The pilot of an Instrument Flight Rules (IFR) CT4 Air trainer made an inbound report on the Armidale common traffic advisory frequency (CTAF) when at 8 NM southwest of the aerodrome. Four minutes later the pilot broadcast that he was overhead, with the intention of conducting an NDB/DME approach to runway 05.
Subsequently, an IFR Beech 1900 taxied at Armidale for departure from runway 05. Both aircraft had been given traffic information on each other by Brisbane air traffic services. When the Beech 1900 crew broadcast that they were taxiing, the CT4 pilot advised that he was about to turn inbound on the sector 1 entry for the runway 05 NDB/DME procedure and was maintaining 5,800 ft.
The Beech 1900 crew acknowledged the call. The CT4 pilot then awaited the lining up or rolling call from the Beech 1900 crew so that they could arrange mutual separation.
After completing the inbound turn the CT4 had approximately 2 NM to run on the inbound leg of the sector 1 entry. At that stage the pilot observed a Traffic Collision Alert Device (TCAD) indication that an aircraft was 1,100 ft below, climbing directly toward his aircraft and at a distance of 1.3 NM. The CT4 pilot therefore made an immediate broadcast on the CTAF, transmitting his position as 2 NM northeast at 5,800 ft. The Beech 1900 crew responded stating that they were in a right turn passing 5,800 ft. The pilot of the CT4 then observed, through a break in the cloud, the Beech 1900 in his 6 o'clock position at the same level and moving away.
The Beech 1900 crew reported that while maintaining runway heading after takeoff, they levelled at 4,500 ft for a short time to ensure separation. They later stated that they had interpreted the CT4's position as being outbound on the Runway 05 NDB approach and to the south-west of the NDB; therefore, it was not perceived to be a confliction.
The CT4 pilot reported the conditions as generally IMC with a few breaks in the cloud at his level but with no significant vertical visibility. The Beech 1900 continued climbing in a right turn in accordance with the published company procedures for IMC departures at Armidale. The CT4 landed from the runway 05 NDB approach without further incident.
Recorded radio transmissions confirmed that the Beech 1900 crew gave a taxi broadcast for runway 05 that included the phrase "shortly entering and backtracking". They did not subsequently advise that they were about to commence take-off, as directed in the Aeronautical Information Publication. The crew could not explain that oversight.