Corporals Wayne Shorthouse, 32, and Mike French, 34, faced catastrophe as they tried to perform a stacking display at Whitehaven Air Show in Cumbria, northern England.
The drama played out above the heads of anxious spectators ended with Shorthouse wrapping his legs inside the ropes of his colleague's deflated parachute and guiding him to the safety of the town's Queens Dock.
A statement on the Facebook page for the airshow said one of the parachutists' chutes failed to deploy properly.
He was able to see exactly how the rescue unfolded through a videographer's powerful zoom lens.
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The two friends were part of a six-man team jumping from a PAC 750 aircraft.
Shorthouse was the first to exit the plane, with his colleague following a split second later. The manoeuvre then required French to "collide" with the partner he has been jumping with for almost five years.
As the "pin", French headed towards his comrade at speed so they could collide and Shorthouse grab his parachute and tuck his feet into it.
"It's something we practise in training, and everything was by the book. I just started shouting instructions to him so he could guide us in. The first thing I said was 'Get it off', to let him know there was a problem.
The two men did not land where they were supposed to for the display but in a nearby marina busy with big yachts with masts, Sherwen said.
"For the first time in 25 years they had a parachute fail. One team member caught his team-mate & brought him into Queens Dock. Our safety procedures worked perfectly & a huge thank you to Whitehaven Marina for getting them out of the water so quickly."
A subsequent statement confirmed that the team members were "both fine" following their splash landing.