Three American firefighters have died when a C-130 water tanker plane crashed while battling a blaze in southern NSW in Australia on Thursday.

ACT Emergency Services confirmed the large air tanker crashed while fighting a blaze near Cooma, north-east of the Snowy Mountains.

"Today again demonstrates the fire season is far from over," said Premier Gladys Berejiklian.

"Our thoughts are not just with family and loved ones but for anyone who feels impacted by what has unfolded this afternoon. We can't thank enough people who continue, notwithstanding the conditions, to put their safety at risk to protect lives and property of others."

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RFS Commissioner Shane Fitzsimmons said that Coulson Aviation, the Canadian operator of the C-130 aircraft, had grounded their fleet on Thursday afternoon as a mark of respect for the victims and to re-assess safety conditions.

The missing plane was a repurposed C-130 Hercules, built in America by Lockheed Martin. It took off from Richmond RAAF base at 1pm, and disappeared from the flight radar just after 2pm.

"First and foremost, our thoughts and prayers are with the three occupants who routinely crew that specialised aircraft and, of course, our wonderful partners in Coulson Aviation, who have a long and respected reputation of working high capacity aircraft in firefighting here in New South Wales and overseas in the Northern Hemisphere," he said.

Fitzsimmons said that the cause of the crash was not yet known. He will not publicly identify the victims, who are all American, until families have been notified.

The owners of Coulson will be on the first available flight out of Canada they can get on, and are expected to be here within 24 hours, Fitzsimmons said.

"As the Premier indicated, it is a confronting and sobering reminder of the inherent risks associated with firefighting and we've seen all too often this season, unfortunately, the tragic consequences that can come as a result of these significant bushfires that we've seen burning across New South Wales," he said.

Fitzsimmons praised the trio as "absolute professionals," and valued members of the firefighting fraternity.

"The crew on board were well known, not just to their colleagues here in Australia, but we're also reminded that a number of our US colleagues that are embedded in some of the incident management teams right now, including down in the high country, actually had personal relationships with them," he said.

"Our hearts are out with all those that are suffering what is the loss of three remarkable well-respected crew that have invested, you know, so many decades of their life into firefighting and fire management, and are professionals in the aviation sector in the aviation firefighting sector."

Coulson Aviation is a privately-owned family company based in Canada. The Coulson family released a statement saying their "thoughts and prayers are with the families of the three crew members onboard."

Helicopters and an Air Force plane circled the Snowy Monaro region after contact was lost with the Large Air Tanker which was working on bushfires in the area.

A Boeing P-8 Air Force plane, which according to the ADF is "a cutting edge maritime surveillance and anti-submarine aircraft," had been circling an area near Cooma, north-east of the Snowy Mountains.

The Adaminaby Complex fire was burning at emergency level in the region before being downgraded to "watch and act", while visibility remains low due to bushfire smoke.

At a C-130 Hercules demonstration water drop in 2017, then NSW Minister for Emergency Services Troy Grant said, "this aircraft can dump 15,000 litres of water or fire retardant at a time and will be used for direct attacks on both bush and grass fires, to create containment lines, and to provide urban interface protection."

The RFS has a handful of its own aircraft but the vast majority of its aerial efforts are organised through contractors. Two weeks ago, a contracted helicopter crashed into a dam near the border with Victoria.

The RFS uses hundreds of contracted machines to assist in firefighting efforts, although many of them badge themselves with the RFS insignia while associated with the organisation.