all dead

After all these years I still think the OP's question was a good one and that the metaphysical aspects of Lost Horizon. while not emphasized in the story as told are there implicitly, as there are many facets to the film, and the possibility,--albeit remote--that the passengers are all dead early on a distinct one and indeed one could read the film as a tale of the paranormal, admittedly an odd take on the story but not one that I would laugh at. Books and movies are open to various kinds of interpretation, and the notion that the new arrivals at Shangri-La have just died, are being taken to a place that's essentially a kind of benign limbo, not heaven as we understand it, is one way to view it.

The pilot who had hijacked the plane died, but not the passengers. George dies much later after losing his sanity and hurling himself down the frozen heights. Robert made his way back to civilization but then returned to Shangri-La in the end.

So, no, I don't think "they all died in the plane crash landing" and nothing in the film suggests that they did.