SpaceShipTwo manufacturer Scaled Composites of Mojave, California, received a one-year experimental launch permit on May 23 for test flights beyond the atmosphere, FAA spokesman Hank Price said.

The six-passenger, two-pilot spacecraft is based on the prototype SpaceShipOne, also built by Scaled, which clinched the $10 million Ansari X Prize in 2004 for the first privately funded human spaceflights.

SpaceShipOne made three suborbital hops beyond the atmosphere, each with a solo pilot aboard, ultimately reaching an altitude of nearly 70 miles (112 km) above Earth. SpaceShipOne is now on display at the Smithsonian Institution's National Air and Space Museum in Washington.

Virgin Galactic is owned by British billionaire Richard Branson's Virgin Group and Aabar Investments PJS. Branson hired SpaceShipOne designer Burt Rutan, who has since retired from Scaled, to create a fleet of spaceships for commercial use. Virgin Galactic has taken deposits from more than 500 people for rides, which cost $200,000.

Participants will experience a few minutes of weightlessness and see the curve of Earth set against the black sky of space. NASA's first two manned spaceflights in 1961, by Mercury astronauts Alan Shepard and Virgil "Gus" Grissom were suborbital flights.

Like SpaceShipOne, Virgin Galactic's SpaceShipTwo will be flown into the air beneath a carrier jet and released. Once separated, the spaceship's rocket engine will fire to blast it into the sky. SpaceShipTwo has completed 16 free flight tests.

The FAA permit will enable Scaled, now wholly owned by Northrop Grumman(NOC.N), to move on to rocket-powered flights, the first of which is expected toward the end of the year, Virgin Galactic said in a statement.

Company President George Whitesides called the permit an important milestone "that positions the company a major step closer to bringing our customers to space."

In addition to flying wealthy tourists, Scaled has signed contracts to fly researchers and science experiments.

The experimental permit allows Scaled to fly only its own test pilots, not passengers, Price said.

A date for the start of Virgin Galactic's commercial spaceflights has not yet been set.

(Editing by Jane Sutton and Anthony Boadle)

• A Permanent Economic Emergency