Andy Janes of Life, Liberty and the Pursuit of Catgirls posts an interview with Mark Hempsell of Reaction Engines Limited about the Skylon project:

• Interview with Mark Hempsell of Reaction Engines Ltd. -- Hobbyspace

Well worth a read. I note particularly that REL are planning to rely on commercial funding for the bulk of their development costs:

"AJ: How likely do you think it is ESA will fund the follow on projects?

MH: ESA is actually the smallest of our funders; most of our funding comes from private investors, and is probably going to stay that way.

AJ: How likely do you think you will be able to raise the money privately with the current financial crisis?

MH: I don’t really know. It is not my field. At the moment it looks likely the majority of the £12 billion could come from private investors."

Rocketeer comments: I very much hope that the launch market will exist (or can be created) to make the Skylon development an economic proposition, and attractive to the large institutional investors that the project will require. I wish Skylon the best of British luck. My concern is that, if the market exists, it also exists for competing projects which are nearly as good, have significantly cheaper development costs, and lower technical risk. XCOR keeps dropping hints about a TSTO RLV. I don't know what Greason has costed the development of his "blank slide" launch system at, but I'd bet dollars to doughnuts that it's very significantly less than £12 billion.

To put it in perspective, Skylon will cost more than the Airbus A380 (€11B to first production aircraft) and on a par with Crossrail (£15.9B) and Chek Lap Kok international airport (US$20B).

Charles Lurio discusses Skylon economics in the 4th September issue of The Lurio Report (subscription required).