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In a previous post (a little over a year ago) about the same engine I posted a link to a video with a Q&A with Elon Musk where he was a bit pessimistic about the idea.

I'm not a rocket scientist so I wouldn't know the first thing about it, but if anyone is interested in his (then) opinion it's after 48m55s in the video here: http://www.oxfordmartin.ox.ac.uk/videos/view/211

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Elon Musk isn't the expert in this area. Practically no one except Reaction Engine employees and some guys at Area 51 are - in the entire world. It's certainly not an easy thing to do, but since they actually do seem to have the heat exchanger figured out then that's kind of a big deal.

Burying the lead is the whole commercial air travel angle though. What they're building is a fully reusable, cheap to operate SSTO to low earth orbit.

ESA did a review of Skylon and the Sabre engine and said "...the SKYLON vehicle can be realised given today's current technology and successful engine development."

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

Of course, there needs to be a successful engine development project. Which needs another billion or two to complete according to the CEO/MD of Reaction Engine. (He was a bit more specific than that when I heard him say it, but it is in the ballpark.)

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