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The incident happened just after 10am over the NZOne Skydive Queenstown drop-zone, beside Jack’s Point.
A witness told the Otago Daily Times it appeared to involve a tandem skydive.
The witness said it appeared as though the parachute was "tangled" and the pair was "falling" before either the reserve or main parachute was cut away — it looked to have ended up in Lake Wakatipu.
A police media spokeswoman said there were no injuries reported as a result of the incident — "everyone’s accounted for and fine".
