Passengers and crew on a Regional Express aircraft flying from Albury in NSW have made a lucky escape after one of its propellers sheared off in mid-flight, narrowly avoiding hitting the wing and tail and forcing its pilots to make an emergency landing at Sydney Airport.

The Saab 340, carrying 16 passengers and three crew, was about 10 nautical miles from Sydney Airport when its right-hand propeller flew off, leading the two pilots to declare a PAN, which is one step down from a full-scale Mayday.

The pilots are understood to have felt a vibration and were about to shut down the right-hand engine when they looked out the cockpit window to see the propeller – rotating at thousands of revolutions per minute – disappear over the plane's wing.

Following the PAN call to air-traffic control, emergency services readied for the 34-seat plane's arrival at the airport, but it landed safely shortly after midday on Friday.