What the media got right and wrong—and missed—about Virgin Galactic’s China problem (updated)

It’s not uncommon for the media to mangle space-related developments, either by getting the facts wrong or misinterpreting their importance, as they did recently reporting that Virgin Galactic did not yet have a license for its flights, even though it didn’t need a license now for its test flights and wasn’t even “late” in getting a response from the FAA regarding its application. And, sometimes, even when the media gets the news right, it’s not even new or, even worse, it misses a more significant issue.

That was the case this week with reports that Virgin Galactic is not allowing Chinese nationals to fly. That news, completing with the release of a British book that provided an unflattering assessment of Virgin Galactic, claimed that Chinese citizens were told they needed to get another nation’s passport, or a US green card, in order to fly on SpaceShipTwo. The story appears to trace back to an article in the Daily Mail on January 25, which cited an unnamed Virgin Galactic salesman in Hong Kong (Virgin Galactic does have an “accredited sales agent” there, Miramar Travel Ltd, according to its website.) Other publications picked up on that report, including high-profile ones like The Independent, the South China Morning Post, and CNN.com.

The “good” news about this report is that it is true. NBCNews.com, one of the few outlets who did some original reporting, contacted Virgin Galactic and got a statement from the company confirming the ban on Chinese nationals. “Virgin Galactic adheres to both the spirit and the letter of U.S. export controls and has for now chosen not to accept deposits from countries subject to U.S. export and other regulatory restrictions,” spokesperson Christine Choi told NBCNews.com.

That’s a reference to the fact that space systems like SpaceShipTwo are currently under the jurisdiction of the International Traffic in Arms Regulations (ITAR), a law that places restrictions on the export of sensitive technologies. In particular, ITAR prohibits the export of any technologies that are under its control to selected nations, sometimes called “part 126.1 nations” from the section of ITAR that lists them. Those countries listed in part 126.1 of ITAR include China, which means that such technology can’t be exported to them.

While there are no plans to fly SpaceShipTwo from China, the technical information that companies have to provide passengers both for their safety and to comply with the “informed consent” provisions of their FAA licenses could fall under ITAR. (A reader has since noted that existing law does not explicitly require companies to provide detailed technical information that could run afoul of ITAR in order to obtain informed consent.) Several years ago, Virgin Galactic sought a ruling, called a commodity jurisdiction (CJ), from the State Department about whether such information fell under ITAR or instead under the less restrictive regulations governed by the Commerce Department. In early 2012, the State Department ruled that “Virgin Galactic Commercial Suborbital Space Tourism Experience and Related Required Safety-related Training and Briefings” fell under the jurisdiction of Commerce.

That would seem to get Virgin off the hook of having to comply with ITAR, and its restrictions on various nations, for the purposes of training and preparing customers for spaceflight. In 2009, Bigelow Aerospace sought and received a similar CJ regarding training for people who would fly on its orbital habitats. The report at the time, though, indicated that despite the favorable ruling, people from part 126.1 nations, including China, would still not be able to fly.

The news, though, missed a few things. One is that, despite the flurry of reports in the last week, Virgin’s prohibition on Chinese customers is not new. Back in 2011, for example, CNET reported that “Virgin is not allowed to sell any tickets to China due to US regulatory reasons” as part of a general article about the company. So what seems like a revelation is, in fact, old news.

The second is that the regulatory environment may be changing. The Virgin Galactic spokesperson told NBCNews.com that “Virgin Galactic may adapt its policies in consultation with appropriate regulators, legislators and other stakeholders.” The US government is in the midst of a review of Category XV of the US Munitions List, which covers satellites and related items, with plans for a final version of the revised list due out this spring. However, a draft of that revised Category XV list would keep suborbital crewed vehicles under the control of ITAR, much to the consternation of people in the industry. Moreover, even if suborbital vehicles are moved off the US Munitions List, exports to China (and, thus, presumably, sales of tickets to Chinese customers) would remain prohibited under the terms of the bill that allowed satellites and related items to be taken off the US Munitions List in the first place.

The final, and perhaps most interesting, item missed by the news reports this week is what another suborbital provider is doing. Just over a month ago, Space Expedition Corporation (SXC), the Dutch company that is selling seats on XCOR Aerospace’s Lynx suborbital spaceplane, announced it has named a sales agent in… wait for it… China. “I am extremely excited about this opportunity with SXC as we introduce this unique travel experience to the rest of China,” Alex Zhang, CEO of Dexo Travel, the sales agent for SXC in China, said in the statement. Alex Tang, the head of SXC’s Asia division, added in the statement that the company had seen “a surge in curiosity and interest, esp. from the Chinese market” in recent months. Clearly, SXC is selling seats on Lynx flights to people in China.

SXC, while not an American company, would still appear to be restricted by the same export control regulations as Virgin Galactic, since the Lynx vehicle is American (and currently being built just down the flight line at Mojave Air and Space Port from Virgin Galactic’s facilities.) XCOR does have a CJ from the State Department regarding its Lynx vehicle, issued in late 2011, but the text of that CJ is not publicly available and thus what language it has, if any, about training is not known.

Update: A reader pointed out language in the proposed revised Category XV rule, released last May, that would get Virgin and suborbital companies off the hook entirely with regards to export control issues for training passengers. The fourth page of that document (numbered 31434) states that earlier studies of export control reform had considered the need to include “technology required for passenger participation in space travel” of any type. “The Departments of Defense and State have since reviewed such technology and concluded that it is not per se now subject to USML Category XV,” the document states. “There is thus no proposed inclusion of such technology as a general matter in either the proposed USML Category XV or the proposed 9E515,” a reference to the updated Commerce export control rule. If that provision survives through the final rule, expected to be published this spring, commercial space companies in general would not have to worry about barring Chinese citizens from flying on their vehicles.