The world's first self-piloted electric air taxi is being tested in Christchurch by company Zephyr Airworks - a business financed by Google co-founder Larry Page.
Creators of the aircraft, called Cora, are reportedly hoping it will be in the market within six years.
The vehicle has been in development for about eight years, and can take off and land vertically.
Christchurch mayor Lianne Dalziel said having the project was significant for the city.
"This aircraft represents the evolution of the transport eco system to one that responds to a global challenge around traffic and congestion, and is kinder to the planet," she said.
"This is a fully electric aircraft that rises into the air like a helicopter, flies like a plane and then lands again like a helicopter."
The prototype can carry two passengers.
The company behind Zephyr Airworks, Kitty Hawk, is run by Sebastian Thrun, who helped start Google's autonomous car unit as the director of Google X.
The project is backed by some of the brightest minds in the aviation and transport technology industries, including former staff from the likes of Nasa, Google, Boeing and Honeywell.
ChristchurchNZ chief executive Joanna Norris said they had been working closely with the company for a while.
"Zephyr Airworks came here because of the ease of doing business in New Zealand, our safety-focused regulatory environment, our culture of ingenuity and our vision for clean technologies and future transport alternatives," she said.
She said Canterbury was the right location due to its physical environment.
"Trials such as this allow us to consider future possibilities for transport which could have far reaching benefits to everyday travel and could even support our growing tourism market," she said.
"This project also supports Christchurch's strengths as a place to trial and commercialise innovative ideas and to explore new ways of living."
Today also marked the launch of the Innovative Partnership programme which aims to attract future-focused international innovators and firms to undertake Research and development (R&D) and develop their products in New Zealand.
Kitty Hawk Corporation has credited Innovative Partnerships as part of the reason it is testing its revolutionary air taxi technology in New Zealand.
Minister of research, science and innovation Megan Woods said the programme would support other similar companies.
"Zephyr Airworks' presence in New Zealand will build capability in our own science system - partially in areas like software engineering, Artificial Intelligence, robotics, composite material, and aviation design," she said.
"New Zealand has a long history of innovation and being at the front of change. Our future is still being imagined and we are determined to play an active role in shaping it for the better through new ideas, new innovations, and new ways of looking at the world."