appears to get the Air Force in a position to take advantage of Starship once it's been fully developed, tested, and proven capable of point-to-point travel on Earth.

At that point, the plan might very well be to start paying SpaceX directly for military transport services. As the new Air Force Rocket Cargo initiative's program manager Greg Spanjers told the Journal, the Air Force "wants to be an early adopter" of this technology once it's ready for prime time -- and that could develop into an important new revenue stream for SpaceX over time.

So how much money are we talking about here?

Well, consider: Analysts estimate that in 2020, SpaceX took in about $1.2 billion in total revenue. But on a single day in 2020 -- October 1, when the U.S. Transportation Command awarded new two-year contracts to its transportation partners -- that Pentagon department handed out contracts totaling roughly $3.3 billion.

Currently, this is money that companies including Delta Air Lines (NYSE: DAL), American Airlines (NASDAQ: AAL), UPS (NYSE: UPS), and FedEx (NYSE: FDX) can count on coming in like clockwork, year after year, as they supplement the Pentagon's internal transportation capabilities by providing aircraft to help share the load. One day soon, however, SpaceX may begin taking this business away from the airlines and transport companies.

And with each successful test of Starship, that day comes a little closer.

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