Early Thursday afternoon, the NSW Rural Fire Service (RFS) said it had "lost contact" with a Lockheed C-130 Hercules being used in water bombing operations in the Snowy Monaro area.

Firefighters, emergency services and military personnel launched a search and rescue operation and located the wreckage.

However, RFS Commissioner Shane Fitzsimmons said all the crew members were "tragically" killed.

"[The aircraft] impacted heavily with the ground and initial reports are that there was a large fireball associated with the impact of the plane as it hit the ground," he said.

Commissioner Fitzsimmons said there was no indication on what caused the accident, but the Australian Transport Safety Bureau (ATSB) was working to determine what happened.

The C-130 was contracted through North American aerial firefighting company Coulson Aviation (USA).

The company has grounded their Large Air Tankers fleet as a precaution and as "a mark of respect".

The grounding of the water bombers by Coulson Aviation will have an immediate impact on aerial firefighting capacity, Commissioner Fitzsimmons said, but he understood their decision.

It's absolutely warranted and I support them 100 per cent," he said.

"They are very mindful of the emotional and psychological effect that such a tragedy will have on the rest of their workforce, not just here in Australia but in North America or Canada."

Commissioner Fitzsimmons said all three occupants on the plane were American firefighters, and he extended his deepest sympathies to their families.

"Our hearts are with all those that are suffering in what is the loss of three remarkable, well respected, crew that have invested so many decades of their life into firefighting," he said.

The RFS said the aircraft was engaged in "routine" water bombing activities at the time of the crash.

Flight tracking website Flightradar24 showed the flight path for the C-130 suddenly stopping south of Canberra.

According to its flight data, the aircraft departed RAAF Base Richmond, in western Sydney, about 12:05pm.

However, soon after 2pm the aircraft stopped in an area called Peak View, north-east of Cooma.

The Civil Aviation Safety Authority (CASA) said the aircraft was brought into Australia in August, 2019 and that it had all the safety approvals required before operating in Australia.

The aviation authority said it had reached out to its US counterpart, the Federal Aviation Authority, about the incident.

CASA said it would "not be taking any action which will affect aerial firefighting operations".

Coulson Aviation said it would be sending a team to Australia as soon as possible.

"Our thoughts and prayers are with the families of the crew members onboard," it said in a statement.

In 2017, the NSW Government invested $38 million over four years for three Large Air Tankers to be used in firefighting efforts.

The aircraft are capable of dumping more than 15,000 litres of water or fire retardant at a time.

Story provided by ABC News.

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