A regional Australian airline has grounded six planes from its fleet after a propeller fell off one of them as it approached Sydney airport.

The near-disaster happened on Friday, with the crew shutting down the right-hand engine on the Saab 340 plane after "abnormal indications" before the propeller sheared off.

Despite the scare the twin-propeller Regional Express (Rex) plane carrying 16 passengers and three crew landed safely.

The airline said that while investigations were under way, it would remove from service all planes using similar propeller gearboxes and shafts, accounting for six planes from its fleet of 55.

"This is an extremely rare event and the only other recorded similar event was in 1991 when US carrier Comair's aircraft also landed safely after a separation of its propeller," said Rex chief operating officer Neville Howell.

"The Saab 340 aircraft is designed to climb, cruise and land on one engine, with appropriate levels of redundancy to cope with these contingencies."

The Australian Transport Safety Bureau has started an investigation.

Regional Express is Australia's largest independent regional airline, operating some 1,500 weekly flights to 58 destinations throughout Australia.

Mr Howell said credit must go to the plane's captain and crew for getting their passengers on the ground safely.

"The crew demonstrated enormous composure and discipline under extraordinary circumstances, and I commend their professionalism," he said.

"The captain displayed exceptional skills in landing the aircraft so smoothly in bad weather and strong winds, so much so that the passengers did not notice anything different."

The propeller has yet to be found.