The Civil Aviation Authority took no action when told a balloon pilot had been too "pissed and/or high" to fly, an inquest has been told.
It had also been told Lance Hopping, 53, had cheated on pilot exams and impersonated a CAA official.
Hopping was the pilot of the hot-air balloon flight that hit powerlines and crashed near Carterton of January 7, 2012. Hopping and his 10 passengers were killed.
The revelations came at the end of the seventh day of the inquest in Wellington into the crash.
Lawyer Alastair Sherriff, acting on behalf of some of the families of the victims, presented a document detailing an internal CAA investigation into complaints about Hopping. It began two months after the tragedy and focused on processes followed after complaints it received in about 2010 into Hopping's fitness as a commercial balloon pilot.
Copies were given to media. Sherriff suggested that if the complaints had been revealed that would have prevented the tragedy.
They included an allegation Hopping had on more than one occasion been too "pissed and/or too high" to fly, causing flights to be suspended.
Earlier, the daughter of a couple killed in the crash made an emotional plea for the CAA to stop resisting proposals to enhance safety measures.
Fiona Rouse said her parents, Ann Dean, 65, and Desmond Dean, 70, would not have got into a balloon piloted by Hopping if they had known he had no medical certificate and was a habitual cannabis user.
As well as the Deans and Hopping, Valerie Bennett, 70, Diana Cox, 63, Howard Cox, 71, Denise Dellabarca, 58, Belinda Harter, 49, Stephen Hopkirk, 50, Johannes "Chrisjan" Jordaan, 21, and Alexis Still, 19, were killed.
Through tears, Rouse said the crash was not an accident, because it was preventable. She felt "ripped off" at losing her parents, for whom family had been everything, and spoke of the hurt of not being able to ring them to share her childrens' milestones.
"There needs to be changes to this industry ... the ramifications of these simple checks [on Hopping's medical certificate, and a drug test] are endless," Rouse said.
It has previously been established that pilot error was the main factor in the crash.
Rouse said outside court that CAA representatives giving evidence today would be less resistant to making changes in the industry if they had lost loved ones.
Earlier, a CAA manager said further safety restrictions on commercial balloonists could put some out of business.
CAA general manager of general aviation Steve Moore was cross-examined by lawyer Grant Burston, assisting coroner Peter Ryan.
Moore is in charge of the CAA's commercial ballooning regulations, known as part 115.
These were planned for years before the Carterton tragedy to formalise the sector, but did not come into force until afterwards.
During questioning he said changes needed by the industry were provided by part 115, which ensured balloon operators obliged their pilots to fly within the law.
However, Burston said not enough had been done to eliminate pilot error.
Moore said there were no plans to take further measures.
"I'm happy that the current requirements are sufficient ... we can never eliminate all risks and the next accident could have nothing to do with powerlines." Ultimately, pilots were responsible for making judgments during flights to keep their passengers safe, he said.
Burston suggested the Carterton crash showed the CAA needed to take steps to "incentivise" pilots to maintain a bigger margin of error in relation to powerlines.
Moore replied that restrictions on commercial balloonists flying within a larger prescribed distance from powerlines could stop some operators that had operated safely for decades.
The inquest ran for five days in May before being adjourned and resuming yesterday.
- The Dominion Post