Virgin Galactic's WhiteKnightTwo, carrying SpaceShipTwo, takes flight in New Mexico, on October 17, 2011

Richard Branson's dream of commercial space flights took a step nearer reality after Virgin Galactic signed a deal with US aviation authorities to let it blast paying customers into space, the company said Thursday.

The agreement with the Federal Aviation Administration (FAA) sets out how routine space missions from the Spaceport America base in the US state of New Mexico will be coordinated with the normal air traffic control system.

Commercial flights are to begin by the end of this year and more than 600 people have already signed up at $250,000 each to take a trip on SpaceShipTwo.

"Our team is working hard to begin routine and affordable space launches from Spaceport America and this agreement brings us another step closer to that goal," said Virgin Galactic CEO George Whitesides.

"We are grateful to the FAA and New Mexico for their partnership to achieve this milestone."

The Virgin announcement came hours before Branson's main rival in the commercial space race was to unveil its latest spacecraft.

Elon Musk, CEO and chief designer of SpaceX, was to present his company's "next generation" Dragon V2 spacecraft at an event in California on Thursday evening.

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© 2014 AFP