By MITSURU OBE and AKITO TANAKA, Nikkei Asia chief business news correspondents

This is the second in a series of Nikkei Asia articles on the players, possibilities and problems of the new era in space.

OITA, Japan — For more than a hundred years, tourists have come to Oita Prefecture to sample its restorative hot springs and marvel at the scorching “Hells of Beppu,” onsen too hot for anyone to bathe in. Now the prefecture wants to get in on a hot new industry as a base for rocket launches and the tourist trips of the future — to space.

Rivals all over Asia are joining this Earth-based space race. Three dozen active or proposed spaceports are hoping to attract business in the region, from governments and a proliferating number of commercial space ventures, and there are predictions that many will fail.

But advocates for Oita Spaceport are pressing ahead, and pressing their advantage.

Located on the southern Japanese island of Kyushu, Oita faces the Pacific Ocean, lies away from big population centers and offers clear year-round weather. An ideal location for a rocket launch, in other words. The local airport, struggling with the travel downturn caused by COVID, is rebranding as a spaceport for midair rocket launches. Unlike conventional rockets that lift off from a launchpad, these are released from under a specially modified plane.

Oita Airport has been chosen by U.S. rocket maker Virgin Orbit for its first satellite launch in Asia. In February, U.S. startup Sierra Space also said it plans to land its unmanned space plane at the airport in 2026.

Virgin Orbit has conducted three launches since 2021 and has put 26 satellites in orbit. It plans six or seven more launches this year, and its first outside the U.S. is scheduled for this summer in Cornwall, England. A launch from Oita will come late this year or in 2023, said Jim Simpson, the company’s chief strategy officer.

“We are looking at this as the Asian hub, [with] Oita as the nucleus as we expand beyond Japan to other regions in Asia,” Simpson said. “It’s not just a Japanese launch for Japanese demand. It’s a Japanese launch for global demand.”

In Japan alone, there are three other active or proposed commercial spaceports, including one in Taiki, Hokkaido, where startup Interstellar Technologies is working on its ground-launched rocket. Australia has three proposed spaceports. Singapore is reportedly being considered as a base for Virgin Galactic’s suborbital space flights. South Korea’s Korean Air is looking to conduct midair launches similar to Virgin Orbit’s and is yet to announce a base.

Indonesia has three candidate sites for spaceports, according to Erna Sri Adiningsih, acting chairman of the Research Organization for Aeronautics and Space of the National Research and Innovation Agency.

“This is a big ambition,” she told a space industry conference in Singapore in February. “We hope that this planning [will] push and strengthen space technology development and activity from research to industry.”

According to Indonesia’s Coordinating Ministry for Maritime Affairs and Investment, Indonesian President Joko “Jokowi” Widodo had a telephone conversation with Elon Musk, chief executive of U.S.-based SpaceX, in 2020 and invited his team to see Indonesia as an Asian launchpad for its rockets. Musk has yet to accept the offer to use the spaceport, which would be build on the island of Biak.

At the same conference in Singapore, Pakorn Apaphant, executive director of the Geo-Informatics and Space Technology Development Agency of Thailand, also expressed interest in entering the spaceport business. “Thailand can be one candidate,” he said. “We are starting to study the opportunities.”

Existing players are also expanding. China, the world’s largest launch country, is adding two commercial spaceports to its five existing sites, according to BryceTech, a space consultancy.

There are at least 88 active or proposed spaceports across the world, according to data from BryceTech. Morgan Stanley predicts that revenues from satellite launches will double to $10 billion between 2021 and 2030, while Northern Sky Research forecasts that the space tourism market will more than triple to over $3 billion in the same time span. Today, however, many spaceports are underused. Spaceport America in New Mexico is struggling to recoup costs, as Virgin Galactic hasn’t flown as many times as the company had hoped.

“There are more spaceports than we need. There isn’t demand to support all the spaceports,” said Phil Smith, an analyst at BryceTech. “The number of launches per year has been going up since 2005, but not dramatically so,” he said, and most of the increase was attributable to China or SpaceX.

That means there will be significant competition among spaceports.

“The proliferation of spaceports and launch providers allows for spacecraft operators to shop around,” Smith said. “Not everybody will be successful.”

Strict restrictions on exporting rockets and satellites mean that countries like China are barred from the Western market, but competition could be intense among allies such as the U.S., Japan and Australia, where such exports are relatively easy.

Russia has been a major provider of launch services for Western satellite operators, but sanctions and the fallout from the invasion of Ukraine could turn out to be a boon to spaceport operators elsewhere by eliminating one of their largest competitors from the Western market.

For those that succeed, a spaceport holds out the hope of a boost to the local economy. The Oita government estimates its site would create 10 billion yen ($86 million) in additional revenue in the first five years from new investment in the airport, rocket engineers coming to work in the area and tourists coming to view launches.

The number of visitors to the prefecture nearly halved because of COVID, putting in jeopardy a plan to privatize the airport’s operations. “Inbound tourism can no longer be counted on as a revenue pillar for a local airport,” said Shin Onitsuka, director of space business development at ANA Holdings, Virgin Orbit’s marketing partner for Asia. “Space business can provide an extra source of revenue for the airport.”

A sense of urgency is palpable. Free workshops and business contests have been organized to encourage local residents to learn about the space business. Oita high school students have held online exchanges with children in Cornwall to discuss their spaceports. Space conferences have been hosted, including Japan’s first spaceport summit in February. The prefectural government, meanwhile, is reaching out to space entrepreneurs with local connections.

Spaceports for horizontal launch may not look that different from normal airports, except that they have a long 3,000-meter runway for Boeing 747 takeoffs and landings, storage for rocket propellants like liquid oxygen, and a clean-room building where satellites can be delivered, tested and attached to the launch vehicle.

Launch sites for more traditional rockets are a different matter. The Kyushu region where Oita is located is also home to Tanegashima Space Center, Japan’s main launch site, at the southern tip of the archipelago. Opened in 1969 by the Japan Aerospace Exploration Agency (JAXA), Tanegashima launches large liquid-fuel rockets, such as H2A and its variant H2B, delivering large payloads such as geostationary satellites or modules for the International Space Station.

On one end of the site is an 81-meter-tall vehicle assembly building, where rockets are put together vertically. On the other is a gantry and launch pad. A giant crawler allows the rocket to make a journey between them. The control room is 12 meters underground to make sure staffers will be safe even in case of an explosion.

Local small manufacturers have been able to get in on the action, demonstrating the potential economic boost from spaceports. Eto Manufacturing, based in Oita, has a long history making brewing tanks for local brewers, but Seiji Koujina, its 70-year-old chairman and a former engineer at Kawasaki Heavy Industries, has expanded the business and now produces equipment used in the launchpad at Tanegashima.

“A launch site needs ground support equipment, such as storage tanks for liquid oxygen. That’s exactly what we make,” Koujina said.

In addition to its long history of space activity and its advanced electronics industry, the existence of satellite launch demand in Japan is another major draw underlined by both Virgin Orbit and Sierra Space for siting some launches in the country. “There is significant in-country demand for this type of capability (in Japan),” said Virgin’s Simpson.

And domestic satellite launch demand continues to expand thanks to technological developments. Fukuoka-based iQPS, which makes the world’s smallest radar satellite, weighing just 100 kg and measuring 1 cu. meter in size, plans to deploy a constellation of 36 to capture images of every spot on the planet every 10 minutes.

“We will consider Virgin Orbit for our satellite launch if it meets our conditions, including cost,” said Toshimitsu Ichiki, iQPS chief operating officer. “We want to launch satellites in Kyushu if possible.”

Tokyo-based Synspective, another radar satellite operator, plans to deploy a constellation of 30 radar satellites by around 2026-27. The first six are set for overseas launch, including in New Zealand, but spokesman Katsuhiko Kumasaki said Synspective is looking at launching from Japan to save on transportation, insurance and customs.

Analysts said government regulation and support is likely to tip the scales in favor of some spaceport locations over others. Space businesses are calling for safety regulations to be harmonized across geographies, and the U.S. Federal Aviation Administration is offering its regulations as a template for other countries. The U.K., New Zealand and Brazil have partnered with the FAA, but Asian countries have yet to sign on.

The Cabinet Office and the Japan Civil Aviation Bureau are the primary agencies responsible for the oversight of the Oita project, and they are still developing a review process, said Shogo Yakame, a space business consultant at Nomura Research Institute.

“If it is overly burdensome — the paperwork, taxes and so on — that is going to be a detriment,” said BryceTech’s Smith. If regulations are too cumbersome, business will be lost to countries with a more friendly regulatory regime, such as New Zealand and the U.K., he said.

Comments from some space companies suggest they know they have the upper hand in negotiations, given the race to win their business.

Virgin Orbit’s Simpson said it is receiving a lot of interest from other locations for potential spaceports. “We are fielding responses from multiple different countries,” including in Asia, he said.

But he said the company has made its picks for now. “Frankly, right now our two focuses are the U.K. and Japan.”