(FORTUNE Magazine) – Orbit is a tough place to get to, and an even tougher place to come back from. Yet an unprecedented number of commercial enterprises--Lockheed Martin and four smaller companies, Kelly Space & Technology, Kistler Aerospace, Pioneer Rocketplane, and Rotary Rocket--are developing reusable launch vehicles to carry satellites and other cargo into space. If any of these projects succeeds, the economics of space will be transformed.

Since the demand for data communications satellites is huge, there's great need for launch vehicles. But the number of planned satellites exceeds the world's total available launch capacity. And launching one or more satellites on today's expendable rockets is exorbitantly expensive: A single launch runs anywhere from $10 million to $140 million, or about $10,000 per pound of payload. That's like flying a Boeing 777 once--and then throwing it into the ocean. Disposable rockets are really nothing more than modified, high-cost intercontinental ballistic missiles. "We should be building transportation machines," says Rotary Rocket CEO Gary Hudson, "not artillery machines." Making spacecraft reusable could reduce launch costs to less than $1,000 a pound.

Of the five projects under way, Lockheed Martin's is by far the best financed. NASA is pouring nearly $1 billion into Lockheed's X-33 program to build a fully reusable, single-stage-to-orbit spaceship; the smaller companies must make do without any such subsidies. But Lockheed isn't the guaranteed winner in this market. For one thing, it will have to come up with roughly $5 billion on its own to turn the X-33, which is a small-scale prototype, into a commercially viable fleet of vehicles (to be called VentureStars). Meanwhile, the other four companies hope to have fully operational vehicles by 2000 or 2001--years before any VentureStars could be built. With the demand for satellite launches so strong, it's unlikely that any single vehicle will monopolize the space transportation business.

Each of the four smaller companies is taking a different approach to the design of its reusable vehicles. Kistler will use powerful Russian engines to loft payloads of up to 10,000 pounds; each of its rocket's two stages are supposed to land with parachutes and air bags. (The Federal Aviation Administration has yet to give Kistler a license, so it may have to launch from Australia.) Kistler's CEO, George Mueller, has impeccable credentials: He headed up the Apollo space program during his NASA days. Satellite manufacturer Space Systems/Loral has already agreed to pay Kistler up to $100 million for ten future launches.

Unlike Kistler, whose K-1 is a vertical-takeoff vehicle, both Kelly and Pioneer are building space planes that will take off and land horizontally. Kelly's plane will be towed to an altitude of 25,000 feet by a 747 before it hits its rocket engines and shoots into space, where its nose opens to release a payload that is then taken to orbit by a small, expendable rocket. Kelly has an $89 million contract to replace satellites in Motorola's Iridium global voice and data communications network starting around 2001. (Kelly has proposed a larger multibillion-dollar contract with Motorola for the launch of nearly 500 satellites over ten years. If Motorola accepts, Kelly will use the contract to float a $450 million bond offering and use the proceeds to develop its first two planes.) Pioneer's Rocketplane, on the other hand, will use normal jet engines to ascend to a cruising altitude, where a fueling plane will transfer a tankful of liquid oxygen. It will then punch its rocket engine to get into space, where it will release a small, second-stage rocket that delivers the payload. Besides satellite launches, both Kelly's and Pioneer's planes could be used for fast package delivery--"When you need it there this afternoon," as Pioneer founder Robert Zubrin puts it. So far, Pioneer has raised only $3 million.

The riskiest, most technically advanced design belongs to Rotary Rocket. Rotary is not yet bidding for any launch contracts; its philosophy seems to be "build it and they will come." As designed, its Roton vehicle blasts off vertically. Once in space, the nose hinges open to deposit the payload. It then reenters the atmosphere base first and slows down by rotating helicopter blades. Even more astounding: The Roton will be manned. The pilot, Marti Sarigul-Klijn, a former Navy test pilot with a Ph.D. in aerospace engineering, came up with the idea of putting tiny rockets on the tips of the rotors. That would allow the vehicle to hover longer just before touchdown for a gentler landing.

The Roton may be one of the cheapest solutions because it will be a single-stage-to-orbit vehicle--as will the VentureStar. Both will use "aerospike"engines. The aerospike obviates the need for multiple stages to achieve orbit: Unlike traditional engines, it adjusts to changing air pressure as it ascends, so it never needs to be jettisoned.

The competition is skeptical about the feasibility of the odd-looking Roton. But this space helicopter is attracting smart money. Richard Smithies, a Barclays investment banker who raised over $1 billion for Motorola's Iridium project, is helping to raise over $25 million in a private placement to cover some of Rotary's development costs. About $100 million will be needed for a fully operational vehicle.

One of Rotary Rocket's largest shareholders is novelist Tom Clancy. A well-known high-tech aficionado, Clancy says his reasons for investing are altruistic. "I want to see space open up," he says, "to be a place where we do business--where we do real work." Of course, he'll also make a killing if the company gets its contraption to fly. An IPO is already planned for 2000, shortly after the first test flight.