More than 70 people have died after an Indonesian air force transport plane carrying military personnel and their families ploughed into a residential area in the city of Medan shortly after take-off.

Rescue teams are using heavy machinery to remove the wreckage of the C-130 Hercules as they searched the rubble of a building shattered by the impact.

Witness accounts suggest the plane suffered an engine fire before crashing.

Air force spokesman Rear Marshal Dwi Badarmanto said 74 bodies have been recovered so far. He said about 30 of the dead have been identified and include air force personnel and members of their families.

Air force officials say there may have been more than 100 people on the C-130, and there is little hope of finding survivors. It is unclear how many people on the ground were killed.

The crash of the transport plane, which had been in service since 1964, occurred not long before midday and just two minutes after it took off from Soewondo air force base.

Air force chief Air Marshal Agus Supriatna said the pilot told the control tower that the plane needed to turn back because of engine trouble.

"The plane crashed while it was turning right to return to the airport," he said.

He added there were 12 crew and more than 100 passengers on the plane before it reached Medan on Sumatra, one of Indonesia's main islands. It had travelled from the capital, Jakarta, and stopped at two locations before arriving at Medan.

Many passengers were families of military personnel. Hitching rides on military planes to reach remote destinations is common in Indonesia, a sprawling archipelago that spans three time zones.

Indonesia has a patchy aviation safety record. Between 2007 and 2009, the European Union barred Indonesian airlines from flying to Europe because of safety concerns.

The country's most recent civilian airline disaster was in December, when an AirAsia jet with 162 people on board crashed into the Java Sea en route from Surabaya to Singapore.

There have been five fatal crashes involving air force planes since 2008, according to the Aviation Safety Network, which tracks aviation disasters.

Medan resident Fahmi Sembiring said he saw the grey Hercules flying very low.

"Flames and black smoke were coming from the plane in the air," he said.

Mr Sembiring said he stopped not far from the crash site and saw several people rescued by police, security guards and bystanders.

Another man, Janson Halomoan Sinagam, said several of his relatives were on the plane when it left Medan headed for the remote Natuna island chain.

"We just want to know their fate," he told MetroTV, weeping. "But we have not yet received any information from the hospital."

The accident is the second time in 10 years that a plane has crashed into a Medan area. In September 2005, a Mandala Airlines Boeing 737 crashed into a crowded residential community shortly after take-off from Medan's Polonia airport, killing 143 people including 30 on the ground.

Medan, which has a population of about 3.4 million people, is the third most populous city in Indonesia after Jakarta and Surabaya.

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