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A Beech 200 was conducting an instrument flight rules (IFR) flight from Lismore to Glen Innes. The pilot gave a departure report to the Brisbane Sector 2 radar controller, and reported climbing through 3,500 ft. The controller advised that there were no other aircraft observed on the radar display. That departure report was also heard by the crew of an IFR Saab SF-340 that had just departed Casino on a flight to Williamtown, via Point Lookout. The Saab was climbing through 2,700 ft when the crew became aware that both aircraft were approximately 5 NM south-west of Lismore. The Saab crew descended to 2,500 ft, in order to establish 1,000 ft vertical separation from the Beech. The Saab crew subsequently saw the Beech pass from left to right, about 1 NM in front of their aircraft, as the Beech climbed through patches of cloud just under the main cloud base of 4,000 ft. The Beech pilot also saw the Saab pass below his aircraft.

Due to their proximity to each other, Lismore, Ballina and Casino aerodromes were encompassed by a non-standard Mandatory Broadcast Zone (MBZ), and used a common radio frequency of 124.2 MHz. The MBZ was approximately 60 NM long and 30 NM wide, and extended from the ground to 5,000 ft above ground level. The intent of the common frequency was to enable pilots operating at any of those aerodromes to hear transmissions from other pilots, so that they could coordinate operations in order to minimise the risk of conflict. Pilots were required to monitor the MBZ frequency when operating within the MBZ. They were also required to broadcast flight details when inbound to, taxiing at, and departing from an aerodrome within the MBZ.

The pilots of both aircraft had made the required broadcasts; however, neither received a response from any other aircraft. While taxiing at Lismore, the Beech pilot had monitored a transmission on the MBZ frequency from another pilot, but disregarded it as that aircraft was operating in the Ballina area. A recording device was installed at Lismore aerodrome to monitor aircraft using that facility. The majority of recorded transmissions from aircraft operating at Lismore were clear. Transmissions recorded from aircraft operating at Ballina and Casino were generally clipped or garbled, and more difficult to understand. The Saab crew later reported that pilots of aircraft on the ground at Lismore were unlikely to hear radio transmissions from aircraft on the ground at Casino, and vice versa.

At the time of the occurrence, both aircraft were operating in non-controlled Class G demonstration airspace. As part of that demonstration, modified procedures had been introduced, including the removal of the directed traffic information service previously provided by flight service, and the introduction of a radar information service provided by air traffic control. The provision of that service to pilots was dependent upon their aircraft being radar-identified. The secondary surveillance radar code from the Beech was not detected by the air traffic control radar system until it had climbed through an altitude of 3,300 ft. The Saab was not detected until it had climbed through approximately 3,000 ft.

Prior to the commencement of the demonstration, pilots of IFR aircraft were provided with traffic information on other IFR aircraft, in accordance with guidelines detailed in the Manual of Air Traffic Services and the Aeronautical Information Publication. Pilots operating an IFR flight from a non-controlled aerodrome were required to contact flight service by radio when taxiing. A flight service officer would then provide traffic information to pilots of conflicting aircraft that were not on the MBZ frequency. Based on that procedure, the Saab crew and Beech pilot would not have been provided with mutual traffic information, as they were both operating on the MBZ frequency at about the same time. However, traffic information was required to be passed to pilots of IFR aircraft climbing or descending through the level of another conflicting IFR aircraft. The overriding intent of the traffic information service was to issue such information if there was any doubt regarding the possibility of a confliction.

The Beech pilot had requested radar service information from air traffic control while taxiing at Lismore. The controller issued the pilot with a secondary surveillance code for the flight and advised that a radar information service would be provided when the aircraft was identified on radar, and that there were no other aircraft observed in the area.

Both aircraft were fitted with dual very high frequency (VHF) radio transmitters and receivers. The pilots were monitoring the MBZ frequency on one receiver while also monitoring the air traffic control frequency on the second receiver, in preparation for requesting a clearance to enter Class E controlled airspace at 8,500 ft. The Beech pilot stated that he normally would not have monitored the air traffic control frequency until passing 4,000 ft, but decided to contact the controller early to request the radar information service. Prior to the commencement of the demonstration period, pilots would normally have simultaneously monitored the MBZ and flight service area frequencies to assist in maintaining their situational awareness during the departure phase.

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