UNITED STATES OF AMERICA

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FEDERAL AVIATION ADMINISTRATION

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2^ND^ INTERNATIONAL AVIATION SAFETY FORUM

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BREAKOUT PANEL SESSION:

PRIVATE HUMAN SPACE FLIGHT:

YOU CAN\'T BE SERIOUS\...CAN YOU?

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THURSDAY

OCTOBER 20, 2005

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The session came to order at 2:30 p.m. in the Washingtonian Rooms 3 and
3 of the Westfields Marriott Conference Center, 14750 Conference Center
Drive, Chantilly, Virginia, Robert S. Walker, moderator, presiding.

[PANEL]{.underline}:

ROBERT S. WALKER Wexler and Walker Public

Associates

WILLIAM E. WHITEHORN Virgin Galactic

DENNIS A. TITO Wilshire Associates, Inc.

ROBERT L. GIBSON Southwest Airlines

ELON MUSK SpaceX Corp.

MAJ GEN JAY T. EDWARDS Rocketplane Ltd., Inc.

P R O C E E D I N G S

Time: 2:33 p.m.

MS. SMITH: Good afternoon, everyone. It is an honor to have such a
distinguished panel and at the same time to have the honor of
introducing a friend of mine, but someone who is not only a friend of
mine but also a proven and dynamic leader of space flight, the former
Chairman of the House Science Committee, Bob Walker, your moderator for
this afternoon\'s session.

His background is in detail in the program, but let me just highlight
just a couple of things. Bob is currently Chairman of Wexler and Walker.
He also is a member of many boards, many of the boards that are now
introducing the new chapter, the new phase of commercial space
transportation. That involves a look at a future in space travel and
space tourism.

So just for a quick independent survey here, how many people in the
audience would be interested in going? So we\'ve got some captive
travelers here. We\'ve got some entrepreneurs on the panel who plan to
provide the vehicles that will carry people to and from space and give
us an experience like nothing we have ever had in our lives.

One thing that you won\'t read in your program in the background about
Bob Walker is \-- I\'m letting out the secret now, for those who don\'t
know. One thing that he really, really enjoys is racing racecars. Does
that tell you about the person and how he looks at the future and how
passionate and exciting he is about things that are coming on-stream,
new and novel, and that represent the future of this country, commercial
space transportation.

Bob Walker is also someone who has received a number of very prestigious
honors, but received the highest honor that NASA gives to public
servants.

We are also fortunate today in this session to have some very
distinguished panelists that represent the future. Bob will be
introducing all of them.

So let me just leave the podium, turn it over to Bob, and let us get on
with what promises to be, I assure you, one of the most exciting
sessions of the conference. Thank you.

MODERATOR WALKER: Well, thank you very much, Patty, and I thank you for
the nice introduction. I somewhat resemble it, and I appreciate the
opportunity to be here today.

The nature of the people on the panel that you are about to hear from
assures that this is going to be an interesting and provocative
discussion. When I received my instructions as a moderator, they said
that as a moderator I would be in charge, to the extent possible. I got
the impression that that might mean that we are going to have a fairly
stimulating session here today.

If you had asked the question that this was posed as a part of the title
of this program in 1978, namely is private human space flight \-- you
can\'t be serious, can you? well, in 1978, the answer to that probably
would have been no. Twenty-five years later, the answer is definitely
yes.

We are serious about this. I\'d say we were deadly serious, but that\'s
probably not a good phrase at a safety conference, but clearly we are,
in fact, very serious that we have programs that are coming on line that
are going to make private human space flight a reality in a very short
period of time.

Why did I pick 1978 as a reference point, looking back? In large part,
because that was the time when Congress really began to first look at
commercial space, and in the initial instances really suggested that we
would like NASA to begin to move more into the commercial space arena.

What we found over a period of years of legislation and changing the
organic act of NASA and a number of things was that NASA and the NASA
culture were really not very receptive to the idea of commercial
activity, and they particularly were not really oriented toward private
individuals engaging in space flight.

So we began to move toward other venues, and it was legislation that I
created, along with several of my colleagues, that put together the
Office of Commercial Space at the Department of Commerce and at the
Department of Transportation. The Department of Transportation became
the FAA office that Patty Smith and her associates so capably serve the
industry from at the present time.

So we really have had an evolution that has brought us to a time when we
have the pieces in place, the public policy pieces, if you will, to
begin to think seriously about how you face the challenges that are
incumbent in any kind of a private human space flight regime.

Let me just talk a little bit about some of the challenges that the
industry faces. I\'ll throw a couple out here, and I\'m sure the
panelists will have some others that will be talked about.

For example, how do we deal with safety issues in a high risk enterprise
that is still in its formative stages? In other words, what is the
appropriate protection of the public interest that we can assure without
strangling the business cases for the people who are trying to stand
things up?

How do we deal with the issues of liability for space flight and for
private space flight? Is this something where government is going to
assume the liability issues or is it something where private insurance
is going to be involved?

How do you have aircraft and spacecraft operating in the same airspace
on regular schedules? It presents some air traffic control problems that
we haven\'t faced up until now. How do you deal with the inevitable
failures in a way that doesn\'t end up destroying an industry in its
infancy?

Well, we are going to explore some of these issues, and we are going to
use this diverse panel and some of their experiences as the foundations
to introduce a lot of the challenges and a lot of the opportunities of
this industry to you.

So let me begin by introducing the panel, so that you have some idea of
who these folks are and what backgrounds they bring.

First of all, to my immediate left is Dennis Tito. Dennis is the founder
and Chief Executive Officer and Chairman of the Board of Wilshire
Associates, which is a global advisory company specializing in
investment products, consulting services and technology products.

Mr. Tito holds a Bachelor of Science degree from New York University
College of Engineering in astronautics and aeronautics. He holds a
Master\'s degree in engineering from Rensselaer Polytechnical Institute,
and he has finished the course requirements for a Ph.D. in finance at
the UCLA.

He spent five years at the beginning of his career at the Jet Propulsion
Laboratory in the 1960s where he helped plot the trajectories for the
Mariner Spacecraft mission to Mars.

Between April 28, 2001 and May 6, 2001, Mr. Tito logged seven days, 22
hours and four minutes aboard Soyuz TM-32, as history\'s first orbital
tourist, and he has used that experience since to advocate for more
human participation in the space arena.

Next to Dennis Tito is Robert \"Hoot\" Gibson. Hoot Gibson is a Captain
with the Southwest Airlines. He holds a Bachelor of Science degree in
aeronautical engineering from California Polytechnic State University.
He is a graduate of the U.S. Naval Test Pilot School and a graduate of
the Top Gun Naval Fighter Weapons School.

He established a world record for altitude in horizontal flight in 1991.
He holds the Defense Superior Service Medal, the Distinguished Flying
Cross, three Air Medals and a Navy Commendation Medal with Combat V,
among his many awards and decorations.

Captain Gibson is a former astronaut and served as the Chief of the
Astronaut Office, which makes him the astronaut of the astronauts, I
guess. In 1984 he was the pilot on the eight-day voyage of the space
shuttle Challenger. In 1986 he spent another 146 hours in space as
Commander of the space shuttle Columbia.

He returned to space in 1988 commanding Atlantis on a 68-orbit mission.
In 1992 he commanded Endeavor during its eight days in space, and in
1995 he commanded Atlantis again when he became the first space shuttle
to dock with the Russian space station.

Hoot has been inducted into the Astronaut Hall of Fame.

Next to Hoot is Elon Musk. Elon is the Chief Executive Officer and Chief
Technology Officer of Space Exploration Technologies, otherwise known as
SpaceX. The company, located in southern California, is developing
launch vehicles intended to sharply reduce the cost and sharply increase
the reliability of access to space.

He holds a degree in physics from the University of Pennsylvania and a
degree in business form the Wharton School. In his mid-twenties Mr. Musk
co-founded Zip2 Corporation that provided Enterprise software and
services to the media industry. Before selling the company to Compaq,
Mr. Musk served as Chairman, CEO and Chief Technology Officer of that
company.

Before founding SpaceX, he co-founded PayPal, the world\'s leading
electronic payment system with more than 65 million customers. Mr. Musk
was PayPal\'s Chairman, CEO and largest shareholder. Three years ago
this month, he sold that company to eBay and has devoted his time and
talent to making commercial space a growing business proposition.

Next to Elon is Retired U.S. Air Force major General Jay Edwards, and he
is a member of the senior management of Rocketplane, a company working
on the delivery of private human space flight services.

As the former Command Pilot, General Edwards is a West Point graduate,
holds a Master\'s degree from George Washington University, a Master\'s
in aeronautical engineering from Texas A&M, and is a graduate of the Air
Command and Staff College.

General Edwards served as Commander of the Oklahoma City Air Logistics
Center with Headquarters at Tinker Air Force Base. A Vietnam veteran, he
served there as Operations Officer for the 510^th^ Tactical Fighter
Squadron and completed 252 combat missions.

A much decorated pilot, his decorations include a Distinguished Service
Medal, the Legion of Merit, the Distinguished Flying Cross with two Oak
Leaf Clusters, and the Air Medal with 14 Oak Leaf Clusters, to name only
a few.

Next to Jay is Bill Whitehorn, who is the Group Corporate Affairs and
Brand Development Manager for Virgin Management, Limited.

A veteran of 30 years of aviation experience reaching back to service
with the British Airways, Mr. Whitehorn currently serves as President of
Virgin Galactic. He was educated in Edinburgh and graduated from
Aberdeen University with an Honors degree in history and economics.

Shortly after the first X-prise flight, Virgin Galactic announced it was
partnering with Scaled Composites and Mojave Space Ventures to create a
suborbital space tourism vehicle based upon SpaceShipOne. At Oshkosh
this July, the Spaceship Company was formed, a joint effort of Scaled
Composites and the Virgin Group featuring Virgin Galactic as the launch
customer.

The spaceship involved will carry seven passengers and a crew of two,
with plans for operations in the next two to three years.

Speaking about the future of space flight, Mr. Whitehorn said the North
Star is safety. It is at the top of people\'s list as why they think
they are interested in suborbital space flight.

As you can see, we have a very diverse and interesting group of people
who have a huge willingness to invest in a future that I, for one,
regard as extremely exciting.

I am going to turn to each of them individually now to talk a little bit
about this whole idea from their perspective, and then we will go from
there to some dialogue, and then ultimately involve all of you. Dennis?

MR. TITO: Thank you. Well, my interest in space began a long time ago,
actually in \'57 when Sputnik was launched, and I decided the next year
to enroll in aerospace engineering, and it became at least my first
career. But my interest in actually flying in space goes back to
probably about the time of Yuri Gagarin\'s launch, and I was just
fascinated by that prospect.

I thought, well, I was 21 years old. I have a long life ahead of me, and
there will be plenty of opportunity to fly in space, because it will be
available sometime in the future.

I waited 40 years, and it still wasn\'t available, and I had to do
something extreme to see if I could make arrangements, and I am still
surprised that I was able to pull this off and fly, because there was a
lot of resistance, as you know.

One thing I did have to face personally was the risk involved. My
profession now is one of looking at investment risk, and I have seen the
stock market go up and down a lot, and there are probabilities
associated with losing everything, and there\'s also probabilities of
losing your life that are significant when you look at the experience of
orbital flight.

As far as the number of people that have left the atmosphere,
approximately four percent have not returned. If you apply those numbers
to commercial passenger flight, you are talking about millions being
killed a year, very large numbers. So it\'s a very high risk.

I looked at these risks, and I felt that, since the Soyuz had at least a
better safety record overall than the Shuttle, that the risk might be
lower, but since there was no serious failure that had involved a loss
of life since 1971, my own estimate was about one in 100, one percent
chance of not returning.

I thought of that in terms of playing Russian Roulette with a 100-barrel
gun. How many of us would spend that barrel, knowing that you had one
chance out of 100 of killing yourself. That is the way I evaluated the
risk, and I said, well, I\'m 60 years old. My mortality risk for one
year is about one percent. So what the heck?

Space flight is a lot riskier than flying in passenger planes. General
aviation is riskier than passenger flight. There are a lot of extreme
activities, such as climbing Mt. Everest, which have significantly
higher risks.

MODERATOR WALKER: Or race car driver. Right.

MR. TITO: Or race car driver. One has to evaluate the risks and returns,
whether it is investing or any life activity.

Now as far as space flight is concerned for people that have flown,
there are not enough words in the language to describe what it feels
like. It was interesting listening to Greg Olson upon his return and his
words. See, he stole those words from me.

Well, everyone has the same words to describe space flight, and this is
a winner as far as a future business opportunity, and people will take
risks. But I think the business model can significantly be improved if
the risks are lowered by several orders of magnitude.

They don\'t have to be as low as passenger flight, which may take 100
years, may never be at that level, because the velocities and the G
forces are so much greater and will always be greater with space flight.
But to the extent that the risks can be lowered significantly from what
they are today and what the public experiences, I think we have a winner
as far as people flying.

I often give talks about my flight, and I will ask for a raise of hands
and say, would you do a suborbital flight, say if the price were
\$50,000, the price of an SUV, and if the risks were fairly low \-- you
observed a lot of flights and no problems. I will always get at least 50
percent positive response.

Last night I asked the same question at an investment conference at a
table of nine people. Eight out of nine raised their hands. I gave a
speech at Florida, and it was an audience of several hundred, and I was
able to get several hundred positive just from that one conference. So I
think there is really a business here.

I think, if it is made safe, that will be the tipping point that will
make a huge industry, one that will attract private capital, unlimited
amounts of private capital. It will eventually go from suborbital flight
of zero range someday to suborbital flight from here to Sydney, and then
orbital flight, and it will lower the cost of putting payload in orbit
many orders of magnitude over what it is now, and this will open the
real opportunity to explore the solar system beyond earth, beyond moon
and Mars.

Right now it will cost something like \$2 billion every time you want to
launch something like a Saturn V. I don\'t think that is an investment
that the government can afford to make. So I think it is going to be up
to private industry to create the infrastructure that will lower the
cost of going into lower Earth orbit.

What payload is in more demand than humans? You don\'t have much of a
demand for commercial satellites. That is satisfied by present launch
vehicles. Thank you.

MODERATOR WALKER: Thank you, Dennis. Hoot?

MR. GIBSON: Gee, interesting listening to Dennis. Before we got started
today, I said it\'s going to be really fascinating to hear your
viewpoints on some of these things, and what Dennis said was I just hope
I\'m not too enthusiastic about it. What I said to him was, how could
you be too enthusiastic about something like this.

I\'m one of those lucky people that got to go to space five times. What
I can tell you is it gets better every time. You see more. You notice
more. It\'s a fascinating experience.

I\'ve done the same thing that Mr. Tito has done, and that is speak
about space and speak about your experiences, and asked people out in
the audience, how many of you would like to go take a ride \-- in my
case, it was always on a space shuttle, and how many would not want to.
It was generally about nine or ten to one. You would have a very small
segment of people that said, no, I\'m not interested, I guess, because
of the risk; but predominantly everybody wants to do this.

It is a fascinating direction for the industry to be going. Mr. Walker
mentioned earlier that NASA didn\'t handle the commercial space
development very well, and it was difficult.

NASA, being a research and development organization, was not in a
customer service type of industry and had a lot of difficulty with it,
had a lot of difficulty transitioning from a research and a technology
industry into one that was more customer service oriented.

Now there are going to be a lot of people that want to do this. There
are going to be a lot of people that want to take this ride suborbital,
as Dennis mentioned, even farther than suborbital across to Australia
and things like that, and then even orbital flight. But one of the
premises that we are here to discuss today is going to be how do you
keep it safe? How do you make it safe?

We had a lot of methodologies that we used at NASA, and I wish we
hadn\'t had the accidents that we had; because I knew all the people on
\-- just about all the people on both of those vehicles. I flew my first
two space flights right before the Challenger accident, and then I flew
three more times after that. The Columbia crew, I knew all of them
except for the Israeli astronaut, because they were in the 1994 and \'96
classes.

Part of the trouble we had, I think, in space shuttle was that we made
it look too easy, and it\'s not easy. In that regard, we were a bit of a
victim of our own success because, as I say, we made it look so
repeatable.

Here goes another space shuttle. Here comes another one back, time after
time after time. We flew \-- We have flown now 114 missions, and it is
not an easy thing to do.

Some of the methodologies that I think we used, flight rules \-- We had
flight rules covering virtually every eventuality; very, very exhaustive
training for the crews flying the thing, with lots of malfunctions, lots
of aborts, lots of failure scenarios; and we had a lot more failures, a
lot more malfunctions than really made the headlines in the press, and
they were handled. They were handled by the crew. They were handled by
Mission Control. They were handled by the team.

That didn\'t just happen overnight. That took a lot of simulation and a
lot of training to make all of those things happen. There is going to
have to be that kind of a methodology in these vehicles.

Additionally, redundancy: If you needed three of them, then you had four
of them or you had five of them, so that you could suffer failures. You
could suffer malfunctions, and you could still regroup and fly
successfully.

I don\'t know how we feel about pressure suits, but a redundancy for
cabin pressure is a pressure suit, and I think we ought to be wearing
pressure suits. And I think it is something that needs to be enforced by
management.

My astronauts \-- When I was Chief Astronaut, I got the argument all the
time, why do we have to wear those darn heavy, warm, stuffy pressure
suits for reentry? Reentry is easy. We are just gliding back down. We
don\'t want to wear the pressure suits. I constantly had to fight with
my guys to say, no, it\'s a piece of safety equipment, it\'s a piece of
safety gear; you need to be wearing it.

We lost an entire Russian crew years ago, because of not being in
pressure suits. So I think, as we move forward in this, I hope everyone
is thinking about pressure suits, because all you need to have is a bad
day for one valve in many of these vehicles, and you don\'t have anymore
cabin pressure.

So I think redundancy, lots of training, flight rules, and all of the
other things are things that are going into keeping this safe so that
the risk level is low enough, so that people want to do this.

I guess, finally, I will just say how exciting is this? Gee, when I
first saw the first announcement of SpaceShip One in *Aviation Week*, I
sent Burt Rutan an e-mail. He and I are from the same university,
graduated from the same university. I sent Burt an e-mail that said,
\"Hey, Burt, don\'t you need an experienced rocket pilot to fly that
thing for you?\" He sent me back something like, \"Come on, Hoot, leave
us alone; we are serious here.\"

The point is I was serious. I\'ve been there five times. I\'m not tired
of it yet. I would be happy to go back, and I think there are going to
be lots of people that are going to share my kind of enthusiasm for it.

MODERATOR WALKER: Thanks, Hoot. Elon?

MR. MUSK: All right. Well, I guess my motivation for doing what I am
doing with SpaceX is a little different. I mean, I think it would be
great to go into space, and I think it is a wonderful thing. But SpaceX
is certainly not motivated \-- It\'s not motivated from a personal
desire to go into space.

It is really motivated from a philosophical belief that I have that it
is really important that we become a space-faring civilization and
ultimately a multi-planet species.

The road that we are on right now is not one which leads there. People
have gotten used to technology improving every year, so that next
year\'s computer or cell phone is better than this year\'s or it is
cheaper. There is this constant improvement that they have come to
expect.

There is something called \"Moore\'s Law\" in computing where you expect
to get more computing for less money every year. Well, in space that has
not been the case. In fact, it\'s been in the U.S. to send people up to
space a heck of a lot more than it did in the Sixties.

The Space Shuttle budget is about \$5 billion a year. Divide that number
by the number of Shuttle flights that occurs, and that\'s the cost per
Shuttle flight. This year, it would \$5 billion, because it\'s one
Shuttle flight. But in a good year, it would be past four. So at least a
billion dollars a flight.

Even what is contemplated for the replacement for the Shuttle is perhaps
something like half a billion dollars a flight, and we are talking just
the low earth orbit here. We are not talking going to the moon or
anything like that.

So if you take something like that, you can extrapolate out to infinity,
and we never get to being a real multi-planet species or true
space-faring civilization and so forth.

So I really started SpaceX to help set us on a path of constant
improvement with respect to space transportation, improvement in both
cost and reliability. In fact, I regard the two as inseparable, because
I think it is very expensive to die.

So that is the basis for SpaceX. We started out with a small launch
vehicle called the Falcon I, which is capable of putting about half a
ton into low earth orbit, and we will be launching the first Falcon I,
hopefully, in about six or seven weeks from now, carrying an Air Force
satellite that will measure a space plasma phenomenon.

That is going to get followed up in 2007 with a vehicle we call Falcon
IX, which takes the same engine that is in Falcon I but puts nine of
them together on a single stage, and that is actually capable of putting
about 10 tons into low earth orbit or about three tons into high energy
orbit like geosynchronous transfer or conceivably about two tons or so
to translunar injection.

So we intend to launch the heavy satellites with Falcon IX, and the
basic business strategy, as I\'ve described, is to sort of go and
establish a beachhead in the existing market, which is satellite
transportation. It is a market of about three or four billion dollars a
year.

If we can establish a beachhead there, dominate that market and use that
revenue stream to fund ongoing development of vehicles, going from
satellite launch into human space flight and continuing to scale up the
size of the vehicle, then I think we can eventually get to the point
where we could do \-- have the ability to transport people to the moon
or conceivably Mars. That is the long-term objective. That is where we
will go, if we are able to get that far.

The first element, as I mentioned \-- The verdict is going to be
rendered fairly soon. Around about Thanksgiving, we will be launching
Falcon I from our island in the Marshall Islands, a little island there.

It sounds sort of nefarious to be launching a rocket from a remote
tropical island, and I should have a white cap or something like that.
But we also have launch sites at Cape Canaveral and at Vandenberg Air
Force Base.

We have been fortunate enough to actually sell the first six launches of
Falcon I. About half of them are U.S. government satellites. About half
of them are non-U.S. government satellites, and we have also been able
to sell the first two flights of Falcon IX, one to a U.S. government
customer and one to a commercial customer.

So, so far, it looks positive, and I\'ll feel a lot better after our
first launch. But I am optimistic about it. That\'s where we are.

MODERATOR WALKER: Great. Jay?

MAJ. GEN. EDWARDS: I would like to talk about the economy of the need
for speed. There is a reason for wanting to go fast just because it is
something new and different, and it has to do with commerce.

I think that there is a direct relationship between speed and commerce,
because if you look at it, transportation really is the fuel of
commerce. So if you can move product and people faster, then you have
immediate effect on commerce and the economy.

As a matter of fact, I have even developed an equation that puts this
into perspective. If we look at a big C, and that represents commerce,
and we say that equals to M, which represents the mass of a product that
is being delivered, times the speed at which it is being delivered,
which is S-squared, then we get the equation C=MS^2^, coming a little
bit from something that Einstein came up with sometime ago.

There is a true relationship then between how fast you can deliver
things to how commerce grows and benefits from it. So that\'s the
equation. I\'m sticking with it.

The problem, though, is when you begin to expedite things, when things
become faster and quicker, you also induce into that equation the
element of risk. So it turns out that speed and safety are in indirect
proportion to each other.

So as we work hard to speed things up, we also introduce risk that has
to be dealt with. So it becomes incumbent upon the design engineer to
develop this vehicle, whatever it turns out to be that\'s going to be
faster than any vehicle that has been in use before, to deal with the
increased risk aspect of doing that.

So the design engineer works very hard to accomplish this, and it is a
balancing problem. How do you balance moving forward? How do you balance
moving forward with progress against the risk and the inducement of
danger into the equation?

That is the tough job that the engineer has to do, and that is a problem
that we all have to deal with and work with.

So the responsibility for the developer is to develop this vehicle that
can do the job faster and better. The responsibility of government then
is to make sure that this developer does not endanger the public beyond
a level that the public is currently willing to accept.

So now we have really a couple of competing situations, a debate, if you
will, between the industry that wants to go forward, wants to develop
new progress, and a government that wants to make sure that it is done
with care and with safety as the uppermost thing in mind.

We then have private companies now who are interested in space travel,
and the private companies are working very diligent to accomplish both
things, which is to provide a product that can do things that have never
been done before \-- Why? To enhance commerce \-- but to do it in such a
way that it doesn\'t increase the danger and the risk to the general
public.

Because we now have this coming along, we have, fortunately, an agency
within the government that has the capability to deal with these
questions about risk, safety, performance, and this organization \-- and
we have representatives here from FAA and the Office of Commercial Space
Transportation who are taking on the job of making sure that this new
industry has two things, has an opportunity to grow and work, but also
make sure that it does not endanger the public in any way, shape or
form.

That\'s a tough job for the government. It is a tough job for the
industry, but the industry and the government are working as close
together as I have ever seen the two before, and I have a lot of
experience in working with the Federal government. But this is an
organization that is working.

It is encouraging. It is part of their mission statement to encourage
the development of commercial space transportation, and as part of that
mission I think they are doing an excellent job.

We in the company that I am associated with are working very closely
with this office, and we are very pleased with the help and the
promotion that we are getting. Thank you.

MODERATOR WALKER: Thank you. Your example of commerce equaling speed
reminds me of a quote from my favorite Pennsylvania philosopher, Mario
Andretti. Mario gave me this quote, and I have a picture of Mario on the
fireplace above my office, because it says a lot about the business in
which we operate.

His quote is: \"If you are in control, you are not going fast enough.\"
To some extent, the ability to invest in this industry and this
technology will keep us on the leading edge so that we are able to go
fast enough. It\'s a great statement.

MAJ. GEN. EDWARDS: C=MS^2^.

MODERATOR WALKER: Will?

MR. WHITEHORN: Good afternoon, everyone. In 2001 I was lucky enough to
meet a couple of representatives of two of the world\'s space
authorities at a conference in Japan, and I asked them both whether or
not they thought that the X-prize was winnable by the end of 2004, and
was it winnable with any sort of vehicle that would suggest suborbital
flight twice in a couple of weeks and would come in under \$50 million.

Both of them said, no, it wasn\'t possible. They just didn\'t think it
would be done. They thought creating a suborbital system was very
possible but not within that kind of budget and time constraint, given
where they thought people had got with the X-prize.

Three years later these two members of the space authority were
obviously proved wrong, and they were proved wrong in a quite dramatic
way, since Burt Rutan\'s project which he undertook for Paul Allen and
luckily with ourselves involved, cost \$27 million, and for \$27 million
Burt designed what I think could arguably be, although we don\'t have
the evidence because, obviously, they only undertook a small number of
flights before going to the Smithsonian \-- but Burt designed a very
safe system, certainly probably theoretically safer than the X-15 had
proved to be, which was the nearest that NASA came in its history to
developing a suborbital aircraft or aircraft capable of flying into
space.

The remarkable thing is the price that he did it for and the methodology
that he used. That sparked Virgin Galactic into (a) forming itself into
a company, buying the technology rights before the X-Prize happened, and
beginning the process with Burt to work out how we were going to get to
a commercial version of SpaceShip One, what we now call SpaceShip Two as
a working title.

Now the fascinating thing is that, as we went through the process of
putting together a business plan for how we would actually undertake
suborbital space flight, it became very obvious to us that there were
two goals that we needed to achieve, if we were going to make a business
out of this in the very long term.

We have to design a simple and safe system to get individuals into
space, and we have to it at prices which would eventually come down to
\$50,000 or less, and economies of scale will be necessary to do that.

It became very clear to us that actually to have the goal of safety as
the primary goal of the business plan, as well as commercial viability,
was absolutely crucial, because we were never going to create a long
term business unless we could prove that you could carry literally tens
of thousands of people on an adventure into space safely; because that
is where, when you look at what the public\'s attitude to space is all
about, there are only about half of us in any room who will want to go
to space.

In certain audiences where you\'ve got the more adventurous, there the
percentage will rise. But basically, half of people want to do
adventurous things, and half of people don\'t. But even if half of the
people want to do adventurous things, most of them are not prepared to
take unnecessary risks.

They do have an interesting perception of risk, the general public. For
instance, a third of people are actually scared of flying, and yet
airplanes are statistically the safest place to be on earth.

You are safer being in an airplane than you are sitting in this room.
You are safer being in an airplane than you are sitting in a train. You
are safer being in an airplane than you are in a car. And yet a third of
all the people who actually get on a plane and fly are fearful during
the process of the flight. It is completely irrational.

Now, luckily, when it comes to suborbital space tourism in the future,
enough of the 50 percent who would like to go into space, enough of the
ones that we need, the 15-20,000 people around the world who might want
to do this over the next five years to prove that business plan right,
enough of them are prepared to take more risk than that; because they
understand, and they have a knowledge of risk of the type that Dennis
has, and they have a knowledge and understanding of the type of
adventure they are about to embark on that Hoot has in his experience of
actually having gone to space.

So for us, the business plan of creating Virgin Galactic and building a
suborbital space system, a commercial one, with Burt Rutan is a process
where we know we can fill the seats if we build the system. And if we
fill the seats and are commercially successful, and yet we don\'t create
a track record for safety, we will never get to the next stage. We will
never get to our orbital craft, and we will never prove to people that
the idea of human exploration of space by people rather than by four or
five major governments of the world is a real possibility.

So safety is our North Star. It is also our goal in terms of creating a
business for ourselves, which we run for 20 or 30 years rather than just
a very short number of years.

The fascinating thing is that safety, to me, is a very nebulous beast
when it comes to commercialization of space. It is not as simple as
saying let\'s take the pressure suit example that Hoot gave just now.

I don\'t know the answer when we are creating a commercial system to fly
into space as to whether or not our customers, or even indeed our actual
pilots employed as crew, should wear pressure suits or not.

All I know is that, when Patty Grace Smith\'s colleagues on the other
side of the FAA let people get on planes at Dulles Airport to fly away
from this conference, they aren\'t handing out 450,000 pressure suits a
day to the customers that get on board those aircraft.

Yet logically, maybe they should, because perhaps there is one accident
that would happen every 20 years where some lives might be saved if they
were wearing pressure suits. However, it is totally impractical.

For us, our goal is to prove Hoot wrong, although he may well be right,
and we have to test that through the process of working with the FAA\'s
AST Division to find out what the answer will be to this, because if you
are going to regularize something and create acceptability amongst the
public to it, they\'ve got to feel comfortable about it.

They\'ve got to feel that they are going on an adventure, but they are
really getting in a corporate jet to do it, and they\'ve got to feel
that level of safety of general aviation that people have gotten used to
in the United States and Europe and Asia over the past 15 or 20 years,
and they\'ve got to have an understanding when they get on board that
they are going to have an adventure, but that adventure is going to be
in a vehicle which they have some familiarity with as they get on the
nice equipment of the Virgin Atlantic upper class bed to get on board
their trip into space for two and a half hours, and they\'ve got to
experience their five minutes of weightlessness, and we\'ve got to
achieve them doing it in a safe way.

If you are going to create suborbital space tourism, the most important
thing you\'ve got to create is an atmosphere where people don\'t have to
train endlessly to do it. They\'ve got to have, with a few days
experience, the ability to get on board and fly this thing.

So in building safety into our project, we are going to follow the other
golden watchword that Virgin tries to follow in all its businesses,
which is simplicity, because to us simplicity equals safety.

That was one of the things that I believe that NASA in the 1970s after
the Apollo program began to lose sight of. The complexity of systems in
order to achieve a minimization of risk can create risk of its own.

If you are trying to create a system, which will work for people and get
tens of thousands of people safely into space and fill the coffers of
our budget to allow us to go to the next stage, we\'ve got to keep it
simple.

Therefore, I am by antithesis against doing anything to increase the
risk to those that take part in a mission, which gives them something
they don\'t quite understand, and a pressure suit may be that, although
it may prove necessary.

What we want to have is a cabin that isn\'t going to leak and isn\'t
going to depressurize. That is, by far, the best thing to do, and to
have our spaceship as a lifeboat that carries the people safely back to
earth if things go wrong, rather than having to get out of it; because
people with three days training, to fly for their \$200,000 eventually
hoping to get down to \$50,000 \-- we aren\'t going to be able to train
them well enough to teach them how to escape from a spaceship at
hundreds of thousands of feet above the earth\'s atmosphere.

We are only going to give them the ability to get back to earth if we
can keep them enclosed in something that is safe.

When it comes to the number of moving parts in the system we create, I
don\'t want to build a Shuttle for \$20 million. That\'s not the aim of
what we are doing with SpaceShip Two working with Burt.

What we are trying to build is something that has 30 moving parts in it,
but each of those moving parts is necessary to achieve the integrity of
the vehicle, get it to do the job in hand, get the customers happy with
the experience they have had of experiencing their weightlessness on
board, seeing the magnitude of the blue planet below them, seeing the
sky turn from blue to mauve to indigo to black, seeing the beauty of
space around them.

At the end of that experience, that lifeboat brings them back to earth
safely, and even if it didn\'t survive, they will.

So my approach to safety in this project is to not be prescribing about
it, but to take it as it comes and work through every problem, and get
to a solution which is different; because if we prescribed how
commercial space flight was going to be, how could you prescribe the
difference between what Elon is doing, what we are doing, and what the
General is doing?

He is building a plane that will take off from the ground and go into
space. We are going to launch ours from an air launch vehicle. Elon is
taking off from the ground. People like T-Space or another company in
the commercial arena are hoping to carry people into space are both
looking at ground launch, and they are looking at a different approach
to air launch to ours.

We are using different materials. We are going to be building out of
carbon fiber composite. You are basing yours on an aircraft hull. Elon
is using conventional rocketry but done in a much more cost effective
way with some interesting add-ons.

They are all different approaches, and because they are all different
approaches, we have to learn as we go along how to create the
prescriptions in the future as to what will become regularized and safe,
which will give people the impression that they can do this, and give
private capital the willingness to invest in creating a future for space
well above the \$30 billion that NASA spends.

If you look at the mobile phone industry in the past 10 years, it\'s had
an investment over \$1.5 trillion in the private sector. My company,
Virgin, is in the mobile phone business. We\'ve made a success of it,
but it has a massive investment.

If you could get these kind of levels of investment that have come into
the telecommunications industry over the past 10 years into private
space, we could do the things that NASA has never been able to dream of
doing under its pressure from government budgets.

We literally could create, you know, the final frontier of space, and
the Star Trek dream could become a reality within a couple of 100 years.
But if we don\'t break the log jam of safe commercial suborbital space
tourism and prove to people that this can be done, none of those things
will happen. Thanks.

MODERATOR WATSON: Well, thank you very much. Well, I have a page full of
questions. I think maybe some of you will have some questions, too, but
I am going to start with mine, and try to get some discussion started
here.

First of all, the general agreement of everybody was this is a risky
business, that there is risk involved in it and so on, and how do you
mitigate risk and so on. So that\'s the real question.

In your mind, what should the safety regime be? How do we do it? Should
it be a government regime? Should government set the standards? Is this
something where business needs to develop far enough so that we know
what it is we are doing?

What I heard Will say a minute ago was we want simplicity of technology.

MAJ. GEN. EDWARDS: Well, let me take a swing at it.

MODERATOR WATSON: But simplicity of technology in this case, because of
the various programs, also means complexity of regulation. So we are in
an interesting area. Jay, go ahead.

MAJ. GEN. EDWARDS: I think, to begin you have to have a goal. What is
the goal we are shooting for in terms of safety? Once you can define
that, and you can numerically define that, then you begin to engineer to
accomplish that.

Your engineering has to take into account your systems and your
subsystems. You do a preliminary hazard analysis of how each one of
those systems work, how they relate to the other, and then you calculate
what is the mean time between failure rate for each of the subsystems?
What does that do to the total system? And by engineering and by
mathematics you can come out with the solution that will give you a
mechanism, a machine that will perform to the safety goal that has been
established.

Now the government will set that goal. The private industry will make it
happen through engineering.

MODERATOR WATSON: But if my colleagues on Capitol Hill \-- Let\'s say we
have lots of sensible people inside the Commercial Space Office that
answer to the people on Capitol Hill. So if Capital Hill says all of a
sudden that the most that we are willing to accept is one death in 100
million, you know, can you design a simple system inside of that that
allows you to make a business case \--

MR. WHITEHORN: Well, they would instantly have the first death, because
I would blow my brains out. So Congress would be responsible for the
death of the first spaceman.

I think to take the matter very seriously, though, I think the
Commercialization of Space Amendment Act 2004 and the earlier
legislation which should pave the way for it \-- you know, it lays down
the FAA with a single responsibility, which is the safety of the
uninvolved third parties and the public, which is absolutely right.
However, going beyond that, we are going to be actually carrying a lot
of passengers into space.

When our business plan is fulfilled, we are looking at up to 50,000
people over 10 years, and certainly to get to profitability several
thousand before we actually break even on the investment or make nearly
\$150 million.

Those people have to perceive their own safety in order to undertake
this, especially the latter. When you get into the more mass market of
this, people have to perceive a level of safety or it simply isn\'t
going to happen.

So really from the point of Virgin, which is a well known international
company with a large number of airline and rail transportation and other
interests, we have set our own safety goals, which we would set
regardless of what the FAA did.

Now not every other operator, of course, has a brand and has those other
international businesses and has that commercial aviation experience,
and therefore, necessarily they aren\'t thinking of it in quite the same
way. But Virgin is certainly thinking of this as a project where we
would set ourselves very enhanced safety standards. However, we don\'t
know what the best approach to safety standards is because of the system
we are using being so different to anything that\'s gone before.

We\'ve got the experience of SpaceShip One in our case to go on. You
guys are moving near to approach us right now. So you will build some of
that experience over the next couple of years, but from the experience
of SpaceShip One, we\'ve already learned a lot from that project, which
has made us think very seriously about the safety systems we will have
on board for commercial flight.

The great thing is we will be able to walk through that process with the
FAA\'s AST Division. We will be able to take them with us as we go along
through the process from the construction of SpaceShip Two through its
test program.

There isn\'t a prescription that\'s been laid down in Congress yet to
force us in one particular direction or another, which I think is the
right approach here. But when we learn things, we may need to start
prescribing, as happened in the civil aviation industry from the 1920s
onward.

Once the industry became regulated, first in Britain actually and then
in the United States in the 1920s, you know, there were things imposed
on operators which they didn\'t like, but on the whole they were based
on precedent and events that unfolded and learning from aircraft.

We are trying to leap all of that approach that happened in civil
aviation during the 1920s and really the beginning of a really strong
safety regime in the 1950s. We are going to try and leap that and put
that into one, because of safety being our North Star, to prove the
business case, to get commercial space going.

It is going to be a fascinating and very different process to the
process that was undertaken in civil aviation. If you hear a Congressman
standing up and saying, well, we need to have a regime which says this
now and does that now, they may actually be making the lives of the
people who are the early space pioneers in commercial space tourism less
safe if they prescribe things now.

That is the irony of the situation, because one of the things I have
learned in the aviation business and the rail business, and having been
a helicopter search and rescue crewman when I was younger, is that the
law of unintended consequences is one of the biggest dangers when it
comes to the interface of legislation and safety. That happens time and
time again.

An apocryphal story is that in the UK we have an organization called the
Health and Safety Executive, and they look after ground transportation
safety. When we were building our new high speed tilting trains for one
of Britain\'s railways, they wouldn\'t let us change the coffee machines
from the old 1950s coffee machines where you pick the coffee out by hand
and pour it just like a coffee machine you have here.

We wanted to put a cappuccino maker on board. By they time they put in
the safety regime we needed to have to put this new style pressurized
cappuccino maker on board, it was costing 10,000 pounds, which is
\$20,000 nearly, for a cappuccino maker as opposed to the old system.
But we went ahead and did it anyway.

Actually, we went in to them and said, but, yeah, we could put the old
system on board with the Kona coffee which was dangerous and it scalded
115 people on trains in the past five years. They said, yeah, but we
don\'t care; that\'s the way the legislation works.

That\'s what we must avoid with the commercialization of space.

MODERATOR WATSON: Hoot, let\'s bring your experience in on this. My
impression after watching these guys for years is that a lot of the
astronauts who were part of your astronaut corps that you headed were
willing to take considerably more risks than NASA was willing to allow
them to take.

MR. GIBSON: Oh, sure. Yes.

MODERATOR WATSON: And so isn\'t that in a sense some of the regulatory
issue that we face here, that NASA has already had the job of kind of
tamping down the desires of even its astronaut corps to do things that
were more risky than what NASA was willing to allow?

MR. GIBSON: Well, regulatory, perhaps supervisory as well; because,
Dennis, you\'ve been there. When you got within a couple of days of
launch \-- Frank, you\'ve been there as well. When you got within a
couple of days of launch and you had some little malfunction pop up on
the orbiter, you would always get the question: Are you guys willing to
launch with this the way it is?

Well, it was a waste of time asking the crew that question, because, of
course, they were ready to launch with it the way it was. They were on
their way to Disneyland. You were getting ready to go to space, and you
didn\'t want anything making that take even one more day over what you
had already been counting down to, counting the days down to your
launch.

So I would always ask the question, but I already knew the answer ahead
of time, and that was that, sure, we are ready to launch with it like
that. That\'s where you had to have the supervisory people come in and
say, no, on behalf of the crew we are not willing to launch with it this
way, we do need to fix it.

I agree with one of the things Will said, except that I\'m not going to
agree on space suits. But I agree that you want a simple vehicle. There
is just no two ways about it that that is an excellent thing to have.
But I do want to point out that, even on an airliner, you have a backup
for your pressurization system, and that\'s those little yellow masks
that drop down, and you are not going to have that.

Well, first off, if you are weightless, that won\'t drop down. It\'s
just going to float out there. But if you are going to have a backup for
that, you\'ve got to have a pressure suit, plus \-- you know what? \--
you are missing a business case for this.

Picture the photo that each passenger could have standing with their
helmet under their arm, in their pressure suit with the vehicle in the
background.

MR. WHITEHORN: They are going to get that anyway. It just isn\'t going
to work.

MR. GIBSON: What you are going to do, you are going to provide them with
a suit to use and, if they want after the mission, they can buy that
suit for just a few more dollars. So you are missing a business case
here.

MR. WHITEHORN; It\'s not a bad idea. To be quite serious, you might well
be right, and we certainly have identified that people want to dress up
in something.

The fact is that I actually don\'t know if it\'s the safest thing to do,
because you know, you have people who haven\'t got experience of using
pressure suits. You\'ve been a fighter pilot. You have experience with
pressure suits before you even joined NASA. These people have three
days.

So it may not be the safest thing to do. It still may be. It may turn
out to be, but that\'s the interesting way of looking at it. The
interesting way of looking at this is to not prescribe, because if
somebody was to write down the rules in advance, and let\'s say it was
Congressman Hoot who had just been in the committee and you were asked
and write it down, you would probably write down space missions have to
have pressure suits.

Now if that turns out to be the thing that was prescribed and it turns
out to actually make it more dangerous, we would still be obliged to do
it. If you look at some of the safety systems that were developed by
NASA, some of them were the result of being prescribed to do things, but
you must always be able to escape from the Shuttle in every single
circumstance, which led to a number of design features which actually
probably reduced the safety of the Shuttle, ironically as it turned out.

So we really \-- You know, what I\'m talking about here is that we need
to think out of the box when it comes to the systems we design, and it
could well be that your contention is absolutely right. It certainly is
in the fashion sense.

MODERATOR WATSON: Hoot is too dedicated to speed to go to the Congress.

MR. GIBSON: There was another expression on speed, and that was Roscoe
Turner that said there is no excuse for an airplane unless it\'s fast.
So that fits right in.

MODERATOR WATSON: One of the fascinating things about what you said in
your statement was the fact that, basically, you did your own risk
analysis, and you determined from your own personal standpoint and so on
that this was a risk worth taking.

Now is that something that we build into any kind of a safety regime
that we do? I know when I drive a racecar I sign a waiver that says I\'m
not going to hold anybody responsible for the fact that I put this thing
into the wall. In fact, it says also that I will pay for the damage to
the car.

I am just wondering. I mean, from your perspective how do we handle
this? Do we have people who kind of make their own risk analysis and
decide that this is what they are going to do?

MR. TITO: Well, I think I did my own risk analysis, because that is my
profession, and I\'m very quantitative. Most people do not go through
that, but to do a risk analysis, say, for suborbital is going to be very
difficult, because you need data. You need experience.

So we may not know what the risk is until we have had 100,000 flights,
because you have to look at things that are going to break and, even if
you don\'t have a fatal accident, you can start to see where the
weaknesses are.

MODERATOR WATSON: You made the point that the essential thing here is to
build reliability into the systems, and that simplicity in many ways
leads to reliability. Is there some reliability factor that should be
built into whatever safety regime we come up with? Is there something
there that would allow us to begin to deal with this complexity of
regulation?

MR. MUSK: I don\'t know. I can say that we have done everything we can
possibly think of to improve reliability. We have never, for instance,
taken a look at two components and said, well, this one is expensive and
\-- this one is expensive and reliable; this one is cheap and
unreliable, and picked the cheap and unreliable one. We have never done
that.

MODERATOR WATSON: I\'m reminded of John Glenn\'s statement when he was
asked what he was thinking about as he was sitting in the capsule, and
he said I thought that \-- the first thing that came to my mind was that
everything below me was built by the lowest bidder.

MR. MUSK: Which is not really true, actually. That\'s actually not true.
So we have done everything we can possibly think of to improve
reliability and, if we think of something else, we\'ll do that.

So I don\'t know what more could we do. I mean, we could come up with
some specious calculation, but I think, you know, when you do that,
it\'s really heavily dependent upon what your assumptions are, and you
can make it go one way or another way.

I just take the approach of, if there is anything we could possibly do
to improve reliability, we will do it, and then what more can you do.

MODERATOR WATSON: The dilemma here for the people, for instance, at FAA
as they go about trying to work this through is the fact that on the
aviation side you have millions upon millions of hours of data to make
these judgments on. In space, you\'ve got limited data and very limited
data as applies to individual vehicles.

So they are being asked by the Congress and by the American people to
make judgments here on things where they are in unknown territory.

MR. MUSK: Right.

MODERATOR WATSON: And I guess what I am trying \-- and you know, part of
Congress\' decision was that, okay, the one thing we can do is protect
the general public, and then everybody else kind of decides what level
of risk they are willing to take in getting on the vehicles in the
initial instance.

Politically, I would say that that works until you have the first wreck,
and then there\'s probably going to be another judgment about that.

MR. MUSK: Actually, let me make a couple of comments. First of all,
regarding the regulation of safety, I am 100 percent in agreement with
Will. I think what you said makes complete sense. We need to be very
careful about being overly prescriptive at this point.

We are really at the very beginning of space flight, particularly human
space flight. There are essentially no flights that have taken place. I
mean, there\'s so few flights that are taking place compared with the
early days of aviation.

In the early days of aviation, tens of thousands of flights took place
within the first four or five years. Where are we at this point in terms
of human space flight?

MR. WHITEHORN: With no regulation at all.

MR. MUSK: Blotto, you know. You know, we have to have human space flight
measured in the hundreds?

MODERATOR WATSON: It\'s interesting. I don\'t know how many of you were
in the earlier session, but an example was used in the earlier session
about candy on the desk and what if you knew that there was a one in a
million chance that the piece of candy \-- there was a piece of candy
that had been delivered here that you might take. Would you be eating
the candy, you know, that kind of thing; and you know, what\'s the level
of risk? There\'s a one in a million chance, but it\'s all here in this
room.

Well, what that doesn\'t bring into the equation that I think we have to
deal with is the passion behind it, the passion that had Dennis Tito
decide that, okay, if it\'s a one in 100 chance, I\'m still going. I
mean, somewhere \-- and that\'s what regulators have a hard time with.
It\'s what Congress has a hard time with, is measuring this in a way
that allows people\'s passion for doing something to become a part of
it.

MR. MUSK: So, actually, I want to just continue what I was saying.

MODERATOR WATSON: I\'m sorry.

MR. MUSK: So on the regulation of the craft itself, I agree. You know,
we should really be cautious about being overly prescriptive, and try to
avoid, I think, regulating the safety of the passengers right at the
beginning. You know, once we figure things out and things sort of settle
down to a couple of obvious design choices, then I think the regulations
will grow sort of naturally at that pace.

Then regarding the possibility of hitting someone on the ground, it\'s
important to appreciate that the cross-section of humanity from space is
essentially zero. The odds of a piece of space degree hitting us, even
if it lands in L.A. or something like that, is so tiny.

You know, if you just took \-- You occupy about two and a half square
feet. That\'s the space that you occupy, like this big from space.
That\'s why when the space Shuttle \-- You know, what is the space
Shuttle, 150,000 pounds of metal \-- 250,000 pounds of metal and
composites and debris, most of which we were actually able to gather up
from various parts of the country. That spread itself over the
Continental United States. Did anyone even break a toenail? I mean,
nothing.

So there\'s just \-- The chances of hitting someone, particularly if
it\'s someplace like Mojave, is \-- Consider it zero. You are much more
likely to be struck by lightning three times in a row or something like
that.

MODERATOR WATSON: Jay?

MAJ. GEN. EDWARDS: Let me make a couple of points. First of all, the
aircraft that we are talking about, suborbital vehicles, are using an
awful lot of aerospace equipment that\'s been used before, and we have
reliability numbers on these components.

So it\'s not like everything on this vehicle is brand spanking new to us
as engineers. So when you start talking about the risk of this
vehicle\'s performance, a lot of the fit and form and function of the
components are already well known and well tried, and reliability data
is in. So that\'s the first point I wanted to make.

The second point I want to make is: In these components, one of the
things that AST is adamant about, and that is you must verify and
validate performance of all these subsystems. What that means is you
have to take your hazard analysis, and you have to verify. In other
words, you can\'t just go, well, I assume that this is going to happen.
You have to go out and verify that that assumption is true.

Then once you verify it, then you have to go validate it by, in fact,
testing it. So there is plenty of thought process that\'s gone into
establishing what makes a safe vehicle.

MODERATOR WATSON: Let\'s go on to the people who are actually going to
do the flying here. A couple of you have trained and gone to space. How
much training should Rocketplane and Virgin Galactic be thinking about
doing of people who are going to go to sub-orbit, and would that
increase if we start to send people to orbit?

MR. TITO: Well, I had eight months of training, which is overkill. If
you have a pressure suit, that involves \-- that would make a big
increment in the training time, because you have to know how to operate
that pressure suit. There\'s no question about it. Otherwise, it could
be a hazard if you turned a knob the wrong way, and you have to test it
before you \-- at different stages, and go through all that.

So if you eliminate the pressure suit, I think there is very little
training. I think it is more \-- The thing that concerns me \-- and this
is another element of safety that I don\'t know if we all think about
\-- is medical issues, because you are talking about G-loads of five Gs
reentering.

MR. GIBSON: Four.

MR. TITO: Okay. So if you are flying tens of thousands of people, there
are going to be some people that might have heart conditions that they
are unaware of or that they fail to disclose, and we may have some
fatalities just through medical problems. So I think \--

MR. WHITEHORN: I agree with you entirely. That is a far bigger area of
concern than things that might make people feel better, and how we
eliminate \-- you know, we know we are ready with, say, a SpaceShip One,
that 20 percent of people on this planet couldn\'t get on board that
because of medical issues. You immediately wipe out 20 percent of your
potential customer base.

There could be some people who dishonestly would want to get on board.
Obviously, from the point of view of safety, we do have to eliminate
some of those people from getting on board, because they would damage
the safety reputation, which is key to making the long term business
plan a success.

How we eliminate them and what systems we use to do so is one of the
intense things. I\'ve got a colleague here, Alex Tye, who has been
working on this precise issue at the moment and it is going to be one of
the big areas of work with the FAA as well. You know, do you give people
a CT scan when they arrive three days before the flight as the first
thing you do to check their circulatory system and their heart, and is
that going to be enough? What other tests are you going to have to do?

How are you going to create systems on board which don\'t cause them to
panic in any way, because a medical issue is people panicking out there
as well, and we are trying to think now how we make the simulation work
for them so as they get comfortable with that before.

We are trying to think that our launch \-- you won\'t have a launch; you
will be going straight to space, but we have a launch ship. You know,
can we design the cabin of that to be a replica of the SpaceShip Two
cabin so they can have a flight the day before in that, again using the
systems up in the air. They will get the chance to see the other
spaceship fly. You can then get a clear impression if there is anybody
on board there who really is going to have a nervous issue with doing
it.

So these are, I think, the key considerations from the passenger point
of view. If we assume that we have built a safe operating system, to the
best of our ability, the biggest issue is weeding out the individuals in
a way, which NASA was able to do over a period of time.

You were always able to take the approach with the people who were
coming through for astronaut training. You could take the long view on
them. You knew their track records beforehand.

If this is a commercial success and we are going to prove all the other
thing is that we all want to prove, we haven\'t got that luxury, but
we\'ve got to try and replicate it within those three or four days. It
will be a real challenge.

MR. TITO: I think one of the issues that was important to NASA was the
fact that I was 60 years old, and I know that was of concern to the
Russians as well. You know, that could involve a lot of political risk,
if somebody has a heart attack while up in space.

MODERATOR WATSON: Hoot, do you have any views of what it would take in
terms of a training regime?

MR. GIBSON: Well, you know, when we trained for a Shuttle mission, you
would appoint a crew a year prior. So once again, you had a real luxury.
You had a lot of time that you were working together.

In addition to that, gee, when you selected people, we had a lot of
background on them before they ever applied, and we were able to screen
them and take a look at them, interview them, do physicals on them. So
we really have a lot of time and a lot of information on them, and it
all came out very well.

You are not going to be working with that, like you so aptly point out.
You are going to have a tougher time. We used to refer to training for a
Shuttle flight as \"death by training,\" because there was so much of
it. You were so ready to get on with the mission and go fly after a year
of training, nine months of which was very, very intensive training.

MODERATOR WATSON: But a lot of that was training for what you were going
to be doing during the mission, too, whereas what they have is folks who
are going along for a ride.

MR. WHITEHORN: I genuinely don\'t know the answer to this. Did you ever
find \-- By the time you have picked a crew for a Shuttle mission, did
you ever find that somebody was ever taken out for psychological reasons
or had you already cleared them for so long that you never had that
situation arise?

MR. GIBSON: We never had that occur, Will.

MR. WHITEHORN: So you already eliminated all the psychological issues a
long time before in that early approach?

MR. GIBSON: For the most part, that\'s true. We had a few little
situations pop up, none of which required replacement of a crew member.
We never had that pop up, and it was after a number of years when we
started looking at much longer duration space flights that the
psychological aspects of it and the cooperation of individuals really
got to be an issue, and we looked more at psychological things. But
again, it was for longer missions.

You will be in that same boat. You are not going to have a very long
flight that you are worried about people getting along for. But you are
going to have a tougher job screening folks and making sure that they
are not going to panic, that they are not going to feel too constrained
by their pressure suit. I\'m just not giving up. You are going to have a
challenge in doing that.

Now your pilots \-- I\'m sure you are going to have very intensive
training that the pilots are going to go through to be able to handle
malfunctions, flight rules, aborts if that\'s necessary, and those sorts
of things. But it won\'t be every three years that you fly, I\'m
assuming, your pilots. I assume, once you get them up to a particular
level, they will continue to fly. They will be current. You won\'t have
to start from scratch, which is what we were doing for every Shuttle
mission.

MODERATOR WATSON: Well, let\'s open it up now to audience questions and
see what is on your minds. Yes, sir? We have a microphone coming for
you.

MR. HEATH: Just a couple of observations. If you go back in history and
you take a look at where the commercial air transportation system was in
the late 1920s, my vision right now that\'s probably where space
operation is today. If you take that and you were 75 years building the
safety record that we\'ve got today in commercial transportation, the
first set of regs were issued in the late Twenties. They have been
recodified into CFRs in the late Fifties and early Sixties.

The one part that we have to do for the commercial transport, we are up
to Amendment Number \-- I believe it is 120. So there\'s a lot \-- It\'s
going to take a lot to get to that level from the commercial space side.
I mean, it\'s just \-- When you start looking \-- and the conversation
about what level of safety do we need. There are cases on commercial
airplanes, it\'s 10^-9^. It will never happen.

Those are the things that we have to consider for commercial
transportation in just an airplane. You know, you heard it this morning.
All you got to do is have 50 people on a missile being launched, you
lose them, and where does it go? It goes on the front page of the
Washington Post.

So I love the thought. I think it\'s great. I mean, I look at space
travel, and I say, boy, from the cargo standpoint that\'s one of the
greatest inventions in the world.

I mean, if you can take a donor organ and launch it from Washington
National and then 45 minutes later it\'s in Tokyo, you\'ve done a lot of
things. But it\'s going to take a lot of time and a lot of effort.

When you look at the FAA and you look at the regs, you know, it takes us
\-- believe this or not, it takes us \-- and I\'ve worked on five
rulemaking committees to do this, and some of these rules have taken us
10 years to get to a final rule. So it\'s an average of five years.

Those are my comments.

MR. WHITEHORN; Interestingly enough, in the 1920s the chances of dying
in a commercial aircraft accident in the United States were about one in
7,500 to 8,000. Then the introduction of the Ford Tri-motor came along,
and the statistical chance of dying was reduced very considerably just
literally overnight with the introduction of that aircraft, and it was
the precursor to a far safer generation with the arrival of the DC-2 and
others in the 1930s.

Ironically, that was considered \-- You know, aircraft were considered,
by the time you were down to that level of risk, as being quite safe in
those days. People perceived themselves to be reasonably safe in
airplanes by the mid-1930s, which is remarkable.

The perception actually was amongst people who flew then of their own
safety was probably higher than it is today. So perception and reality
are two very different things.

I think one thing to take into account when you compare civil
aviation\'s history with what we are talking about in the history of
space flight is that in the case of what we are doing, especially the
two of this on this side of the room, we are basically taking aircraft
and aircraft technology and flying them into space.

So we have a huge amount of learning that we can pick up from the FAA\'s
experience, the CAA\'s experience in Britain, other places around the
world, our own commercial experience as an air aviation operator, the
General\'s experience in the U.S. Air Force.

All of the teams who are working in their different companies to do this
do have a massive amount of experience to draw on, and we think we can
get to levels of safety, which have not been seen in space.

Remember that the space that we are talking about on that side of the
room where Dennis and Hoot are is a different thing. It is much more, or
should be in theory much more the space equivalent of Captain Cook going
off to discover the Polynesian Islands.

You know, Captain Cook didn\'t get 100 miles off the coast of Plymouth
to find a rip in his suit and say, oh, I\'m turning back. Queen
Elizabeth or whoever was on the throne at the time was going to be
really upset and, oh, we might all get dysentery, we might get scalped,
we might get this.

I think there is a big difference. I think NASA and the other space
agencies do need to be given some slack by Congress and the American
public to get back to their roots as an exploratory organization,
because Hoot and his colleagues were prepared to do things and prepared
to volunteer for things, and sometimes it was right to keep going.

Yes, if you found a safety issue, you obviously don\'t carry on
regardless. You plug the gap, and you then get on with it. But you have
to make the difference.

What we are trying to prove is safety on this side of the room, and
there, that side of the room is about exploration and actually providing
the basis to allow the civil industry to develop that can then in the
next phase help feed the exploration of space, because the private
equity has come into it.

So if you think about that holistically, I think we must not show fear
of moving forward, and we must resist all attempts to stop this in its
tracks because of the theory that it could be less safe than commercial
aviation is today.

MAJ. GEN. EDWARDS: Will, here is another thing. I think you and I, our
companies, are being held to the same safety criteria as we begin with
what the aviation industry is at today. Otherwise, we can\'t fly.
That\'s the rule.

So we don\'t get that start-up curve that aviation had. We are having to
start up here where commercial aviation already exists in terms of
safety.

MR. WHITEHORN: But I am not being told to put a life jacket under my
seat, and that\'s really the important difference between the current
civil aviation regulations on one side and where we are going with the
FAA\'s regime that is going to be created around this.

MODERATOR WATSON: And where all of this, it seems to me, comes into
focus as well is, if you take Elon\'s Falcon IX that ultimately might be
used to launch humans into space, the fact is that when you start to go
orbital, the challenges and the risk factors and so on are a very
different kind of regime, which means that FAA will have to look at that
in probably a different way than they are looking at suborbital.

MR. WHITEHORN: And not the same thing. You can\'t compare a Zeppelin and
a First World War Sopwith Camel, just as you can\'t compare the Titanic
and Concorde. They are all completely different. They were all doing the
same thing. They were all carrying people in some form of
transportation, but there is as much similarity between a ground-based
orbital rocket launch and a suborbital flight launched from the air with
something like a SpaceShip One or Rocketplane \-- there is as much
similarity between those things as there is between Titanic and the
Zeppelin.

MODERATOR WATSON: Have you started those kinds of discussions with the
people at FAA at this point?

MR. MUSK: Well, we haven\'t really \-- I mean, we are designing our
vehicles initially perhaps as a satellite launch and, as I said, we are
doing everything we can conceivably think of to improve reliability.

So that doesn\'t really quite come into the FAA realm quite yet,
although we \-- I mean, when we do commercial satellite launches, those
are licensed by the FAA. Our third launch, for example, will be licensed
by the FAA.

MODERATOR WATSON: Other questions, comments? We\'ve got several back
here.

MR. TIER: Good afternoon. I am Paul Tier with the Florida Space
Authority. We did a paper about a year ago and, in fact, Futron has done
a study industrywide about a commercial spaceport.

One entity that no one has mentioned today is, really, I don\'t know
where you are going to fly anything to go into space without going near
a DoD range. They tend to have a different perspective on things and, as
far as \-- You know, we have talked about FAA being in control of the
safety requirements, but especially if you fly out of the eastern range
or Cape Canaveral, you know, they have \-- they think they are in
control.

So the question is really how can we get through this process, not
around it \-- Do you have any ideas how we can get through the process,
plus after we said give us a chunk of the Cape and we will make a
commercial spaceport, now all of a sudden there\'s DoD requirements for
the entire Cape.

Of course, NASA Kennedy Space Center has said don\'t even think about
39(a) and (b). Don\'t even think about it.

MR. MUSK: Well, I\'ve been through the range certification process for
east and western range, both for Cape Canaveral and Vandenberg for the
Falcon I. The Falcon I is certified to fly from Vandenberg or the Cape
as well as from the Marshall Islands. It was definitely a very arduous
process, but fortunately, they are only concerned about ground safety. I
mean about the rocket sort of landing on something, I think a little
excessively concerned sometimes.

I think some of the thinking is a little archaic. They had something
called traceability which made sense in the Sixties, doesn\'t make sense
in the twenty-first century. But we got through it. We sort of labored
through it, and it is arduous and it needs improvement, but it\'s not
fatal, I think, to new space flight ventures.

Our first one will be from Marshall. Our second one shall be from
Vandenberg. We feel reasonably happy at this point.

MODERATOR WATSON: Jay?

MAJ. GEN. EDWARDS: There are 13 states at last count that were planning
on a commercial spaceport. The Oklahoma spaceport is well into its
application process with AST. We expect they will be approved prior to
our requiring a facility to fly from.

So, actually, right now Rocketplane is planning to fly from the Oklahoma
spaceport. So we will not have to deal with the east or western ranges.

MODERATOR WATSON: Okay. Question back here.

PARTICIPANT: I was just curious. Do you see any \-- Any of the panel, do
you see any technologies \-- Look 10 or 20 years in the future \-- in
launch technology or propellants, which are really going to reduce the
cost of space flight?

Maybe a corollary to that question is: What will be the biggest factor
in reducing the cost of space flight? Is it a change in technology? Is
it educed regulation? What will bring the cost down in the next \--
really, in the next 10 to 20 years?

MAJ. GEN. EDWARDS: The biggest change is going to reusable launch
vehicles rather than expendables, but I don\'t think that was the nature
of your question. I think you are looking for what is some advance in
the whole technology itself, maybe propulsion systems.

I think there are a lot of things that are in the works that will help
to reduce the cost of launch and space travel and all the things that we
are talking about here, but the biggest step forward is going to
reusable launch vehicles.

MR. MUSK: I agree with that. I think as long as you\'ve built the craft
in sort of a way that you obviously have some floor on your per flight
cost, which is your per craft cost, aviation would be very expensive if
we threw the plane away every time we flew it.

Even if you do apply the expendable route, I think there\'s a lot of
room for improvement. SpaceX\'s economics currently assume no reuse even
though the Falcon I first stage is designed to be reusable, and the
Falcon IX \-- both stages are designed to be reusable.

So we priced at a level where reusability doesn\'t matter, and if it is
successful, we will be able to reduce prices over time. In fact, I am
quite confident it will be successful. It\'s just a question of how long
it takes us to figure that out. But that\'s the way you can get, really,
the two or three orders of magnitude improvement in cost.

MR. MUSK: I think one of the potential improvements is materials
technology, composite technology, which will move us more in the
direction of, if not a single stage to orbit, one and a half stage to
orbit vehicle, which would give us the reusability, and with the
reusability is the much lower infrastructure cost.

One of the big costs now in the space program is all of the facilities
that are required and have to be maintained.

MODERATOR WATSON: And Elon talked a little bit about the cost of flying
the Shuttle. A large portion of the cost of flying the shuttle is the
standing army that\'s required to keep the Shuttle serviced and do the
repair work after the Shuttle and so on. So if you could move away from
that, it really does begin to reduce some of the cost.

There were other hands over here. Yes, ma\'am, right here. Come to the
mike.

PARTICIPANT: Chairman Walker, you alluded to some of the challenges
being liability issues. Now in the case where you\'ve gotten your
license to fly and you\'ve had an accident. The passenger \-- or the
passenger\'s estate has collected on that insurance.

What sort of precautions are you taking to protect beyond that, to
protect your ventures beyond that, and is that something that you\'ve
thought about? Is that clear?

MAJ. GEN. EDWARDS; Were you addressing me on that question?

PARTICIPANT: The three of you, I guess, for your commercial human space
flight ventures. I mean is that something that you\'ve thought about in
the case of a liability claim beyond what you\'ve been insured for or
anything that goes beyond that?

MR. WHITEHORN: Well, at the moment, if you look at what\'s happened so
far with the X-Prize flights and SpaceShip One, there was insurance
there for third party uninvolved risk, and I\'m sure Elon has insurance
for third party uninvolved risk as well, and I\'m sure Rocketplane will
do the same thing.

That is probably going to be placeable in the market for when we go to
the commercial stage. I don\'t think that will be an issue. The market
has certainly told us that already and, no doubt, these guys the same.

Insuring the individuals who fly, who currently would have to sign a
waiver, we will have to educate them about the flight. The FAA will
insist that they are properly educated with the risks of a flight, and
they will have to sign a waiver.

Our desire would be to insure them as individuals as well for the
flight, but that won\'t be a necessary part of, certainly, the early
stages of where the legislation puts us at the moment, but we would like
to achieve that.

Now if we can, through the testing program and getting the insurance
market comfortable with the product we have, achieve personal liability
insurance as well for the individuals who fly, that will be a great
breakthrough and a leap forward.

MODERATOR WATSON: Build that into the cost of the ticket. Is that it?

MR. WHITEHORN: Pardon?

MODERATOR WATSON: And build that into the cost of the ticket?

MR. WHITEHORN: Build that into the cost of the ticket over time, yes. I
mean, the people who\'ve paid up front, the first 100 founders, are
assuming they are not going to be insured, because that\'s what we have
already told those people, that we cannot guarantee they will be insured
as individuals, and they have to take care of any of their own
arrangements, etcetera, etcetera. But our desire is to achieve this for
them by the time we get to flight, if we can.

That will be part of the process that we go through. By going through
the process we will go through with the FAA and satisfying ourselves
with regard to the safety of the vehicle, and hopefully being able to
use our overall \-- as a large group of companies internationally, to
use our insurance capabilities in the marketplace, we hope we can
achieve that.

MAJ. GEN. EDWARDS: Part of your question, I don\'t think we have
answered yet. It had to do with, well, what happens if their damage
exceeds the liability insurance.

In the case of the third party or the noninvolved public that\'s on the
ground, based upon calculations that the company presents to FAA, they
will calculate from that data a maximum probable loss number, and that
number has to be insured.

Any liability that occurs beyond that number, the Federal government
will insure up to \$1.5 billion. That ought to cover it.

PARTICIPANT: That addresses the third party, but if the estate is
claiming more damages than the insured value \-- They are not an
involved party, but they are claiming for that loss.

MAJ. GEN. EDWARDS: If we are still talking about the noninvolved public
\-- in other words, not the passenger. You\'re talking about the
passenger?

PARTICIPANT: The passenger\'s family, yes.

MAJ. GEN. EDWARDS: Well, as Will has mentioned, that particular
individual is expected to sign a waiver, just like the Congressman has
mentioned that he signs a waiver when he drives a racecar.

MR. MUSK: I actually think that is not going to be a very significant
issue. I mean, that\'s something that occurs all the time with, you
know, private jets that crash or airliners that crash or get blown up,
whatever, and those are cases where there is a much greater expectation
of safety.

If you are entering a spacecraft and you go up there before the Judge
and the Judge says, did you think this was really safe? I think the
Judge will sympathize with Virgin or whomever in saying, you know, you
fully informed this person it was a dangerous flight. It was a
reasonable expectation that space flight is dangerous. I think liability
claims are going to be very limited in that context.

MR. WHITEHORN: It is a difficult one. You know, a McDonald\'s cup of
coffee that scalds you and gives you a permanent scar \-- take your
court case to a Judge there. It\'s going to be a lot more credible than
the family of somebody saying, well, he was flying up into space, but he
didn\'t think there was any risk involved.

MR. MUSK: Exactly. That\'s exactly the point I\'m making.

MR. WHITEHEAD: I think there is some truth in that. I think the court
system would give you more protection. But achieving insurance is a goal
of ours in this project.

MODERATOR WATSON: Other questions? Yes, sir?

PARTICIPANT: What level of risk will you represent to your first
passengers that they will be taking, and what will this waiver say
exactly?

MAJ. GEN. EDWARDS: The level of risk that \-- What level of risk would
we specify to the paying passenger? Was that the question?

MODERATOR WATSON: Yes. I think he\'s talking about the first few
customers that you have. What are you going to tell them about the level
of risk that they are taking?

MAJ. GEN. EDWARDS: Probably going to say it\'s the probability of one
times 30 times 10^-6^ or one in 30 million. That\'s what I\'m required
to demonstrate to the noninvolved public.

MR. MUSK: I\'ve done some sort of adventurous sports and so forth, and
usually the waiver \-- A simple waiver is a good waiver. If it says
something like \"I accept significant risk of serious injury or death,\"
that\'s usually what it says. Sign right here. All right.

Then have it be witnessed by a few people. I think, if you take that to
the Judge afterwards and say, look, he jumped in the spacecraft and
signed this thing and said serious injury or death. Well, the last one
occurred on that option, and I don\'t think you are going to face
significant liability risk.

MODERATOR WATSON: I know in the racecar they hand me that waiver as they
hand me the helmet.

MR. WHITEHORN: The average waiver for adventure sports, paragliding,
power motoring, off-peak skiing, is about 150 words long, and it\'s
acceptance of significant risk.

We won\'t \-- I mean, I think, certainly, from the early flights of
SpaceShip Two in the commercial arena, we won\'t be able to put a number
on risk. We won\'t be able to go for the aviation levels of risk of, you
know, one in 2.5 million or one in 15 million or one in whatever it will
be, because there will just be no way of doing that.

MAJ. GEN. EDWARDS: Well, we won\'t be licensed if we can\'t, sir.

MR. WHITEHORN: Well, but no. When we put on the waiver to the individual
members of the public\--

MAJ. GEN. EDWARDS: Oh, on the waiver. That\'s different.

MR. WHITEHORN: That\'s a different thing. We have to do a risk
assessment for third party uninvolved, but to put it on a waiver \--
Probably, actually, it would give people too much of a feeling of
comfort as well. I think, from the point of this, this is going to be
from the point of view of the individual who is going to take it, they
are going to have to accept that there is a significant risk.

The individuals who \-- Certainly, I have spoken to most of our first
100, as has my colleague Alex who is here. We\'ve got to know them quite
well, and they completely understand that, and they want to do this.

Clearly, if something went wrong during the test program, they would be
getting their money back. These are individuals that have already put
down their \$200,000, and they are prepared to do it, because they want
to be part of this. They feel passionately about it.

You know, they are well known people from the worlds of business,
finance, aviation, and they are individuals who really care about this
happening, because they share the vision that all of us who worked on
this, probably everyone on this panel shares.

MODERATOR WATSON: Question over here.

PARTICIPANT: You haven\'t talked too much about the people that get to
fly these space vehicles. So could you talk about what has been
discussed from the standpoint of the pilots, and as it relates to the
regulatory agencies that currently make decisions and policy on
qualification and training, what has been discussed with the regulatory
agencies about that requirement?

MAJ. GEN. EDWARDS: Well, the regulation specifies how the crew will
perform, what\'s the crew rest requirements, what are their
qualifications. Also, not just the pilot, but also one of the very
important ones is the safety officer who is on the ground, who will
determine whether this vehicle is ready to fly, whether all the
conditions are right, and whether or not a rehearsal has been done to
check out all the things, and whether or not this person has talked to
the mission controller who is going to run the mission.

So the qualifications of the safety officer are also specified and have
to be approved by AST. With respect to the pilot, the same thing is
going to hold true there as well.

We feel we are fully going to meet that qualification, because we are
having an astronaut be our test pilot.

MODERATOR WATSON: Another question, back here.

PARTICIPANT: You were talking about a shared vision for the future in
suborbital flight and, the folks that are signing on there understand
that risk management and that assessment.

My question to you is: What are you going to do, since this whole
gathering is about the public image of commercial aviation and the
international market, because you are really stepping out and doing
something that has value in the future. The FAA\'s got a problem,
because if something burps, the public, the guy that doesn\'t share the
vision or 90 percent of the people, are going to go, geez, that\'s
really \-- what a dumb thing, you know.

So they don\'t share that vision. My question is: How are you going to
pre-up the public opinion and the risk assessment that they are going to
look at when you do this, and have you looked at that?

MR. WHITEHEAD: I think that is a very interesting question, and I
actually am not sure I totally agree. I think it may be the media and
politicians that are going to share that vision, but I think the public
may well share it.

I think the public have actually an understanding of risk intrinsically
when it comes to things of this nature, when the people involved in it
are clearly knowledgeable about what they are doing, which is quite
forgiving.

An area I have been involved with is record breaking flights over the
past 30 years, balloon flights and aviation flights, and they have
involved significant amounts of risk.

For example, when Sir Richard Branson crossed the Pacific in a hot air
balloon in 1991, the world\'s largest ever built with new technology
materials, actually a Japanese balloonist took off on the same day and
was killed 600 miles off the coast of Japan, just before Sir Richard
took off in 1991, and a big amount of press coverage in the Japanese
media about it, a little bit of press coverage in other places around
the world, but it didn\'t get people to turn around and say to
politicians, people shouldn\'t be allowed to take off in balloons to
attempt record breaking flights high above the earth\'s atmosphere in
the jet stream.

I actually think that, you know, depending on the circumstances of how
something happens, if it does, then I think the public will be very
forgiving that this is part of a race.

You know, the public were saddened by accidents like Challenger, but
there was never a call from the public, there was never a mass public
opinion or survey taken which showed that people wanted people to stop
exploring space.

In fact, the opposite was true in the Eighties and Nineties. People were
disappointed at the prospect of man not exploring space, and it\'s clear
from research that they were disappointed when scientists were telling
them that only unmanned robotic vehicles would ever get beyond the solar
system.

So I am not sure that it would be as big an issue as you think. However,
if we make silly mistakes, any of us, and cop out, we don\'t deserve to
carry on flying, which is a different thing.

MODERATOR WATSON: I interpret the question also as meaning, though, does
FAA get a black eye out of all of this that then gives them a black eye
in terms of their ability and the perception of them inside of
commercial aviation.

MR. MUSK: I think it is important to manage the perception. You don\'t
want to have mismatched expectations. You don\'t want people out there
thinking that this is really safe and, well, you said it was safe, and
look, somebody has gone and died.

I think it needs to be clearly stated that, look, this is at an
experimental phase; it\'s entirely possible that there will be
fatalities and accidents, but over time we expect that reliability to
improve, and there would be fewer accidents, just as there was in
aviation.

I agree with Will. I think \-- I have a lot of faith in the public. I
think that, by and large, the public as a whole has a lot of common
sense. I think sometimes the media can overreact, but if you really did
a poll and asked people what they think, their response would be
rational and reasonable.

MODERATOR WATSON: The level of tolerance is interesting, because public
opinion, in light of the Challenger accident, the Columbia accident and
so on, did not come back and say we ought to stop flying humans in
space. I mean, it was an evaluation of, you know, were all the steps
taken that should have been taken to protect the crew. But there was not
a public reaction that said shut it down.

MR. MUSK: Absolutely.

MR. GIBSON: Yes. And I think the public is going to be very excited
about this. I think they are going to be extremely excited about it.
There are some real things going for you, I believe.

You are not really pushing the state of the art. You are applying proven
technology, and you are using it in really a great way. So I think
there\'s going to be a lot of support for it, and I don\'t know that the
FAA is going to get a real bad eye unless you start dropping rockets on
downtown Orlando or something like that and start injuring or destroying
things on the ground.

My Dad was FAA, and he told me years ago the philosophy \--

MR. WHITEHEAD: We did drop a rock on downtown Orlando. Nobody lives
there anymore.

MR. GIBSON: My Dad was FAA, and he told me the FAA\'s philosophy in a
lot of cases is we\'re not going to prevent you from hurting yourself in
an airplane, but we sure as heck are going to prevent you from hurting
somebody on the ground with it.

So I think there is going to be a lot of leeway given. There\'s going to
be a lot of admiration for the people that want to do this, because they
are going to say, well, there is a little bit of risk in doing this, but
how more exciting can this get.

MODERATOR WATSON: Question right here.

MR. HEATH: Let me just point out one thing, and let\'s don\'t all forget
this. When one of these vehicles prangs itself, there\'s going to be one
agency that\'s going to look into that accident, and that\'s the NTSB,
and when you start looking at the NTSB, the FAA is going to start
responding to NTSB recommendations, and some of their recommendations
\-- But, you know, all I can say is the public \-- We do a lot of things
on the commercial side, and we\'ve been forced to do a lot of things
because of the media and because of Congress.

MODERATOR WATSON: Any other questions? Looks like we\'ve exhausted the
questions.

Having done so, maybe I\'ll go back to the panel and say, is there
anything else that the panel would like to say on the subject before we
close things up?

MR. WHITEHORN: Just quickly, we\'ve got some brochures here, if anybody
would like to fly. You are all going to get my business card. I\'ve also
got some very pretty pictures taken from SpaceShip One by Brian Binne,
who was the last astronaut. So if you want to pick up one of these on
your way out and, of course, I\'ll be expecting several checks in the
post.

MODERATOR WATSON: Great. Well, we have appreciated the audience
participation. Thank you for your good questions. Hopefully, this has
been something that has been informative.

Thank you very much to all the members of the panel. You did a great
job.

(Whereupon, the foregoing matter went off the record at 4:18 p.m.)

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