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Fancy having the oil that fried your hot chips being then used to power your interstate flight? Qantas Airways does. And sooner rather than later.

Qantas chief executive Alan Joyce says finding a sustainably produced biofuel is an important step in confronting the major challenge of high fuel prices.

It also supports the aviation industry's goal of being carbon neutral by 2020.

Mr Joyce says crude oil had risen from $US65 a barrel in 2006/07 to near $US125 a barrel today.

"The market view is that this price is likely to stay over $US100 per barrel in the medium term," Mr Joyce said at Sydney Airport on Friday, ahead of Qantas's first commercial flight using biofuel.

"We need to get ready for a future that is not based on traditional jet fuel or frankly we don't have a future."

When Qantas Airways' QF1121 took off from Sydney just after 1010 AEST on Friday, it marked Australia's first commercial flight using sustainably derived biofuel.

The fuel, made from used cooking oil and produced by Dutch firm SkyNRG, powered one engine of the Airbus A330 aircraft.

The airline has also been working with other firms on alternative sources of aviation jet fuel made from algae or household waste.


Qantas's low-cost subsidiary Jetstar will use the same SkyNRG biofuel on a return trip between Melbourne and Hobart on April 19.

Virgin Australia had no immediate plans for one-off biofuel flights, preferring to focus on its two projects to develop commercially feasible supplies of biofuel at competitive prices.

These included producing commercially viable biofuel from mallee trees, as well as teaming up with an Australian company working on plans to turn agricultural and farm waste into biofuel.

Resources, Energy and Tourism Minister Martin Ferguson said the federal government had awarded Qantas $500,000 for a feasibility study to investigate feed stocks, supply chains, and refining and distribution of biofuels.

A CSIRO report published last year said Australia and New Zealand were strongly positioned to produce sustainable aviation fuels that complied with social, environmental and economic criteria.

This included not impacting on food security or the environment.

It also had the potential to create 12,000 jobs and provide Australia with a measure of energy security.

"If we can achieve this, for Australia the rewards are enormous," Mr Joyce said.

KLM, Lufthansa and Finnair, among others, have operated commercial flights with engines partly powered by biofuel.

Shell is a partner with Qantas on the feasibility study and its country chair Ann Pickard said there was no time to lose.

"It's taken us to get 30 years to get biofuel into road transport. All I can say is we can't wait 30 years for this," Ms Pickard said.

The International Civil Aviation Organisation has earmarked 2020 as the year when the industry will achieve carbon neutral growth.

While lighter, more aerodynamic aircraft, advances in engine technology and better air traffic control systems will go some way to meeting that target, industry players say it will not be achieved without sustainably derived aviation biofuel.

AAP