Air New Zealand says it has achieved the "holy grail" of long haul air travel - a lie-flat economy seat.

The airline will begin installing the "Skycouch", a Kiwi-designed row of three economy seats providing a flat surface for two adults to sleep on, at the end of this year when it takes delivery of the first of its new Boeing 777-300 aircraft.

A Skycouch ticket will be based on buying two seats at standard prices and the third seat at half-price.

Twenty-two sets of Skycouch seats will be available on each flight, and go on sale in late April.

The new seats, along with redesigns of Air New Zealand's Premium Economy and Business Premier seating, are displayed in a full mock-up of a Boeing cabin at a design centre close to the airline's central Auckland head office.

International media packed the cabin this morning as sports stars Sarah Ulmer and Mils Muliaina demonstrated the new seats.

Chief executive Rob Fyfe said true innovation often came from setting impossible targets.

"I said, 'it would be great if we could have passengers able to lie down in economy, but I don't want the seat to take up any more space and I don't want people to have to pay any more for it'."

An Air New Zealand team has been working on the project for three years.

The 340 seat 777-300 aircraft will be configured with 246 in Economy (including 66 seats creating 22 Skycouch combinations), 50 in Premium Economy and 44 in Business Premier.

The first routes to offer travellers the new seats will be on selected services between Auckland and Los Angeles from December this year followed by dedicated return services between Auckland and Los Angeles and through to London from April 2011.

Air New Zealand is re-fitting its existing fleet of eight Boeing 777-200s from mid next year. It says all its Asian, North American and UK services should have the new product in 2012.