A Qantas flight between Sydney and Adelaide on Friday is using a 50:50 mix of conventional fuel and refined cooking oil.
The ABC reports the biofuel cost four times more than conventional fuel, partly because it was imported from the United States.
But Qantas says it is absorbing the cost because it is keen to highlight the need for an Australian biofuel source.
The airline says the flight will produce far fewer carbon emissions than if conventional jet fuel were used.
It says it used a product that is not a food crop. The oil was refined in Houston before it was shipped to Australia.