Air New Zealand expects 10 per cent of its fuel - enough to run the entire domestic fleet - to come from a nut grown in India and Africa within five years.

The national carrier has announced it will use oil from jatropha nuts to fuel a test flight this year - the first of its kind using a sustainable biofuel with commercial potential. By 2013 it says the fuel will provide it with one million barrels a year.

Group strategy manager Abhy Maharaj said jatropha met all the airline's "non-negotiable" criteria.

It was cheaper than traditional jet fuel, emitted less carbon dioxide and was socially responsible - it was grown on land unsuitable for food crops, which had not been forest land for at least 20 years.

Air New Zealand has spent $1 million in a year on its biofuels project. Mr Maharaj said when it started oil was about $80 a barrel.

"Now it's above $170 so it's goodthat we started when we did - and an extra incentive."

Air New Zealand has already begun cutting carbon emissions by reducing weight on aircraft and adopting slower flying times.

But it has also been forced to increase the fuel surcharge for passengers twice in the past two months.

And at the end of May it downgraded its profit forecast to below $200 million, down from the expected $268 million in February.

Captain Dave Morgan, general manager airline operations, said cost was "clearly a factor" but environmental responsibility was "a cornerstone" of Air New Zealand and the country's clean, green image.

The national carrier has been working with Boeing and Rolls-Royce on the biofuel plan.

A date has not yet been set for the test flight, but it will be "in the last quarter of this year" said chief executive Rob Fyfe.

It is also likely to be a world first. Virgin Atlantic powered a jumbo jet partly using coconut oil in February, but Air New Zealand's flight will use a biofuel that is a commercially viable option. One of four engines will be filled with oil from jatropha for the Boeing 747-400 flight out of Auckland.

It is a race against Dutch airline KLM, which plans a test flight this year with a biofuel made from algae.

JATROPHA PLANT COULD BE THE KEY
In a field of volcanic red soil overlooking Pearl Harbour is the future of air travel, according to Air New Zealand.

Jatropha plants standing about 2.5m tall are in neat rows across half a hectare of the 43ha Kunia substation, owned by the Hawaiian Agriculture Research Centre.