Attempts to secure it and bring it to shore were initially hindered by stormy weather and heavy seas, but authorities managed to board the vessel last night.
Mr Blair was not on board, and police said there was no immediate indication of what happened to him.
His brother Peter said while some members of the family were clinging to hope that he would still be found alive, he said he had personally "sort of accepted Kerry has gone".
"There was a glimmer of hope that he might have been alive, but not to have been aboard was pretty destroying," he told APNZ today.
The news came as a thunderbolt.
"I was pretty upset. It's my brother," Peter said.
Police officers onboard the Navy vessel HMNZS Wellington battled 10-metre swells to board the Erie.
The naval vessel will now attempt to tow Mr Blair's boat to New Plymouth. Because of rough sea, it was not expected to arrive today, police said.
"Once the Erie is back in port a detailed examination will be made to try and find some indication as to what has happened to Mr Blair," police said.
Peter said he accepted that all official search operations for his brother would cease.
It was likely he would now be filed as a missing person, he said.
"I understand it.
"They don't know where Kerry would be, or where to look. If he fell overboard, it's a huge ocean, you can't look out there.
"As far as police are concerned it's the end of things.
"Everyone is pretty grieving and trying to come to terms with it right now. We have no idea where to go."
Peter said the family hoped a forensic examination of the boat would answer all of the questions that they had into the unexplained disappearance.
