At least 116 people are feared dead after an Indonesian air force transport plane crashed into a major city shortly after take-off and exploded in a fireball.

Buildings were left in ruins and cars reduced to flaming wrecks when the Hercules C-130 came down on Tuesday in a residential area of Medan, a city of two million on the island of Sumatra.

Air force chief Agus Supriatna said the manifest showed there were 113 people on board the plane – 12 crew and 101 passengers – when it crashed, and he did not believe any had survived.

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“No, no. No survivors, I have just returned from the site,” he told AFP in answer to a question.

So far, 49 bodies had been recovered and taken to hospital, he said.

Many passengers were likely to be family members of servicemen and women, said a spokesman for Medan air base, where the plane took off. At least one child has so far been confirmed killed.

The local search and rescue agency also said that three people were killed on the ground when the 51-year-old plane went down near a newly built residential area, hitting a massage parlour and a small hotel.

A rescue operation swung into action, with ambulances ferrying bodies from the site, and crowds of anxious residents gathering around a police cordon to view the smouldering wreckage.

Residents of Medan described the terrifying moment just after midday when the plane came down.

“It was very scary,” said Novi, an employee of an international school who goes by one name, describing how she heard the plane and saw it flying very low before the crash.

Another local resident Januar, 26, said the aircraft appeared to be in trouble just before the accident.

“I saw the plane from the direction of the airport and it was tilting already, then I saw smoke billowing.”

Military personnel inspect the wreckage of an Air Force cargo plane that crashed in Medan, North Sumatra. Photo: AAP

Medan’s police chief described the bodies as “crushed by debris of the buildings and the fuselage”.

Indonesian President Joko Widodo expressed sorrow at the accident, tweeting: “May the families be given patience and strength… May we remain protected from disaster.”

The plane took off at 12.08pm (1508 AEST) from the air base and crashed in the city about two minutes later, about five kilometres from the base, according to the military.

Shortly after take-off, the pilot had asked to return to base, Supriatna said, adding the aircraft might have suffered engine trouble.

But he added the plane was in “very good condition” and had made several stops before arriving in Medan.

Medan is the biggest Indonesian city outside the main island of Java and is a major economic centre.

-AAP