One passenger, Tim Joga, said he heard "four or five bangs" before seeing an "orange light" outside.
"It started making amusing noises when we were getting ready for take-off", she told Fairfax Media.
Malissa Siaea was travelling with her husband to Malaysia for their honeymoon when "fire sparked out of the right-side engine" less than 20 minutes into the flight.
She said no one seemed to react initially until one man shouted out: "What the heck is happening?"
The airline later explained in a statement that the plane had experienced "a suspected bird strike to its starboard engine".
The turbulence was so severe on flight D7237 that the pilot asked passengers to pray twice.
NBA Awards show: Malcolm Brogdon wins NBA Rookie of the Year
Now he moves forward as a valued piece of the core of a team that is a rising contender in the Eastern Conference. McGruder started 65 games this season for the Miami Heat, averaging 6.4 points and three rebounds per game.
Many passengers would have seen the flames, Mr Jago said, describing the mood among passengers as "tense but calm".
"Two bird remains were found on the runway", the low-priced carrier said in a statement adding that the starboard engine had experienced a "suspected bird strike".
CASA will review the incident and the Australian Transport Safety Bureau is investigating.
The Malaysian carrier said that the flight was carrying 345 passengers and 14 crew members and also added that it was arranging a special flight to take the passengers to Kuala Lumpur. "I'm not fussed about living or dying", he said and described the mid-air encounter as "exciting".
"We are following all regulatory guidelines to ensure the safety and wellbeing of our guests".
The June 28 flight, on which 359 people were travelling, landed safely and investigations are continuing. The flight was bound for Kuala Lumpur.