The Australian Transport Safety Bureau is investigating the "hard landing" involving Picture This Ballooning about four kilometres from Lilydale in the Yarra Valley.
The ATSB says while landing in windy conditions the balloon initially touched down in a field before the pilot manoeuvred over the fences of adjacent fields.
The balloon's basket was dragged 30 metres while landing, seriously injuring two of the 16 people on board.
As part of the investigation, ATSB investigators will examine weather data and operator procedures, and interview the pilot and witnesses.
The same operator was investigated over a separate incident near Coldstream, also in the Yarra Valley, in March of 2019.
Two people were seriously injured when the air balloon basket tipped over during a vehicle-assisted deflation.
Before the accident, the balloon landed without incident on a private property.
As a result of that investigation, the company updated their procedures and the ATSB released a safety advisory notice to all commercial balloon operators about the risks associated with vehicle‑assisted deflation.
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