Eleven people in a hot air balloon were killed when their aircraft hit power lines, burst into flames and crashed near Wellington in New Zealand.

The balloon went down near the small rural town of Carterton, 150 kilometres north of Wellington, on the country's north island.

Those on board included five couples and the pilot.

New Zealand police say it appears one of those couples jumped from the basket before it hit the ground, and their bodies were found about 200 metres from the crash site.

The victims are yet to be formally identified, and police say the bodies are badly burnt.

Investigators have five eye witnesses, three of whom work for the company that owns the balloon, the Early Morning Balloon Company, which is based in Carterton.

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 4 minutes 15 seconds 4 m 15 s Witness Don Cunningham describes the crash Download 1.9 MB

"It appears a fire has ignited on board, causing the hot air balloon to crash in farmland. Sadly, the pilot and 10 passengers onboard have not survived," Wellington district police commander Mike Rusbatch said.

"This is an absolutely tragic incident and our thoughts are with the families of the deceased."

Radio New Zealand reporter Hugh Barlow says he spoke to a cyclist who saw the crash happen from a distance.

"He knew the balloon, he had been up with his own family and he feels he probably knows who the pilot is," he said.

"He said he looked up and saw flames licking up the side of the big wicker basket. He immediately ran to the first house he could find and rang 111.

"When he came out, he said there was about 10 metres of flames trailing and the balloon was descending very quickly. He said he saw it disappear down to ground level."

Local resident Don Cunningham was walking his dog in the area when he realised the balloon was in trouble.

"I could then hear the burning but I couldn't see the balloon, so I was looking for the balloon and I could just see the top of it descending," he said.

"I thought nothing of it but then I heard some screaming and shouting and saw a large plume of black smoke."

Mr Cunningham says the balloon came down in farmland.

"The guy who flies the balloon, if it was the normal guy, he's incredibly experienced," he said.

"I've lived here nearly three years and he would fly on average twice a week even during the winter."

Emergency services attend the scene of the crash at Carterton. ( Getty: Marty Melville )

'Colossal speed'

David McKinlay was watering his garden when he looked up and saw the balloon in flames.

He says it was clear no-one would survive.

"Couldn't believe what I was seeing - there were flames leaping up the side of the basket towards the guy ropes of the balloon," he said.

"I dropped the hose, ran inside and dialled 111, and eventually by the time I got back the thing had completely disintegrated.

"I don't know what height it was but it was coming down at a colossal speed."

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Listen Duration: 1 minute 4 seconds 1 m 4 s Jill Stringer says conditions were perfect Download 504.7 KB

Jill Stringer from the local area health board says the weather conditions were fine.

"It was a perfect morning for ballooning this morning," she said.

"Our balloon pilots have such a fantastic safety record and this is just such a bizarre happening."

Ms Stringer says the terrain around Carterton is perfect for ballooning.

"That's why it's a bit of a centre for ballooning. It's flat and at this time of the morning ... there's minimal breezes and it was a lovely still morning," she said.

There are reports that the balloon is owned by the director of Ballooning New Zealand, Lance Hopping.

The Department of Foreign Affairs is trying to confirm if any Australians were on board.