The craft, called SpaceShipTwo, was designed to eventually take paying customers into the lower lip of space.
This isn't the first time that tests of Richard Branson's craft has resulted in deaths.
During initial pre-launch tests of SpaceShipTwo's rocket systems in Mojave, Calif. in 2007. Three people were killed and three were injured. All were employees of private company Scaled Composites.
The blast happened when employees were testing the flow of pressurized nitrous oxide, the gas the rocket uses to create the oxygen burns that propel it forward. The spaceship was being tested on the ground.
"What we do is inherently risky," the facility's manager, Stuart Witt, told The Guardian when the crash happened. "These are not the days we look forward to, but we deal with it."
Scaled is managed by aerospace designer Burt Rutan, who also oversaw SpaceShipTwo's precursor, SpaceShipOne. SpaceShipOne was the first manned private rocket to reach space.
While SpaceShipOne was funded by Microsoft co-founder Paul Allen, SpaceShipTwo is being developed with financing from Virgin Galactic's Richard Branson.
Virgin Galactic one of a number of private US companies working on projects to take paying customers to space, but it is the first to test a manned mission there. The crash did not occur in space, however, but far below its final destination at an elevation lower than 50,000 feet (just below the outer edge of the atmosphere's first layer).
The craft could not have been higher than 50,000 feet, or 10 miles, because that is the elevation at which it was released from the vehicle that carries it aloft, the WhiteKnightTwo. The issue seems to have arisen right after the craft was released, when it first fired its engines.
Boeing, XCOR Aerospace, Sierra Nevada, and SpaceX are some of the other companies with craft in the space tourism pipeline. Since none have reached the phase of testing manned missions, none have yet resulted in fatal crashes.