Four people are dead after two twin-engine planes collided mid-air at Mangalore, about 120 kilometres north of Melbourne.

Key points: One plane crashed to the ground immediately after the collision

One plane crashed to the ground immediately after the collision The other travelled for some distance before crashing nearby

The other travelled for some distance before crashing nearby All of the passengers on board the planes died at the scene

One of the planes was carrying a trainee pilot and instructor who had taken off from Mangalore airfield shortly before the collision, which happened about 11:25am.

The other aircraft had taken off from a different airport, Victoria Police Inspector Peter Koger said.

"We're not sure why both aircraft were on the same trajectory or why they were in that area, but unfortunately they've collided mid-air," Inspector Koger said.

"There was some talk of possible cloud cover and there's a possibility that they didn't see each other."

Inspector Koger said one plane crashed immediately and the other crashed a distance away. ( ABC News )

Inspector Koger said one of the planes crashed immediately after the collision, while the other continued for some distance before crashing.

He said both had been "extensively damaged" before they hit the ground.

Witnesses on the ground and in a helicopter saw the mid-air collision and the first plane crash, Inspector Kroger said.

"It's a big tragedy for both families … it's very upsetting for everyone including emergency services that had to see this scene today," he said.

"It's a tragedy for sure."

Both aircraft were carrying two people. ( ABC News )

A spokesman for the Civil Aviation Safety Authority said the incident involved a Piper Seminole aircraft registered to flight school Moorabbin Aviation Services and a Beechcraft Travel Air registered to a private owner at Tyabb, on the Mornington Peninsula.

Both planes had two people on board, the spokesman said.

All four people died at the crash scenes.

They are yet to be identified.

Police are investigating and will prepare a report for the coroner with the assistance of the Australian Transport Safety Bureau.

Police are also keen to hear from anyone who may have dashcam footage of the collision, which happened close to the Hume Freeway.