Part of the reason that getting to space is so stupendously expensive is that we go about it very inefficiently. We use rockets, which spend the vast majority of their thrust to lift their own fuel and oxidizer—neither of which we care very much about, at least not as far as the end product of getting mass into orbit is concerned. Airplanes, on the other hand, are very efficient, because they take advantage of air, which helpfully provides both lift and as much oxidizer as an engine can suck down.

For the last quarter century or so, a British company called Reaction Engines has been making slow, steady progress toward a hybrid system that has the potential to bind aircraft and spacecraft together. Reaction's Synergetic Air-Breathing Rocket Engine (SABRE) could power a safe, efficient, and very cool looking single-stage-to-orbit vehicle. It's an enormous technical challenge, but one that may now be realistically solvable thanks to massive new investment from BAE Systems and the British government. BAE just ponied up £20.6 million for a 20-percent stake in the company. And with £60 million in grants coming from the UK government, the company thinks it should have the resources it needs to stage a full-scale ground test of SABRE by 2020, and unmanned test flights around 2025. ?

Space planes are an as-yet-hypothetical attempt to build something that behaves like an airplane while air is available (efficiently lifting itself to the edge of the atmosphere with wings and air-breathing engines), then resorting to rockets for the last push into orbit only when necessary. This dual-mode approach could potentially make access to space orders of magnitude more efficient and reliable. But developing an engine that can operate at the range of speeds, altitudes, and temperatures necessary to make a single-stage-to-orbit (SSTO) space plane a reality has so far proved to be too much of a challenge. You'd need an engine that can provide effective thrust between the moment of liftoff and Mach 25. Then the vehicle would have to make a seamless transition from breathing ambient oxygen to drinking liquid oxygen as it climbed out of the atmosphere.

http://www.reactionengines.co.uk/