Flight D7207 left the Gold Coast bound for Kuala Lumpur on Monday night but was forced to land in Brisbane a short time later due to a suspected birdstrike.
Several passengers say the plane’s right engine appeared to “explode” or catch fire.
“Successive sparks boom boom boom went off and some people were crying and calling out “oh my god oh my god,”” Passenger Eric Lim wrote on Facebook.
“That was quite an experience seeing the engine on fire,” Twitter user Hippie Tim wrote. AirAsia says a suspected bird strike caused the emergency.
The flight landed safely at Brisbane Airport at 11.33pm on Monday, with all 345 passengers and 14 crew on board uninjured.
Chief executive AirAsia X CEO Benyamin Ismail said the engine problems appeared to have been caused by a birdstrike and praised the efforts of the flight crew.
“We would like to commend our pilot and crew members for their professionalism and swift action to reassure passengers … and to land the aircraft safely.
“ Passengers have been taken to hotels and the airline is arranging a replacement flight, expected to leave this evening.
Early last week, another AirAsia plane was forced to make an emergency landing at Perth Airport after an engine malfunctioned 90 minutes into the flight to Kuala Lumpur.
That flight, D7237 with 359 people on board, on June 28 landed safely and investigations are continuing.
Video footage captured by a passenger showed the plane loudly vibrating and shaking after what passenger Brenton Atkinson said sounded like a small explosion.
“It was literally like you were sitting on top of a washing machine,” he told ABC radio.