Transport accident investigators will today examine the wreckage of a hot-air balloon and talk to witnesses after a crash near Arrowtown.
Eleven people were injured when the balloon crashed into a low bank after it was caught in a wind gust as it came in to land near a house just before 10am yesterday.
Transport Accident Investigation Commission spokesperson Simon Pleasants told RNZ investigators would piece together all the variables that were at play when the accident happened.
"The investigation team will be on site in and around Queenstown and Arrowtown over the next three days at least, and they'll visit several other locations over the course of the investigation.
"They will be gathering evidence - at this stage it's quite broad for the first several months of an investigation. They will be talking to all the people involved that they can find, they'll be looking to speak to eye witnesses."
The team would also look at the history, previous inspections and design of the balloon, and air-traffic control and weather factors.
The balloon bounced about 200m across an Arrowtown paddock before a deer fence halted its progress and it ended up in a tree, a witness says.
The owner of the Morven Ferry Rd property where the balloon crashed, Phillip Bunn, told RNZ last night his sister had witnessed the crash and was very upset.
She had been feeding deer from a tractor and saw the crash. Another sister was inside the house and heard people screaming, he said.
Two injured passengers were in a serious but stable condition in Dunedin Hospital last night, the Southern District Health Board said.
Nine other people, including pilot Carrick McLellan, were taken by ambulance to Lakes District Hospital with moderate and minor injuries, including fractures and bruises, but had since been discharged.
The company involved, Sunrise Balloons, released a statement in which it pointed to the balloon being caught by a sudden wind gust at it approached the landing, before the basket hit a low bank.
Bunn understood the most seriously injured passengers were thrown from the basket.
He had been told the balloon bounced across a paddock and then over or through a deer fence, which interrupted the balloon's progress, and the basket ended up on its side in a tree in front of the house.
The balloon itself was draped over a covered power line to the house.
Bunn earlier said balloons landed on their property quite often.
"I just feel sorry for the people on board."
The balloon crashed about 9.55am and emergency services were soon at the scene.
An investigation by the Transport Accident Investigation Commission began yesterday.
Civil Aviation Authority communications principal adviser Mike Richards said the authority was "considering a separate investigation".
Yesterday, police could be seen identifying key sites, including a raised bank running around the front of the Morven Ferry Rd property where the balloon landed.
The passengers and pilot had been finishing the one-hour flight, operating within normal wind parameters, as the balloon came in to land on the private airstrip, Sunrise Balloons said in a statement.
"On approach, the balloon was caught by a sudden wind gust and the basket containing passengers impacted with a low bank," the statement said.
All the passengers were understood to be New Zealand residents.
"The company has temporarily suspended its commercial operation and is cooperating fully with police, Civil Aviation and the Transport Accident Investigation Commission," Sunrise Balloons said in its statement.
Aurora Energy cut power to the area after the crash, affecting 160 households in Gibbston, the Crown Terrace, Morven Ferry Rd and McDonnell Rd.
Sunrise Balloons owner and chief pilot Hugh McLellan said the company was "deeply upset".
"We are fully supporting our staff and guests at this difficult time, and we wish all involved a full and speedy recovery.
"An internal investigation is under way and we are working closely with all relevant authorities."
Ambulances from Queenstown, Wanaka, Cromwell and Glenorchy were sent to the scene, as were volunteer fire crews from Queenstown, Frankton and Arrowtown, and Queenstown police.
A woman who saw the balloon moments before it crashed said it appeared to be "a little bit in distress" and was too low.
"I thought, 'that's coming down too fast' and seemed a little bit in distress.
"Normally, I see hot air balloons all the time on a winter morning ... It looked like it was in a bit of trouble."
- Additional reporting RNZ and NZ Herald