Sabre would burn hydrogen and oxygen to provide thrust - but in the lower atmosphere this oxygen would be taken from the atmosphere.
At high speeds, the engine is required to cope with 1,000-degree gases entering its intake. These have to be cooled prior to being compressed and burnt with the hydrogen.
REL's solution is a module containing arrays of extremely fine piping that can extract the heat and plunge the intake gases to minus 140C in just 1/100th of a second.
Ordinarily, the moisture in the air would be expected to freeze out rapidly, covering the pre-cooler's pipes in a blanket of frost and dislocating their operation.
But the company's engineers have also devised a means to stop this happening, permitting Sabre to run in jet mode for as long as is needed before making the transition to full rocket mode to take Skylon into orbit.
It is the critical "pre-cooler" technology with its innovative helium cooling loop that REL is validating currently on an experimental rig at Culham.
During flight air enters the pre-cooler. In 1/100th of a second a network of fine piping inside the pre-cooler drops the air's temperature by well over 100C. Very cold helium in the piping makes this possible.
2. Jet engine
Oxygen chilled in the pre-cooler by the helium is compressed and used to fuel the aircraft. In the test run, a jet engine is used to draw air into the pre-cooler, so the technology can be demonstrated.
3. The silencer
The helium must be kept chilled. So, it is pumped through a nitrogen boiler. For the test, water is used to dampen the noise from the exhaust gases. Clouds of steam are produced as the water is vaporized.
The company's message here are Farnborough is that the pre-cooler is performing as expected - air flows through the module in a stable and uniform way, free from any vibration.
The pre-cooler has also been run at sub-zero temperatures where frost would be expected to form were it not for the anti-frosting mechanism, although the REL engineers have yet to take the system all the way down to below minus 140C . That will be done in the coming months.
"We've been down to sub-zero temperatures with completely stable operation; we've had steady-state operation for over six minutes," explained Alan Bond, the driving force behind the Skylon concept.
"We've now stopped the programme for the time being, to upgrade our test facilities in order to go down to much lower temperatures. We expect to complete that testing by the end of the year."
The Skylon/Sabre programme is being assessed by the European Space Agency (Esa). Its propulsion experts have been conducting a technical audit at the request of the UK Space Agency, to provide an independent view of the pre-cooler's capabilities and performance.
The company has now appointed a new chief executive, Tim Hayter.
One of his roles is to find the £250m needed to take Skylon/Sabre into its final design phase.
"We need to find investors or strategic partners with the vision and drive to see the long-term on this," he said.
"It's not going to be a quick turn-around [investment], but this is a disruptive technology that could turn launch vehicles on their head and we need people who can see that."
The prospect of some further UK government funding is not out of the question, either.
"We see this as predominantly a commercial project and it has already successfully raised money in the city," said Mr Willetts.
"We are considering whether there is any way we can provide them with further public assistance. No decision has been taken on that yet, and of course the overall budget position for the government is very tight."
he pre-cooler demonstration is being conducted at REL's HQ in Oxfordshire
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