"Air New Zealand says its new fleet of Airbuses will use 15 per cent less fuel and be able to carry more passengers.
It has ordered 13 Airbus A320neo and A321neo (new engine option) aircraft which will be delivered from late 2017.
The single-aisle aircraft have a list price of $US1.5 billion ($NZ1.77b) but Air NZ says it has got a discount.
The A320neo will replace the current fleet of 13 A320s, which operate the majority of the airline's Tasman and Pacific Island services.
Newer engines and fuel efficient "Sharklet" wing tips are expected to deliver fuel savings of up to 15 per cent, says Air NZ chief executive Christopher Luxon.
The new aircraft order will include at least three A321neos, which will have 38 more seats than the A320s, allowing for future growth on the Tasman and Pacific routes.
Mr Luxon said buying the aircraft was part of an "unprecedented" investment in new aircraft and would "tool the business up for growth".
They would minimise Air NZ's carbon footprint by saving around 3600 tonnes of carbon dioxide per aircraft per year.
The carrier plans to have a fleet of medium-range airliners consisting exclusively of Airbus planes. Airbus's A320 family competes with Boeing's 737.
Air NZ has also ordered another A320 next year for its domestic routes.
In November 2009, Air New Zealand placed an order for 14 A320 jets to replace its Boeing 737-300 planes.
Air New Zealand Updates its Airbus Fleet
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