On 7 January 2010, the crew of a Convair 580 aircraft, registered VH-PDW, were conducting a training flight from Bankstown to Tamworth, New South Wales (NSW). While on descent to Tamworth, the crew noticed smoke emanating from below the instrument panel. Shortly after, the smoke intensified and flames appeared. The flight crew declared an emergency and suppressed the flames using a portable fire extinguisher. The crew continued the descent and the aircraft landed without further incident.

A subsequent engineering inspection revealed that a small amount of insulation material had become detached and fallen onto the right red instrument panel light rheostat and surrounding wires. The rheostat had developed a 'hot spot' and consequently, the insulation absorbed the heat and transferred it to the wires, which produced smoke and flames.

The operator has advised the ATSB that, as a result of this occurrence, it has implemented a number of safety actions, including:

• all of the organisation's aircraft have been examined to ensure that there is sufficient clearance between the rheostats, insulation material and wires
• any insulation material located in close proximity to a rheostat has been removed
• a notice to crew was issued to emphasise the importance of recording defects in the maintenance log.