Launching into orbit could become a little easier and cheaper, thanks to a futuristic space plane that looks like it might have flown straight out of a "Star Wars" film.

The European Space Agency and British government have awarded $1 million euros ($1.28 million dollars) to Reaction Engines Limited (REL), a British aerospace company, as part of a multi-million dollar development program for an air-breathing rocket engine that could power the Skylon spaceplane .

The unpiloted, reusable vehicle is designed to take off from an airstrip, deliver cargo into orbit and return to the same runway.

"This is an example of a British company developing world beating technology with exciting consequences for the future of space," said Lord Paul Drayson, U.K. Minister for Science and Innovation.

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A breakthrough could provide relief for space-faring nations, which currently rely on expensive rocket launches that can cost thousands of dollars per pound. But the project faces a host of competitors as well as its own technical challenges.

Breaking down the competition

The Skylon spaceplane would boast a unique SABRE hybrid engine which can act as both an air-breathing jet engine and a rocket engine in space.

This gives it a potential advantage over other space plane designs, according to Mark Hempsell, director for Future Programs at Reaction Engines.

Unlike Virgin Galactic's SpaceShipTwo or other vehicles designed for suborbital flight, Skylon aims to replace the aging space shuttle, as well as rockets such as Ariane or Ares.

Hempsell noted that a two-stage design such as Rocketplane Kistler's faltering K-1 project is possible, but has higher development and operational costs. Scramjets that would channel supersonic airflows appear to be decades off.

As for a pure rocket single stage, such as the Lockheed's long-defunct Venturestar design, those are "right on the borderline of feasibility," Hempsell told SPACE.com. "I think in reality they are not practical even if possible."

"We have the full advantages of being single stage but with low technical risk (but admittedly not as low as a two stage)," Hempsell added.

Keep it cool

Unlike most rocket engines, the Skylon's SABRE engine would use hydrogen as its fuel rather than as a coolant, and instead would use liquid oxygen for cooling.

That means the air-breathing mode would rely on a revolutionary heat exchanger pre-cooler, which cools the air that gets compressed and fed to the rocket engine along with hydrogen fuel. Once the spaceplane enters rocket mode, the hydrogen would be burned along with liquid oxygen.

"We have a working demonstration of the frost control system at flight engine scales, and we have construction of a flight standard heat exchanger module," Hempsell said. That system is slated for testing on a jet-engine-powered rig.

Pressure is on

Skylon would also try to squeeze more power from its engine by using a redesigned exhaust nozzle that makes the most of the space plane's vital fuel.

Ideally, hot exhaust gases should press fully against the walls of a rocket engine's nozzles to push a rocket upward and onward, assuming that the exit pressure matches the atmospheric pressure.

However, current nozzles cannot adjust to different atmospheric pressures, and only work efficiently at certain altitudes. Exit pressure lower than atmospheric pressure (i.e. low altitudes) means that the escaping gases may not expand fully against the nozzle wall. That means less thrust for the rocket and more wasted fuel.

By contrast, exit pressure greater than atmospheric pressure (i.e. high altitudes) means the exhaust gases still expand after escaping the rocket nozzle — representing wasted fuel spent outside the rocket and loss of potential thrust.

"In practical terms this places a maximum on the area ratio that may be used on a system that flies from sea level to vacuum," said Neil Taylor, an aerospace engineer at the University of Bristol in the U.K. He has helped investigate the new nozzle concept for Skylon.

The new nozzle contains a central "plug" that forces exhaust gas to flow between the plug and outer walls. The escaping gases eventually separate from the plug and leave a void in between, which should provide a buffer that allows for atmospheric pressure flexibility as the spaceplane flies to higher altitudes.

But will it fly?

Skylon could realistically see a 10 percent increase in carrying payload, if the new nozzle design pans out. The technology is based a prototype engine called STERN, which managed a stable flow of exhaust gas under many different atmospheric conditions.

It has even worked with max efficiency at just 116 pounds per square inch (PSI) inside a test chamber, as opposed to the space shuttle main engine which needs a test chamber pressure of least 2,900 psi.

But there are still hurdles to surmount, researchers said. One such major obstacle is to make sure Skylon's engines remain cool enough to avoid melting during flight. The STERN prototype fired for just one second to keep it from overheating, Taylor noted, but added that the problem should not be more challenging than for a regular engine.

As for Hempsell, he envisions a time when customers can buy a launch on just weeks or days notice. "Currently you have to give years notice," he said.

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