Airbus just announced its version of a reusable rocket in response to SpaceXs determination to succeed at the effort. Although every rocket company has known for more than 60 years that reusability could cut costs getting into space by a factor of 1,000 -- not 1,000% but 1,000 times less -- only upstart startup SpaceX has actually tried to do it.

That is an astounding threat to the likes of Boeing and Lockheed Martin, who have something of a military monopoly with their United Launch Alliance (ULA), which uses Atlas V rockets, not to mention French rocket company Ariane, which relies on Airbus to build its vehicles. The entire space industry has been turned upside down.

But the Airbus proposal, which is not much more than a slick video, looks ridiculously complicated (Propellers? Really?) and involves only the booster stage of the rocket. You can watch the video here.

https://www.youtube.com/watch?v=tV29pEvZvZw

The significance of that video cant be underestimated, because it proves that other major rocket companies are plenty worried about SpaceX and that its CEO Elon Musk is not tilting at windmills.

Musk has pointed out that it costs about $60-90 million to launch a SpaceX Falcon 9 rocket into orbit (less than half of an Atlas V launch). The fuel cost for each launch is less than half of 1%. If the rocket can be reused, the cost to launch tons of stuff into orbit could be reduced -- these are Musks numbers -- to $60,000. That would make it possible for every small company on the planet to have its own communications satellite.

Musk, of course, has even bigger ideas. He wants to launch more than 4,000 small, inexpensive communication satellites into orbit in five years to bypass the likes of AT&T, Verizon and Time Warner and deliver telephone and data services to everyone on the planet for about a 20th of what were forking over now. He filed permission to do so with the FCC this week and is hiring engineers by the hundreds to design and staff the operation out of Seattle.

Meanwhile, Musk is still waiting around for the Air Force to certify the Falcon 9 rocket, which has a perfect launch record. Apparently, the Defense Department has no problem paying ULA much more for nothing. But the government is now getting a better deal even without using SpaceX. When Musk sued to get the governments business last year, ULA found a way to cut its costs in half. And now it too has declared it will find a way to make its rockets reusable.

Is it possible Elon Musk could end up saving the U.S. government more money than any citizen who ever lived? How? There are so many ways, but here are just a few: by ferrying NASAs astronauts to the International Space Station starting in 2017 for less than half of the $50 million per person the Russians charge to ride on their Soyuz; by prompting ULA to drop the cost of its launches to the military by more than a billion dollars a year just by threatening to compete; and by essentially ending the days of NASAs cost-plus contracts.

Finally, space is becoming a business instead of a federal handout.

To your health and wealth,

Stephen L. Petranek

for The Daily Reckoning

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