[5] Advances were quickly made in skirt technology to require less power to keep inflated, and extensions of the existing vehicles were also performed in order to increase payloads, however it was recognised that there were other means to drive down costs and thereby improve the hovercraft's commercial viability.

[10] In response to the according demands of customers, BHC formed a partnership with operator Hovertravel in order to develop the envisioned hovercraft, which would be a cheaper and quieter successor to the SR.N6; £237,000 of funding was provided by the British Technology Group to support the initiative, which was to be repaid during via a levy on sales on the new craft.

[6] Early on in development, it was decided that the new vehicle would be powered by heavier diesel engines instead of employing a gas turbine powerplant, as the former would generate substantially less noise while also possessing increased fuel efficiency, as well as being only 20 per cent of the cost to buy while also having far lower and simpler maintenance requirements.

[10] According to BHC, trials of the craft went smoothly and only minor modifications were made to the production AP1-88s, such as shifting the engines and fuel tanks slightly forward to improve the vehicle's center of gravity and the adoption of firewalls to manage engine-related heat.

[13] Upon its introduction, the science & technology magazine New Scientist hailed the AP1-88 as being "sufficiently different to generate cautious optimism that the hovercraft is at least coming of age.

[5] It featured a number of design improvements over previous hovercraft, such as the cockpit having been repositioned to a high-mounted position in order to provide superior all-round visibility to the pilot, and the elimination of rivets via the use of a welded hull instead.

[10] Typically, on prior hovercraft, construction techniques and materials common to the aviation industry had been employed, which had resulted in vehicles that were expensive to produce, procure, and maintain.

[12] Additional noise reduction measures were also employed on the design, such as the rear of the craft being aerodynamically shaped so as to minimise turbulence within the air prior to contact with the fan, while the use of separate engines in order to provide lift and forward movement also had benefits in this respect; earlier craft had to keep running their main engines at high speeds in order to keep the skirt inflated, making hovercraft terminals noisy.

[12] According to author Ashley Hollebone, the vehicle could be readily adapted to perform various roles, including search and rescue, icebreaking, fire-fighting, passenger transport, and anti-submarine warfare.

[14] However, the company found that the vehicles lacked the power to operate in the presence of strong headwinds, alleging that the type would be unable traverse the intended route at winds in excess of 30 knots and that engine damage could be incurred.

On a search and rescue mission on the Fraser River, the AP1-88 CCGS Siyay of the Canadian Coast Guard struck a rock breakwater and the craft sustained significant damage.