The small aircraft carrying four American passengers to King Island to play golf was on runway 17 at Essendon Airport. It was two minutes before 9am.

Everything – on the surface – was normal. The airport would later say the twin-engine Beechcraft King Air light plane prepared for and executed a "routine departure".

Just a few minutes later Melbourne pilot Max Quartermain, 63, with almost 40 of years of charter flight experience but the subject of a federal investigation into his flying standards, rose 30 metres, called in two urgent maydays, turned slightly and crashed.

It was Victoria's worst civil aviation disaster in 30 years.

Police said the aircraft suffered "catastrophic engine failure." The aircraft went through the roof of the DFO shopping mall right next to the Tullamarine Freeway – before the mall had opened for the day.

All five on board died in what those among the first on the scene described as carnage; the plane, and the bodies within, torn apart.

Two of the passengers have been named by their families as Greg de Haven and Russell Munsch.

Mr Munsch is believed to be the founding partner of a big Texan law firm. The US embassy in Canberra extended their "deepest condolences" to the dead passengers' families.

Mr Quartermain, Fairfax Media can reveal, was the subject of an 18-month investigation by the Australian Transport Safety Bureau (ATSB) that was yet to be resolved. He faced referral to the Civil Aviation Safety Authority and possible suspension of his licence over a "near collision" with another plane near Mount Hotham in September 2015.

He was flying a small aircraft with faulty GPS that took 87 minutes to reach Mt Hotham Airport - a flight that usually takes 38 minutes.

He came within 1.8 kilometres horizontally and 90 metres vertically to a plane from Sydney that was ferrying passengers to the same function on the mountain.

The pilot of the Sydney plane claimed Mr Quartermain's actions were "unsafe" in an incident report to the Australian Transport Safety Bureau.

"If this event did result in a midair collision, two aircraft would have been destroyed and 18 people would have been killed," he said.

However friends and colleagues have offered support and tributes. Friend Bart Crawley described Mr Quartermain as "incredibly thoughtful, caring, supportive, and very responsible".

Premier Daniel Andrews said the often-controversial Essendon airport was crucial to the state's economy, with "many thousands" of passenger and freight movements per year.

However, he said, "there will be some – and they are entitled to – who (will) want to have a…discussion and a debate about how suitable Essendon airport is".

DFO retailers, town planners and aviation experts have all raised issues about the proximity of the busy airport to its neighbours. Some Essendon residents have also raised concerns. The airport is on Commonwealth land which has been privatised and developed.

Nancy Tedesco, an Esprit store manager at the DFO, says retailers had been concerned for a long time about how close the airport's runways are to shops and warehouses.

"It feels like you can reach out and touch the planes. It's a real hazard. When their engines are struggling you can hear that too and there is always the smell of aviation fuel when they take off and land."  

Rob Fisicaro, a store salesman at Berkowitz furniture, very close to the crash site, said retailers often complained about the danger of the runways. "We have said this 100 times - one day a plane will hit."

The plane was operated by Corporate and Leisure Aviation, Mr Quartermain's company. The plane was hired from MyJet in Bendigo and the trip was booked by golf travel agents Golf Select.

In 1978 a light plane crashed into an Airport West home, killing six. The accident sparked calls, even then, to restrict housing development in the area, for buffer zones and for the airport to be closed.

Then in 1993 a small plane, above, with ten people on board crashed into five houses in Essendon, but no-one died.

Three nearby schools closed after Tuesday's crash. One told parents it thought the thick black smoke coming from the DFO was the result of a terrorist incident. Eye witnesses described the impact of the plane onto the DFO roof as like an "atomic bomb" going off.

No-one from the DFO was injured – most shops there open at 10am – but several workers were treated for shock. A wheel from the stricken aircraft remained on the closed Tullamarine freeway until lunchtime. Debris was found hundreds of metres away.

with Clay Lucas, Liam Mannix, Tony Wright, Benjamin Preiss from The Age