Regional Express has posted a media release on their website detailing a passengers iPhone 4 bursting into flames mid-flight.
"Regional Express (Rex) flight ZL319 operating from Lismore to Sydney today had an occurrence after landing, when a passenger’s mobile phone started emitting a significant amount of dense smoke, accompanied by a red glow.
In accordance with company standard safety procedures, the Flight Attendant carried out recovery actions immediately and the red glow was extinguished successfully.
All passengers and crew on board were unharmed."
From the photo it appears to be an issue with the battery, which wouldn't be the first time Apple has had such a problem. As we reported they recently just issued a recall for their first generation iPod Nano over battery issues.