A passenger aboard an Virgin Australia flight diverted to Invercargill after an engine began spewing out flames says the airline's response has been a "slap in the face" to traumatised travellers.

Melbourne man Franz Demhardt said he booked and paid for his own flights out of Invercargill because the 18-hour journey proposed by the airline was "unacceptable".

He said he was shocked to find himself travelling alongside the crew from the stricken flight while seats that could have taken his fellow passengers remained unfilled.

Virgin Australia said 15 passengers travelled on a more direct service from Queenstown the next day, but there were not enough seats to accommodate everyone.

Passengers pray as fire shoots from engines

Demhardt said he and his partner were seated on their flight home from Queenstown on Monday evening when - moments after take-off - he heard a loud bang and saw flames belching from the engine near his window.

"You could see the fire and explosions and they kept coming," Demhardt said

The mood inside the cabin, at least on that section that saw what happened, quickly changed and everyone became very distressed and panicked. People started to recite prayers."

Demhardt took to checking the flight's progress on the Flightradar24 website where he could see the plane had headed south towards Invercargill.

Nearly 50 minutes after take-off, the aircraft touched down in Invercargill.

"It was quiet. There was no clapping or anything like that. It was just quiet relief. Coming from a state where you're basically resigned to the fact that you might die to then being down on the tarmac, having landed safely - thanks to the good work of the pilot - it is a state of relief. But everyone was fairly quiet and and it's obviously a moment of shock," he said.

Passengers were herded from the plane and assisted by Invercargill Airport staff who told them they would be bussed to a hotel and contacted by the airline.

But no contact came. At about 10pm, Demhardt checked his booking on Virgin Australia's app and saw an itinerary change.

He said the airline proposed a bus trip back to Queenstown followed by a flight to Brisbane and then on to Melbourne - interspersed by hours waiting in between - 18 hours of travel in total.

Demhardt said he was made to feel "like a nuisance" by call centre staff who said the airline's plan had been put in place for "safety reasons".

Flames could be seen near the engine compartment on the Virgin Australia flight moments after take-off on Monday night (Image: Supplied/Michael Hayward).

Virgin crew fly Air New Zealand from Invercargill

Demhardt made the call to book and pay for his own flights home with Air New Zealand - but was shocked to find himself sharing the plane with crew from the Virgin Australia flight.

He said neither of the flights - from Invercargill to Christchurch and then to Melbourne - appeared to be fully booked and he believed each had the capacity to include the 67 passengers from the diverted flight.

"It was a slap in the face to see the flight crew on the Air New Zealand flight's going back to Melbourne. It really left a sour taste. Putting your passengers through an 18-hour journey with horrendous long waiting times after a traumatic experience like this emergency landing. It's not okay. It's simply not okay," he said.

Demhardt said he had applied to Virgin Australia for reimbursement for his flights and was in the process of filing a formal complaint.

He said he was hugely grateful for the skill of the airline's pilots and the Invercargill Airport staff who worked after hours to help him and his fellow passengers, but he would never fly Virgin Australia again.

A Virgin Australia spokesperson also praised the support of Air New Zealand, Invercargill Airport and local emergency services in their handling of "very challenging circumstances".

They said they had been working directly with Demhardt to address his concerns and pointed out that he had been contacted via email the day after the flight and, at that time, appeared to be unavailable to reach by phone.

They said phone calls were made to all passengers to check on their wellbeing and passengers were offered "advice on compensation for out-of-pocket expenses" as well as "free and confidential counselling services".

Fifteen passengers had been flown directly to Melbourne from Queenstown on another airline the day after the emergency landing but seats were not available to include all passengers aboard that flight.

"The situation was made challenging by the fact that Virgin Australia does not operate its own services out of Invercargill and has a limited number of services from Queenstown (e.g., we do not offer a daily service to Melbourne). The next available Virgin Australia option was a Queenstown service to Brisbane with a connection to Melbourne, which was offered to the remaining passengers.

"While we appreciate that this was not an ideal solution, it was the best alternative Virgin Australia was able to provide taking into consideration a number of variables, in an operationally complex environment unfolding late on a Monday night," the spokesperson said.

The spokesperson did not offer comment on the transportation of the flight crew other than to say they "returned from Invercargill consistent with our post-incident protocols".

"We were impressed by the calm and measured demeanour [the pilots] demonstrated while simultaneously ensuring they seamlessly executed their standard operating procedures as part of an emergency landing.

"Our pilots and cabin crew at all times followed the instructions of air traffic control, New Zealand immigration and biosecurity services, and airport staff in managing what was ultimately a calm and successful disembarkation. We are deeply appreciative of the professionalism and guidance of all authorities as these circumstances unfolded."

Main image (RNZ/Supplied): Franz Demhardt (left) and his partner Luke Andrews say they thought they might die as flames began to belch from the engine of their Virgin Australia flight on Monday evening.