Joining with Burt Rutan, an aircraft designer, and Paul G. Allen, the billionaire co-founder of Microsoft Corp., Branson will form Virgin Galactic to offer suborbital flights into space. During the three-hour trip, passengers will be able to view the earth from 80 miles up, experience weightlessness for about four minutes and perhaps have a cocktail.
The first ship will be called the VSS Enterprise. A Web site for Virgin Galactic said the company expects to start taking deposits next year.
Virgin said it expects 3,000 passengers to sign up for the pilot program.
"I've dreamt about it since I was a child," Branson said in a telephone interview, referring to his interest in space travel.
Analysts and aviation experts predict that space tourism could become a lucrative business.
The cost of government programs prohibits all but the extremely wealthy from traveling into space. Two businessmen have done so, paying $20 million apiece for the privilege on a Russian ship.
Rutan made aviation history in June when his rocket SpaceShipOne, launched from the Mojave Desert in California, left the Earth's atmosphere and became the first nongovernment craft to enter space.
The rocket has a toylike appearance, its top dotted with portholes, its underbelly speckled with stars and two finlike rudders off the sides. The venture was financed in part by Allen, who invested about $20 million.
The new Virgin venture is aimed at giving Rutan's ship a greater future. The ship "could have made a few flights, then gone to the Smithsonian," Branson said, "which is what Burt feared."
Aside from the launching of SpaceShipOne, "this is one of the most exciting days of my life," Rutan said in a statement yesterday.
Virgin expects to invest up to 60 million pounds ($108 million) to buy five such spaceships and develop the on-ground infrastructure necessary for the project.
Virgin is licensing the technology to build the ships from Mojave Aerospace Ventures, a company owned by Allen.
The licensing deal could be worth up to 14 million pounds ($25 million) over the next 15 years, depending on how many ships it orders, Virgin said.
All of the money that Virgin earns selling tickets will be reinvested in the program, Branson said.