Heavy Baggage: Liability and Risk in the Space Tourism Industry

As private space companies continue to grow, monetized space travel is becoming a booming industry. So far, much of the economic activity associated with the private space industry has involved the transportation of telecommunications satellites into orbit. Increasingly, however, these companies are eager to begin launching even more valuable cargo in orbit: thrill seeking tourists willing to pay top dollar for a chance to spend a few days in space.

The legal risk of orbital space tourism is uncharted territory, and the liability risks to these companies could be huge.

A 2010 report from the Federal Aviation Administration predicts that space tourism could become a billion-dollar market within 20 years.

Meanwhile, there are no comprehensive federal guidelines on space tourism and only a patchwork of untested state laws. Other mechanisms currently used to mitigate risk, such as liability waivers, also remain untested in the courts.

Despite decades of improving technology, the space flight industry is far from being a reliably safe method of transportation. In September of this year, one of SpaceX’s commercial rockets infamously exploded during the fueling process on the launch pad. While nobody was on board, NASA has contracted with SpaceX to begin transporting astronauts to the International Space Station as soon as next year, with plans for commercial tourism not far off.

Even if their rockets take off and land without incident, the effects of spaceflight on the human body in terms of long-term health are still poorly understood.

Because of these concerns, it’s almost certain that commercial space flight companies will be faced with significant liability, and without a regulatory framework in place, this will pose a significant threat to the rapidly growing industry.

Space insurance has been flagged as potential means for companies to mitigate this risk. But the space insurance industry is relatively new and has paid out more in claims than it has collected in premiums in several of the past few years.

As the market struggles to absorb the risk of transporting commercial satellites into orbit, the projected entry of space tourists will add even more uncertainty to the industry. How commercial space flight companies, regulators, and the courts confront liability issues will be crucial in determining the shape and viability of the space tourism industry in the coming years.

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