SPACE FIRMS FEAR FEDS; KEEP GOVERNMENT OUT OF COMMERCIAL LAUNCH BUSINESS, EXECS SAY.

Byline: Jim Skeen Daily News Staff Writer

Executives of start-up companies trying to open the space market argued Friday against federal loan guarantees such as those being sought by Lockheed Martin for its VentureStar spaceship.

Speaking at the Space Frontier Conference in Los Angeles, chief executives of Kelly Aerospace in San Bernardino and Rotary Rocket, which is building a plant in Mojave, said such government involvement would lead only to politicization of the commercial space launch business.

``I have a problem with an artificial influence on the market,'' Kelly Aerospace CEO Mike Kelly told the gathering of industrial officials and space buffs, including Apollo astronaut Buzz Aldrin. ``Generally speaking, I'm opposed to government intervention in commercial business.''

Rotary Rocket CEO Gary Hudson said he testified before Congress earlier this year against the loan guarantees, possible under legislation proposed by Sen. John Breaux of Louisiana.

``The most important thing government can do is provide a level playing field,'' Hudson said. ``Beyond that, I don't see a role for government.''

Lockheed Martin is seeking loan guarantees for $760 million as part of its business plan for VentureStar, an unmanned, reusable spacecraft the company hopes to fly in 2004.

In a telephone interview Friday, Jerry Rising, Lockheed Martin's X-33/VentureStar vice president, said the proposed legislation would encourage lenders to reduce interest rates for technically risky space ventures by companies other than Lockheed Martin.

``It was really modeled after the maritime act, (the) shipbuilding act, of a number of years ago, which was designed to attract shipbuilding back to the United States,'' Rising said. ``The current bill is intended to attract the commercial launch business back to the United States. About 70 percent of commercial launch business is in foreign hands today.''

The companies opposing the bill are not proposing rockets capable of lifting such heavy loads as VentureStar, which is to carry as much as 25 tons into low orbit at one-eighth the cost of the shuttle.

``We are working on heavy lift capability with very advanced technology, which is an order-of-magnitude bigger program than some of the other companies are doing,'' Rising said.

Senate Bill 2121, sponsored by Breaux, is expected to be taken up at the next session.

At the conference, which continues for three days at a hotel near Los Angeles International Airport, space executives said government should provide tax incentives and put people with proper technical knowledge in regulatory agencies to foster the commercialization of space.

The executives suggested eliminating the capital-gains tax on space investments and complained of a lack of understanding of the industry by federal regulators in charge of overseeing them.

``Staffs of regulatory agencies need to be filled with people who know something about launch vehicles,'' said Pat Ladner, executive director of Alaska Aerospace Development, which is pushing the development of a launch facility at Kodiak Island. ``We need people who know which end of the rocket is up.''

The commercialization of space is viewed by Antelope Valley civic and political leaders as the next economic frontier. The city of Lancaster is vying with several other states for the right to house the launch facilities for VentureStar.

Other companies also are providing economic opportunities. Rotary Rocket, for example, expects to employ about 120 people when it completes an office and hangar complex at Mojave Airport in 1999. There, it plans to assemble an unusual spacecraft that would descend to Earth via helicopterlike rotors that pop out of its nose.

Kelly proposes flinging a spaceship into orbit on a tow line pulled by a jet, just like gliders are towed aloft by small airplanes. It has tested the concept at Edwards Air Force Base with an F-106 fighter towed by a C-141 cargo plane.

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PHOTO (Color) Rotary Rocket plans to build an unusual craft that would return to Earth using helicopterlike rotors that pop out of its nose.