Plane maker Airbus and manufacturer Honeywell say they are developing a biofuel that by 2030 could satisfy nearly a third of the worldwide demand from commercial aircraft, without affecting food supplies.

Along with JetBlue Airways Corp. and International Aero Engines, they plan to produce fuel from vegetation and algae-based oils that do not compete with existing food production or land and water resources.

International Aero Engines is a multinational consortium whose shareholders include United Technologies Corp.'s Pratt & Whitney and Rolls-Royce.

Airbus spokesman Clay McConnell said in the technical partnership, each company will invest time and intellectual property into developing and testing a biofuel that can later be sold to refiners or others interested in producing it.

Currently, commercial airlines run their planes on kerosene, though some alternative fuels are being tested.

Air New Zealand is working with Boeing and engine maker Rolls-Royce on its own bio-jet fuel plan, with the first commercial aircraft trial due to take off later this year or early next.

The test Boeing 747 flight is likely to depart Auckland and will not carry customers.

Only one engine will run on a blended bio fuel/kerosene mix and the remaining three will be powered by regular aviation fuel. The airline has yet to say what the source of the fuel will be or what sort of mix.

Airline chief executive Rob Fyfe said last year that bio fuel recently seemed like pie in the sky to many aviation industry observers, but was now a possibility.

Fyfe said Air New Zealand would like to progress to an all New Zealand bio fuel for future tests flights, but sourcing the quantity necessary may be a challenge in the short term.

As well as any green credentials, bio fuel may also help the airline cope with the growing pressures on ticket prices caused by high jet fuel costs.

Just yesterday Air NZ announced a 3 per cent increase in trans-Tasman and Pacific Island airfares. It hiked domestic fares for the second time in six weeks last month.

A surge in world biofuel production has been blamed for pushing up food prices.

President George W. Bush signed an energy bill in December that requires refineries to use 136 billion litres of ethanol a year by 2022 with at least 79.5 billion litres of the alternative fuel coming from nonfood raw materials.

The US currently produces nearly 26.5 billion litres of ethanol annually, all from corn.

Critics say reliance on that crop has helped inflate food prices, while sceptics note there is no way to know when biofuels from other sources will be commercially available.

Airbus and its partners are undeterred.

In order to replace a significant portion of that jet fuel with bio-jet, we need to find something that has much greater yield than the current biomass sources available, Sebastien Remy, head of alternative fuels research programs for Airbus, said in a release.

Airbus believes that second-generation bio-jet could provide up to 30 per cent of all commercial aviation jet fuel by 2030.

The new biofuel is expected to be a drop-in replacement for kerosene jet fuel that won't require engine modifications, according to Airbus and Honeywell representatives.

The new biofuel will be produced using technology developed by Honeywell UOP, which has created a process to convert biological material into renewable jet fuel that performs like traditional fuel and meets flight performance specifications.

Honeywell UOP last June was selected by the federal Defence Advanced Research Projects Agency to develop and commercialise production of jet fuel from the same renewable sources for use by US and Nato military aircraft.

That process will be completed by the end of this year and we see no issue with the technology working on the commercial side UOP spokeswoman Susan Gross said.

On Wednesday, DuPont executives said a new joint venture with a Danish company will enable production of cellulosic ethanol that costs less to manufacture than corn-based ethanol and won't drive up food prices.

The companies plan to invest US$140 million ($185.72 million) in the US-based venture and hope to have a commercial-scale demonstration facility, making fuel from the leaves and stalks of corn and from the remnants of sugarcane stalks, operating by 2012.