At approximately 1930 Eastern Summer Time (ESuT), the tug driver called the International Terminal Apron Surface Movement Controller (SMC) and requested push-back clearance and clearance to tow the Fokker F-28 VH-EWG to the domestic terminal. The tug driver was advised that a clearance would be unavailable for about 30 minutes pending the arrival of VIP traffic and to call SMC on Sydney Ground frequency 121.7 MHz for clearance.

Airbus A320, VH-HYC, received a taxi clearance at 1931. The aircraft, scheduled to fly to Perth, had an operational requirement to use runway 34.

At 2007, the tug driver called SMC and requested clearance for pushback and tow from bay 3 at the international terminal to bay 17D at the domestic terminal. Approval was given to push back and the driver was instructed to report when ready to tow. Two minutes later the tug driver reported ready to tow. SMC cleared the aircraft to tow.

As the F-28 under tow proceeded along taxiway Charlie heading east towards runway 34, the SMC requested a clearance from the Aerodrome Controller for the F-28 to cross the runway. The Aerodrome Controller refused the request and advised the SMC to expect extended delays due to a backlog of departing traffic. Runway 34 was the only runway available as the route of the VIP motorcade temporarily closed runway 07.

The Aerodrome Controller, after visually scanning runway 34 to ensure the runway was clear, issued a take-off clearance to VH-HYC.

As VH-HYC approached rotate speed, the crew sighted the F-28 under tow, crossing the runway ahead. The takeoff was continued as it was apparent to the crew their aircraft would reach a safe height before VH-HYC crossed taxiway Charlie. The crew then called the Aerodrome Controller and advised that an F-28 under tow had crossed runway 34. The transmission was the first indication to the five Air Traffic Services persons on duty in the tower that a runway incursion had taken place. The crew of VH-HYC reported that their aircraft was about 600 ft above the runway when it overflew taxiway Charlie.