Inquiry underway after 800 passengers' lives risked by Interislander ferry losing engine power in Cook Strait

An inquiry is underway to find out why an Interislander ferry lost engine power in the Cook Strait last night, endangering the lives of 800 passengers.

The ferry drifted towards land, which the Harbourmaster says could have ended in disaster.

Passengers were relieved to be on dry land when they arrived at the Interislander Wellington terminal at 9:30pm last night.

"I'm going to be honest, everybody was frightened," said one passenger.

"They put life jackets on us, that was not very reassuring," said another lady.

"It was the longest ferry ride ever," said another.

It was 4:55pm when the Kaitaki lost all engine power just off Wellington's South Coast. Gusts up to 100km/h pushed the ship closer to the rocky coastline. Although it had put out anchors to steady the boat, they didn't grab hold until it reached shallower water.

The marine ship tracker shows the ferry drifted a nautical mile towards land.

"Ship's crew did exceedingly well. All the reports I've seen from on board they did everything they should," said Wellington Harbourmaster Grant Nalder.

Onboard, its 800 passengers donned lifejackets as an emergency was declared and they were assembled at emergency stations.

"They declared a mayday on the radio, that means there is a danger to life - that is a very serious step," Nalder said.

It activated an emergency operation on the South Coast in case passengers had to abandon ship.

The rescue plan included the Harbourmaster, Police, NZ Defence Force, KiwiRail, rescue helicopter organisations, ambulance services and other emergency services.

About 25 vehicles and drivers from the local four-wheel-drive club were also sent to the Red Rocks carpark, the only vehicles that could get rescuers close enough in the rugged terrain.

Duncan Grocott, from the Wellington Cross Country Vehicle Club, said they acted immediately.

"We got a message from LandSar to come and assist in possible recovery of people from the south coast here," he told Newshub.

Luckily the boat restored some of its engine power and by 7:30pm it slowly limped its way back to Wellington, escorted by the two harbour tugs.

Although, whether the tugs would've had the power to tow the boat, if its engine hadn't re-started, is unclear.

"Tugs are just for harbour use, so that was trying conditions," Nalder said.

The Transport Accident Investigation Commissioner has launched an inquiry into what went wrong, and Maritime NZ is also investigating.

Interislander executive general manager Walter Rushbrook said they're trying to get to the bottom of it.

"It'll be investigated in full, at this stage we don't know - and we've got a team of people who are going to go on the ship shortly to look into it."

There's a sense of relief that a repeat of the Wahine Disaster was avoided.

"If they had abandoned ship that would have been quite challenging," Nalder said.

Maritime NZ has imposed conditions on Kaitaki, preventing it from leaving Wellington Harbour until initial investigations and conditions are met.