A New Zealand Police statement said the accident was reported at 7:26 a.m. at Clareville, near Carterton in the lower North Island.
"It appears a fire ignited on board, causing the hot air balloon to crash in farmland. The pilot and 10 passengers onboard have not survived," said the statement.
Wellington Police District Commander Superintendent Mike Rusbatch said in the statement the accident was "absolutely tragic. "
"We are in the process of notifying next of kin, however we will not be releasing any names until all next of kin have been advised," said Rusbatch.
A disaster victim identification team was en route to the scene to begin the process of identifying the bodies.
Police were working with the Fire Service, the Coroner`s office, the Transport Accident and Investigation Commission, Civil Aviation Authority and the Department of Labor to investigate the cause of the crash.
The crash site was cordoned off and only emergency workers and the families of those in the balloon were being allowed through, Radio New Zealand reported.
Television New Zealand (TVNZ) reported the crash was New Zealand`s worst aviation disaster since an Air New Zealand passenger jet crashed into Mount Erebus in the Antarctic with the loss of 257 lives in 1979.
Carterton resident Don Cunningham told TVNZ that he saw the canopy going down in what looked like a controlled descent in perfect conditions with hardly any wind.
He said he heard screaming and shouting and saw a big pall of smoke.
Eyewitness Rosalee Thurston told TVNZ her family saw "a puff of smoke in the sky and then flames as the balloon fell to the earth. "
TVNZ quoted eyewitnesses as saying that the balloon was about 150 meters in the air when "things seemed to go wrong" and it burst into flames, before it "came down like a rocket" with a " huge bang."
They said the balloon might have hit a power pole on the way down, cutting power to the area for several minutes.
New Zealand`s Transport Accident Investigation Commission announced it had begun an inquiry into the accident.
An investigation team was being assembled of up to four investigators, said a statement from the commission.
Hot air balloon flights are a popular attraction for visitors to the area and normally take off in the early morning.
(C003)
Editor: Ella Syafputri
Copyright © ANTARA 2012
