Bali-bound passengers have been sent into panic as an AirAsia plane suffered engine issues just moments after take-off.

Flight QZ545 lifted off from Perth Airport just after 6.30pm on Sunday.

WATCH THE VIDEO ABOVE: Bali-bound flight forced to turn back over engine issue

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Travellers said it was not long before they heard loud bangs and saw flames coming from one of the Airbus A320’s engines.

“All the alarms all went off, and then it was just totally dead,” one passenger said.

“No lights, nothing.”

Another said, “it was like an explosion”.

“You could see the actual flames and this happened about six times,” they said.

“At first we thought it was lightning.”

A third passenger said they “really thought we were about to crash and die”.

“It was so scary because the plane started going down, up and down,” they told reporters.

The pilot diverted over the Indian Ocean, including circling Rottnest Island off the coast of Perth, for about an hour to burn fuel.

The plane then landed safely back at Perth Airport at 7.50pm, where it was met by fire crews.

All 108 passengers and six crew on board were OK and “disembarked without incident”.

“Shortly after take-off, the flight crew observed an abnormality in one of the engines, which was swiftly stabilised in accordance with standard operating procedures,” the airline said.

“After assessing the situation, the crew decided to conduct a turnback in line with operational safety and completed all required checklists before landing safely at Perth Airport.

“Engineering inspections are ongoing, and the aircraft is expected to return to service once all checks are complete.”

It was a “precautionary turnback” and the crew “responded swiftly”, Indonesia AirAsia chief executive Achmad Sadikin said.

“Throughout the situation, guests were kept informed by the crew, and arrangements were made to support their needs at the airport,” Sadikin said.

“Our team was focused on minimising the impact of the disruption to travellers, and we thank our guests sincerely for their patience and understanding.”

Passengers were put on a number of other flights on Monday morning, a spokesperson for Perth Airport said.