Most people think reaching space is really, really expensive. And it is, currently, because of how the U.S. and Soviet governments designed their space programs in the post-WWII Era, but it doesn't have to be. Reaching space can be pretty cheap under certain circumstances.
Like any business, space launch and in-orbit activities have costs that recur at certain intervals. One of those recurring costs is fuel, but honestly, rocket fuel isn't very expensive on a per/unit basis. It's just water that's been broken down in hydrogen and oxygen using electricity and then chilled down to liquid temperatures. This is basic chemistry and the materials are available in industrial quantities at low cost.
Another recurring cost in space flight (and this is where the stupidity of government programs becomes obvious) is the rocket. The workhorse Gemini, Apollo, Delta, and Atlas rockets that launched our Moon program, planetary exploration craft, and military satellites are all thrown away after one use. They're based on the military rockets first developed by Nazi Germany and then further developed by the US and the USSR for their ICBM weapons. For military rockets, single-use makes sense. No one expects to recover hardware from the epicenter of a nuclear blast. But for a vehicle that is flying two and from peaceful locations with non-exploding cargo, expendable rockets are ludicrously expensive and wasteful.
So is reaching space expensive? You bet! But air travel would be expensive too if we scuttled a 747 after every one-way trip.
Of course the rocket scientists that developed NASA's space program for the Apollo missions knew this would be wasteful and expensive. They weren't idiots. The problem was that Apollo wasn't a sensible infrastructure program like the Hoover Dam. Apollo was a political statement, and a race to beat the USSR to the Moon. The guys at NASA had to choose between using the better-developed one-use weapons rockets, or developing new rockets that could land, be refueled, and take off again like a 747. The latter would produce cheap and sustainable access to space, but the former could be done cheaper and more quickly within the timeline set down by Kennedy for reaching the Moon, so the former they did.
NASA attempted to correct those mistakes with the Shuttle program. At first they wanted to create a "space plane" that would fly and fly again like a 747. Unfortunately what was developed was far away from that. The Space Shuttle orbiter threw away its main fuel tank, dropped its boosters into the ocean (which required their being retrieved and then refurbished at great expense), and had a heat shield that required significant maintenance between each flight (and was still responsible for destroying two of the orbiters). As a result of these issues, the Space Shuttle was far from the cheap, reusable craft it was first hoped to be. The Space Shuttle program is estimated, over the course of its existence, to have cost between $1 and $2 billion per launch.
Besides the cost of fuel and throwing away the rocket, there are two other sources of cost that have historically driven the cost of space flight higher than even their orbits.
The first is the cost of ground operations. To use air travel as analogy again, this is the cost of running the air port, having personnel on hand to fuel up, repair, maintain, and prep vehicles for use, and the cost of air-traffic control.
Ground operation costs are largely fixed, and thus their cost per-flight is driven by flight rate. At a busy airport like O'Hare, the cost of the ground crews and air traffic control tower is shared between the hundreds of flights that go in and out daily. At Kennedy Space Port, where the old Shuttle program flew one or two times per year, the cost of keeping personnel on hand between flights is quite burdensome. Everything else being equal, a rocket program with a high flight rate will be cheaper per/unit of mass delivered to orbit than a program that flies infrequently.
The last source of costs is the cost of designing and building the vehicles themselves. Unfortunately for most of its history, NASA has worked on a cost-plus model, where NASA says what they want and then pays whatever it costs to build that, plus a fixed "profit" margin to the contractor. This system produces zero incentive to lower costs, and in fact provides the opposite incentive. The further a contractor can drive up costs, the bigger their "plus" profit.
So, to recap, the four costs of space flight are:
- Single-use flight profile
- R&D/Manufacturing (the rocket itself)
- Ground operations
The cost of fuel is largely the same for everyone. It's an industrial product produced by a competitive market. It's also less than 0.2% of the current cost of reaching space.
But what about the other three? Well we can sort of guess how much they contribute to the cost of space flight by examining certain statements from SpaceX, an American space company that has refused to participate in the cost-plus model and is working on reusability.
The Delta IV and Atlas V are current US-based competitors to the SpaceX Falcon 9. They were built using the cost-plus model of development. I made the following little table to compare costs; I have also included the Falcon Heavy (set to fly this year) and the Space Shuttle (for historical comparison).
Rocket kg-2-LEO $/Launch $/kg-LEO
Falcon 9 13,150 $ 61 M $ 4,500
Delta IV Heavy 28,790 $ 435 M $ 15,109
Atlas V 18,810 $ 226 M $ 12,014
Falcon Heavy 53,000 $ 85 M $ 1,600
Space Shuttle 24,400 $1,000 M $ 40,983
As you can see, abandoning the cost-plus model and vertically integrating their manufacturing of rocket components has produced a significant cost savings for SpaceX. And this is still with their throwing the rocket away. There is no other American company that comes close to SpaceX's cost, and the one that comes closest (the Atlas V) actually buys their rocket engines from the Russians.
So the cost of reaching orbit on a Falcon Heavy is just $1,500/kg even while throwing the rocket away, but the rocket is still really expense. If we could achieve reusability, the cost for SpaceX to reach orbit would come down at least a factor of 10, or $150/kg for the Falcon Heavy. And that's at the current flight rate! If the price falls 10x, we should expect demand to increase, increasing flight rate, and lowering the price further. A virtuous cycle would fall into place, and it's not entirely obvious where a stable price floor would be.
By comparison, a first class airline ticket from New York to Australia costs about $50/kg, only a factor of three away from where the Falcon Heavy could be 3-4 years from now.
So is space expensive to reach? Yes, but only at the moment. With reusable rockets and high flight rates, it really doesn't have to cost any more than jet travel. And thanks to SpaceX's recent efforts, we aren't that far away from seeing it happen.