The billionaire’s space race between Jeff Bezos and Richard Branson entered the final stage on Friday, as Branson’s Virgin Galactic finally won the go-ahead from US regulators to put paying passengers into the lower reaches of space.

The approval from the Federal Aviation Authority sent Galactic’s shares up by 37 per cent in morning trading in New York, marking a near-fourfold increase since a low point little more than a month ago when Wall Street worried about a long delay to its test programme. Since then, the suborbital craft completed its first successful test in more than a year.

The licence from the FAA appeared to be the final step needed to clear Galactic’s Unity spacecraft to carry commercial passengers, said Laura Forczyk, a space analyst at Astralytical. “They’re finally there,” she said.

The green light from regulators clears the way for Branson to take a personal trip to the edge of space that he has been promising for more than a decade. Galactic has said that his flight will be one of three further tests it plans to run before it starts carrying paying passengers in its six-seat craft.

On Friday, Michael Colglazier, chief executive officer, said the FAA licence and the recent test “give us confidence as we proceed toward our first fully crewed test flight this summer.” The company did not say when the flight would take place or whether Branson would be aboard.

Bezos has already set 20 July as the date for his own first space flight, on top of a rocket developed by his private space company, Blue Origin. The Blue Origin rocket carries payloads to a height of more than 100km, the internationally recognised beginning of space, while Galactic’s craft only reaches a height of more than 80km, a level that the US officially considers space.

The planned flights by the company’s billionaire founders sets up a race to become the first to mount a fully commercial operations, with Galactic saying it was the first to receive a full licence to carry paying passengers.

“There is a lot of pent-up demand for space tourism,” said Forczyk. She pointed to a waiting list of about 600 people who have waited for years to travel on Galactic’s craft. If the company can move safely to full commercial operations, it was likely to trigger a much bigger wave of interest from potential customers, she added.