Crews then located a second aircraft, a Jabiru carrying one man who was pronounced dead at the scene, one kilometre north of the first aircraft.
“Early stages would appear to be a midair collision,” Supt Calman told reporters on Saturday.
“Damage at the scene would indicate the first aircraft has come straight down and we do have witnesses that have reported seeing debris coming from the sky.”
Ambulance and fire crews are at the crash site and two crime scenes have been set up.
The planes were flying in uncontrolled airspace at the time of the accident.
Police believe the Jabiru plane had taken off from the nearby Oaks Airfield.
“The scene that we’re closest to here that has been impacted by fire, it would not have been a survivable impact,” Supt Calman said.
“The second scene that’s a kilometre north of here, that aircraft did not burn, but it would also not have been survivable.”
NSW Ambulance Inspector Joseph Ibrahim said 10 ambulance resources including a helicopter were deployed to the “confronting” scene but “nothing could be done”.
“The nature of the injuries were unsurvivable,” he said.
The sites, covered by bushland, are near two flying schools - Sydney Recreational Flying Club and Dave’s Flying School.
The area is popular with trainee pilots and recreational flyers, local councillor Suzy Brandstater said.
“Recreational flying is very popular and this is probably one of the closest places to Sydney that you can do it,” she told AAP.
The Wollondilly Shire councillor said the accident was a “terrible shock”.
“It’s horrific and I really also feel for community members who saw it,” she said.
“It’s something you’re never going to forget - seeing two planes crash.”
Authorities are urging the public to stay away as forensics and police rescue vehicles move around the area.
The Australian Transport Safety Bureau will deploy a team to the crash sites to interview witnesses and collect air traffic control and flight tracking data, pilot and aircraft maintenance records, and weather information.
“Over coming days, investigators will undertake site mapping, examine the wreckage of both aircraft and recover any relevant components for further examination at the ATSB’s technical facilities in Canberra,” the safety regulator said.
They have urged any witnesses or anyone with footage of the planes in any phase of their flights to contact them.
In Queensland, two people suffered minor injuries on Saturday after a seaplane carrying five people crashed off the coast of Hamilton Island in the Whitsundays.
The occupants were picked up by tour boat operator the Ocean Explorer and taken to shore, where paramedics assessed them.
