The pilot of a skydiving plane that plunged in to Lake Taupo saw flames coming out of the aircraft's engine exhaust moments after its engine suddenly stopped.

A team of three investigators from the Transport Accident Investigation Commission (TAIC) have begun piecing together the last moments before Skydive Taupo's bright-pink Pacific Aerospace 750XL fell from the sky with six skydivers and another six instructors on board.

All were forced to abandon the plane at 2000ft, before it crashed in to the lake near Rotongaio Bay shortly before midday yesterday.

It is expected to be recovered from the lake tomorrow.

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This afternoon, TAIC air accident investigator Peter Williams said the cause of the engine failure wasn't immediately clear -- and pieces of the engine may have to be sent to the plane's manufacturer in Canada.

"Today we have been with the police dive team to survey the wreckage, which is broken up but in shallow water, and once we know the extent of the break-up we will be in a better position to continue with recovery plans.

"We know what's happened, and it will be quite a while [until we find out] why that's happened."

Investigators had interviewed the pilot, six instructors, four witnesses and had been provided police statements from the six tourists.

Mr Williams described the failure as a sudden engine stoppage, followed by a burst of flames out of the exhaust.

There could have been many possibilities for this, he said, and what the pilot had described "sounds rather catastrophic".

The investigators would focus on the engine - which Mr Williams described as popular and widely-used - and particularly a device that monitored much of the engine parameters.

Bird strike was an "outside possibility" and not likely to be the cause.

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In incidents like this, investigators typically transported the wreckage to facilities with more capabilities than anywhere in New Zealand, and it was probable it would be analysed in Canada, he said.

The plane had been in use for around nine years -- about half of that in the agricultural sector in Australia - but Mr Williams said such was the constant maintenance and certification of the aircraft that there was likely little use in contacting its former Australian owners.

Investigations into planes used for skydiving were rare, with only a few in the history of TAIC and its predecessor authorities.

The most recent was a Fletcher FU24 that crashed shortly after take-off near Fox Glacier Aerodrome on September 4, 2010, killing all nine people on board.

Earlier today, Skydive Taupo director Roy Clements said the plane had been serviced regularly, as recently as last month, and to stringent CAA standards, with no defects of any note found on previous inspections.

In his several decades in the industry, he had not seen such a failure.

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All instructors were back at work today and would be interviewed by investigators, but did not want to speak publicly about the ordeal, Mr Clements said.

"Every one of them had indicated they wanted to jump today, but unfortunately we won't be operating because we don't have an aircraft in range today."

They were expected to make their first jumps tomorrow morning.

He described them as "heroes".

"They were probably only doing their job, which they are trained to do, but I think at the same time, the way they dealt with it was just terrific, very calm -- and that's the message we got from each of the passengers, just saying how great the instructors were."

He said the major risk had been the low altitude -- parachutes were usually opened at 5000ft, but as the plane plummeted towards the lake, the group had no choice but to jump from less than 2000ft.

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Mr Clements admitted he had expected the worst when he was told of the pilot's mayday call, only to receive a phone call about three minutes later from the pilot, who had landed in a patch of blackberry near the lake's edge.

He said the pilot had left Taupo for several days to take some time out with his wife, while the tourists, who were all travelling the country together, had been offered another skydive.