By Irene Mona Klotz
at Cape Canaveral, Florida
US taxpayers will foot the bill for a planned $225m (£127m) spaceport that Virgin Galactic will use to launch its space tourism business, under a plan unveiled on Wednesday.
Virgin Galactic is offering the prospect of private space travel
New Mexico Governor Bill Richardson said he will ask state legislators for $100m (£56.4m) over three years to build the commercial base in Upham.
The rest of the money would come from local towns and the federal government.
The towns can expect to be richly rewarded for their investments.
According to a study released Wednesday by aerospace industry consultant Futron Corporation, the Southwest Regional Spaceport could generate as much as $750m (£423.3) per year by 2020.
Richard Branson's Virgin Galactic plans to start suborbital passenger flights from the New Mexico spaceport as early as 2009.
Brian Binnie rides on SpaceShipOne after his flight to win the Ansari X Prize
The company is partnered in the project with famed aircraft designer Burt Rutan, who led a team that last year claimed a $10m (£5.6m) prize for the world's first private piloted spaceflights.
With funding from Microsoft co-founder Paul Allen, Rutan's company - Scaled Composites of Mojave, California - designed a three-passenger vessel called SpaceShipOne and a jet carrier craft, called White Knight.
SpaceShipOne made three flights beyond Earth's atmosphere with a solo pilot aboard before it was retired to the National Air & Space Museum in Washington DC for public display.
The demonstration flights prompted Branson to set up a new business venture with Rutan to develop a commercial version of SpaceShipOne.
The new enterprise, called The Spaceship Co., is designing and building five vehicles that can each carry six or seven passengers and two pilots to suborbital altitudes.
Virgin Galactic has already collected more than $10m (£5.6) in deposits from aspiring rocketeers willing to pay about $200,000 (£112,867) for the experience. The trip will last about 3 1/2 hours from takeoff through landing and includes about five minutes of weightlessness.
At a press conference earlier this week in London, project managers said New Mexico's favourable climate, low-density population and largely unrestricted airspace were key factors in its selection as Virgin Galactic's base. Fewer people and open airspace should cut insurance and regulation costs.
The region also has a 4,700-foot (1,433-metre) elevation, which saves on the amount of jet fuel it takes to get the spaceships to the proper altitude for launch, said Katie Roberts, spokeswoman for the New Mexico Economic Development department.
Virgin also considered sites in Mojave, California, where Rutan's firm is based, and Cape Canaveral, Florida, home to the Kennedy Space Center.
In the end, New Mexico had the winning combination of economic, demographic and environmental factors, though Virgin will continue to test-fly and develop the fleet in Mojave.
The first passenger flights may launch from Mojave as well if the New Mexico spaceport is not yet finished. Construction of the new spaceport is targeted to begin next year.
The New Mexico spaceport is to be built almost entirely underground on 27 square miles (70 square kilometres) of state-owned land. Virgin said it would sign a 20-year lease agreement for use of the spaceport, paying $1m (£564,400) a year for the first five years and increasing amounts thereafter.
"Of all the projects that I've worked on in my life, of all the businesses I've started, this is by far the most exciting," Branson said during a press conference on Wednesday.
"This business will mark a milestone in world history, and it will launch a new space industry - a private space industry, driven by innovators and entrepreneurs and new technologies and bold-thinkers."
Virgin Galactic will be the spaceport's primary, but not its only tenant. New Mexico already has agreements in place to host an annual private spaceflight exhibition billed as a follow-on to the $10m Ansari X Prize. In addition, two start-up commercial space firms, UP Aerospace and StarChaser Industries have set up shop in New Mexico.
"New Mexico will be known around the world as the launch pad of the new space industry," Branson said, adding that his firm is aiming for two- to three flights daily from the new spaceport.
"We're going where no one has gone before. There's no model to follow, nothing to copy. That is what makes this so exciting," he added.