Tourist killed in tandem skydive as instructor found alive in freezing NZ waters

A tandem skydiving tragedy has claimed the life of a tourist in New Zealand, while his jumping partner has miraculously survived.

A water and aerial search failed to find the foreign national passenger on Wednesday after he and the instructor "dropped" into Lake Wakatipu, near Queenstown Point at about 1.30pm.

The instructor was plucked from the frigid waters after about 20 minutes and released from hospital in the evening, Inspector Olaf Jensen said.

Members of the public witnessed the pair fall into the lake, and Insp Jensen praised them for rushing to the instructor's aid.

Police divers are set to look for a foreign national still missing after he and his skydiving instructor plunged into a lake near Queenstown on Wednesday. Source: Getty

"The self tasking of those people contributed to the survival of the jump master," he said.

"He was very lucky to be found."

The water-based search for the passenger was suspended at about 4.30pm on Wednesday when rescuers, including up to 12 vessels, were unable to locate him.

Police are now focused on a recovery mission rather than a rescue with dive squad members on their way and considering whether it's possible to use sonar equipment to find him

Insp Jensen said it was unclear whether sonar equipment would work because the lake was about 250m deep where the two crashed into it.

Two investigators from the Transport Accident Investigation Commission are also due at the site.

It said the circumstances, as reported, are that during a commercial tandem skydive - where the passenger is attached to an instructor - there was a possible parachute malfunction.

The company involved in the jump, Queenstown-based NZONE Skydive, described the instructor as highly experienced and having completed thousands of jumps.

It's the second incident for the business in less than a year after a crash-landing last January.

It has suspended operations while the search continues.