Balloons from the Hot Air Balloon Fiesta 2009 (photo courtesy of Creative Commons).

The crash occurred in Carterton, a town northeast of Wellington. All the victims were from the area. There were no survivors.

Wellington District commander Superintendent Mike Rusbatch told CNN that a fire likely started on board the balloon, sending it plummeting to the ground.

Two passengers had attempted to jump from the burning balloon.

Rusbatch told the Associated Press that it appeared the balloon's basket struck power lines that set a fire on board.

Witness David McKinlay told the news organization that he saw the burning balloon above the trees.

"It looked like [the pilot] tried to raise it a bit higher," McKinlay said. "All of a sudden there was just 10 meters of flames."

The balloon then rose to 500 feet before it dropped quickly.

It turned to "just a sheer flame as it hit the ground" with a bang, McKinlay said.

A spokeswoman for the Wairarapa District Health Board, Jill Stringer, told CNN the weather was likely not a factor in the crash.

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

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Reach executive producer Agnus Dei Farrant here.