The cause of the crash was determined by the Bureau of Air Safety Investigation (BASI; now the Australian Transport Safety Bureau, or ATSB) to have been a power loss in the aircraft's left engine caused by an inlet valve being stuck in the open position, compounded by inadequate action on the part of the pilots; Rod Lovell, the pilot in command of the flight, has disputed BASI's conclusions.

The aircraft had been chartered to transport Scots College band students to Norfolk Island to perform in Anzac Day celebrations; there were twenty-one passengers including a team of journalists from the newspaper The Australian.

The crew subsequently reported to crash investigators that all engine indications were normal during the take-off roll and that the aircraft was flown off the runway at 81 knots.

The four crew and twenty-one passengers successfully evacuated through the aircraft's rear door before it sank, and were rescued by nearby fishermen.

Contributing factors included the overloaded condition of the aircraft, an engine overhaul or maintenance error, non-adherence to operating procedures and lack of skill of the handling pilot.

However in documents provided by BASI to Rod Lovell a couple of years later found that in the right engine, after strip down, 11 out of the 28 spark plugs, after cleaning, re-gapping and then testing were UNSERVICEABLE.

Despite being praised by the passengers for his handling of the crisis, Captain Lovell was partly blamed in the BASI report for contributing to the crash and his piloting licence was suspended as a result.

In 2018, Lovell was invited to the Netherlands to handle the only certified DC-3 flight simulator in the world, and claimed that its outcome demonstrated that "my DC-3 was not producing the power and it had nothing to do with the allegation of above maximum take-off weight.