Passengers on a Qantas superjumbo jet heard a loud boom and saw fire on the plane's wing as one of the aircraft's engines exploded in mid-air.
The Airbus A380 made a dramatic emergency landing in Singapore with 459 people on board after the incident over western Indonesia yesterday.
Passenger Tyler Wooster was looking out the window at the aircraft wing when the explosion happened.
"I heard a massive bang. It was like a shotgun going off, like a big loud gun," he told Australia's Nine Network.
"Part of the skin peeled off and we could see the foam underneath and heaps of broken wires poking out.
"My whole body just went to jelly ... I really thought as soon as it happened, 'There is a good chance we could go down right now'. When we landed, it was a big relief. Everyone on the plane clapped and cheered."
New Zealanders were among the aircraft's passengers, and staff from the New Zealand High Commission in Singapore went to the airport.
Deputy High Commissioner Jacqui Caine said a consulate officer spoke to "a few" Kiwis who had been on the plane.
"They were all fine and doing well and were receiving assistance," Ms Caine said.
Witnesses on the ground heard a mid-air explosion and saw metal debris, including a piece bearing part of the airline's red-and-white flying kangaroo emblem, crashing into industrial and residential areas of the Indonesian city of Batam, which is about 20km across a strait from Singapore.
"There were metal shards coming down from the sky," Noor Kanwa told the AFP news agency.
Another witness, Devi, told the local agency Antara: "It sounded like a bomb."
Qantas chief executive Alan Joyce last night grounded his company's six Airbus A380 airliners.
Passenger Rosemary Hegardy, 60, of Sydney, was flying in an A380 for the first time.
"There were flames - yellow flames came out, and debris came off ... You could see black things shooting through the smoke, like bits of debris."
German passenger Ulf Waschbusch said: "We heard the boom. I looked outside and saw a little bit of fire.
"We were circling for almost two hours dumping fuel. Everyone was surprisingly calm on the plane."
Qantas said later all passengers were safe and well.
Some were able to catch other flights late last night, and others were to be flown to Sydney this morning on a Boeing 747 jet being sent to Singapore overnight.
The four-engined double-deck A380 is the world's largest passenger plane. It started flying commercially in 2007.
Aviation experts were last night pointing the finger at engine manufacturer Rolls-Royce, rather than Qantas.
NZ commentator Peter Clark said it looked like catastrophic engine failure.
"To have an engine failure on such a new engine on an aircraft is very unusual," he said. "Such a catastrophic failure of an engine needs to be looked at very seriously."
Australian aviation commentator Geoffrey Thomas said he believed a high-pressure turbine blade at the rear of the engine had failed, puncturing the casing and engine cowling and scattering debris.
"It will probably be a Rolls-Royce issue, not a Qantas issue," he said.
Contributors to an international pilots' website said it was incredibly lucky the turbine blade had not pierced a fuel tank.
"If a piece of hot turbine had gone though the wing tank, it would have made the Air France Concorde disaster look like a fairly small accident," wrote one.
Qantas said the aircraft had four Rolls-Royce Trent 900 engines.
A spokesman for the British engine maker said: "We will work with Qantas to identify what the problem is."
Two Qantas A380 flights from Los Angeles and one scheduled to leave Sydney last night were cancelled. Passengers were booked into hotels and other flights were being arranged.
Emirates' A380 flights to New Zealand are unaffected - the aircraft use Engine Alliance engines.
The Airbus involved in the incident was the first to be flown by Qantas, and went into service two years ago.
"Qantas takes safety as its number one priority," Mr Joyce said.
"We have decided we will suspend all A380 takeoffs until we're confident sufficient information has been obtained about QF32."
The explosion happened soon after the aircraft took off from Singapore for Sydney, carrying 433 passengers and 26 crew. It landed at 11.45am local time (4.45pm NZT).
The flight is a regular service that flies between Sydney, Singapore and London.
News.com.au said several error messages displayed in the aircraft's cockpit had warned of a serious problem and the pilot had shut down the No 2 engine.