A pilot and a TV camera operator were filming a promotional shoot for an ex-military jet company when their aircraft crashed into waters off the Mornington Peninsula.
Crews resumed scouring Port Phillip Bay at first light on Monday for any sign of camera operator James Rose and the pilot, who were on board when a Jetworks Aviation flight went down about 1.45pm on Sunday.
The pilot has been named in media reports as Jetworks Aviation owner Stephen Gale, a highly experienced flyer.
The rescue mission shifted to a recovery mission later on Monday, with both men presumed dead.
The plane was one of two Viper S-211 Marchetti aircraft conducting a civilian formation flight about 12km west of Mount Martha.
The planes collided mid-air and one crashed into the water while the second landed safely at Essendon Airport, the Australian Maritime Safety Authority confirmed.
Both planes had a pilot and passenger on board.
Australian Transport Safety Bureau chief commissioner Angus Mitchell on Monday said the aircraft's occupants were filming a promotional video for Jetworks Aviation when the plane went down.
The planes were in close proximity by necessity given they were formation flying, Mr Mitchell said.
"Something obviously has gone wrong that the two of them have come into contact," he told reporters.
"They are fast jets so they're capable of doing well over 700km/h, so exactly what was happening at this particular point in time, we're yet to determine."
The safety bureau planned to interview the surviving pilot on Monday afternoon, Mr Mitchell said.
Jetworks Aviation, based at Essendon Fields, hosts flight training and joy rides, with one package offering a 45-minute two-jet fighter formation flight.
The business was created for the TV documentary Any Fool Can Fly, which is yet to air, according to the show's website.
The series was set to show a "group of high achievers" attempting to master flying, aerobatics and formation, with Australian comedian Tommy Little among the "student pilots" featured.
Rose, a well-known and experienced drone operator, has worked on high-profile TV shows for the Nine and Seven Networks and production company EndemolShine, which produces MasterChef.
He tagged a video production company in a story posted to social media before the crash, which appeared to show him sitting in the cockpit of one of the jets.
Victoria Police Inspector Terry Rowlands on Monday confirmed search and rescue efforts for Rose and the pilot had shifted to a recovery mission.
Several vessels were aiding the search for the aircraft wreckage about 5.5km offshore.
The search zone stretched across several kilometres, Insp Rowlands said.
"Divers haven't entered the water as yet as I understand and won't do until there is some wreckage that is located," he said about midday on Monday.
"The search that's being undertaken now is to find any debris that may be floating ... sonar equipment is being used to try and locate anything that might be on the sea floor."
Port Phillip Bay covers 1950sq km and is 24m at its deepest point.
Some debris from the wreckage was found on Sunday and there were witnesses to the incident.
Monday's search was expected to wrap up about 9pm if police did not find the wreckage.
The jet that made it back to Essendon landed about 1.50pm on Sunday, according to flight records.
The Australian Maritime Safety Authority handed over control of the search to Victorian Police about 7.30pm on Sunday.
A preliminary report from the safety bureau is due to be released in two months.
The Viper S-211 is an Italian-made fighter plane.
There have been four mid-air collisions in Australia in the past 12 months.
Australian Associated Press