Air New Zealand on Tuesday successfully flew a test flight powered by second-generation biofuel, and hailed it as a "significant milestone" in the development of sustainable fuels for aircraft.

The airline used a 50-50 blend of standard jet fuel and synthetic fuel made from the oil of jatropha plant seeds to power one of the engines on a Boeing 747 during a two-hour test flight.

It was the world's first test flight using jatropha biofuel and followed a Virgin Atlantic test flight earlier in the year using a blend including coconut oil and babassu nut oil.

"We undertook a range of tests on the ground and in flight with the jatropha biofuel performing well through both the fuel system and engine," Air New Zealand chief pilot Dave Morgan said.

Further analysis of the Rolls-Royce engine and fuel systems will now be conducted as the airline works to have jatropha certified as an aviation fuel.

The test flight was a joint venture involving Air New Zealand, Boeing, Rolls-Royce and Honeywell company UOP, with support from Terasol Energy.

Air New Zealand chief executive Rob Fyfe said the completion of the flight was "a significant milestone" towards becoming an "environmentally sustainable airline."

Prime Minister John Key, who is also tourism minister, described the flight as a "historic day for aviation," noting that the fortunes of Air New Zealand and New Zealand's tourism industry were closely tied.

Biofuels are seen as a sustainable alternative to fossil fuels but critics are opposed to turning farmland over to the cultivation of biofuel at the expense of food crops.