Now we see the true Virgin Galactic business model

When Sir Richard Branson introduced Virgin Galactic at a press conference in Dubai he asked journalists who among them would not want to fly into space. I put up my hand. What sane person would risk their life in such a foolish venture?

I also wondered what the business model was for Virgin Galactic. How many people would sign up for a $200,000 trip into orbit? That is a life’s savings for many people even in the richer Western countries.

$280 million deal

But yesterday’s sale of a 32 per cent stake in Virgin Galactic to Abu Dhabi state investment group Aabar for $280 million now explains how Virgin thought it could make money from flying tourists into space.

This is also the classic Branson approach to a recession: sell something to put some cash in the bank. Of course, the buyers do not necessarily do badly: Singapore Airlines has 49 per cent of Virgin Atlantic and the Virgin Megastores have done well.

But I wonder about Virgin Galactic. Apparently 300 have signed up and paid deposits totaling $40 million so far for the trip of a lifetime into space. It does not sound a money spinner.

Space PR

On the other hand, it is a fantastic public relations vehicle, guaranteed to provide millions of dollars of free publicity to the owners. Is it any coincidence that Virgin Galactic is headed up by Branson’s long-time PR chief Will Whitehorn?

Launch space vehicles from Abu Dhabi and you will certainly attract attention. Perhaps that is what it is all about, rather than being a commercial venture.

But raising your PR profile with flights into space is clearly also a risky venture. Personally even a check for $280 million would not get me on board!