A Cessna 182G was climbing to 10,000 ft for a parachute drop over the Warnervale authorised landing area (ALA) while a Twin Otter was operating a regular public transport flight from Aeropelican to Sydney at 6,000 ft outside controlled airspace (OCTA). The airspace above Warnervale ALA was Class G up to 7,500 ft, including a common traffic advisory frequency (CTAF) from ground level to 3,000 ft, and Class C above 7,500 ft.
While climbing OCTA, the Cessna pilot broadcast his intentions on the CTAF and area frequencies, but received no replies. When the pilot called Sydney Departures for clearance into Class C airspace above 7,500 ft, the controller advised him of the Twin Otter in his vicinity. The controller then cleared the Cessna to enter the CTA and cleared it to carry out the parachute drop.
Immediately after releasing the parachutists about 1.5 miles west of the drop zone, the Cessna pilot looked back and saw the Twin Otter just south of the drop zone on a southerly heading. He then called the Twin Otter crew and asked if they had seen the parachutes. The Twin Otter crew replied that they had not seen the parachutes and had no prior warning of the drop. The parachutists later reported that they did not see the Twin Otter. The minimum separation between the Twin Otter and the parachutists was estimated to be 1 NM.
Procedures governing parachuting operations from Class C airspace are detailed in AIP OPS SPEC-8 para 95.2. which states;
95.2.2 Where parachutists will leave classes B, C or D airspace on descent, the pilot of the aircraft must broadcast the intention to drop, at least two (2) minutes prior to exit, on the relevant CTAF, Area VHF or MBZ frequency. Notwithstanding that a drop clearance may have been issued, the drop must not proceed if replies to this broadcast (or visual observation) indicate that there is conflicting traffic beneath the CTA. The drop must not proceed until the conflicting traffic is clear.
The controller advised the Cessna pilot of other aircraft in the vicinity of the drop zone in accordance with the AIP requirements. Although aware of the presence of the Twin Otter below, the Cessna pilot did not ensure that the Twin Otter was clear of the drop zone before releasing the parachutists.