No. 41 (Sea Transport) Squadron RAAF was formed in Townsville on 21 August 1942 under the command of Acting Squadron Leader J. M. Hampshire to Establishment H D 125 A/5. Initially it only had 2 Empire Flying Boats out of a possible establishment of 3 Empire Flying Boats and 4 Dornier Flying Boats. The required Dornier Flying Boats were undergoing a complete overhaul at Rathmines and Lake Boga.

The equipment and personnel of Headquarters "A" Flights (Empire Flying Boats) of 33 Squadron RAAF were taken over by 41 Squadron along with their workshops etc located on the water front in Townsville. 41 Squadron's barracks were located in Saint Patrick's Convent on The Strand in Townsville. The initial Marine Craft taken over by 41 Squadron were as follows:-

1 Seaplane Tender (No number issued) or Armament Target Boat
2 Refuelling Launches 06-1 and 06-2
1 Marine Tender 07-11
1 Launch "Alma"

Motor transport comprised:-

1 Light Sliding Tilt, allotted by NEA HQs
1 Dodge Utility, on hire from Messrs. Heinespeter, Townsville (probably Hinspeter)

41 Squadron took delivery of four dinghies on 15 September 1942 as follows:-

013-27
013-28
013-29
013-3

On 15 October 1942, a guard fired shots over the heads of two partly intoxicated American soldiers who were making a nuisance of themselves outside the WAAAF quarters. On 17 October 1942, Captain Johnston, U.S.A. accompanied by a U.S.A. Provost Corps Lieutenant visited to inquire the name of the guard who fired shots over the heads of intoxicated American soldiers. On 19 October 1942, an unofficial inquiry was led by Flight Lieutenant into the firing of shots by a guard on 15 October 1942.

On 21 October 1942 a suitable site for a marine craft slipway in Ross River was successfully negotiated with the Townsville Harbour Board. Work was to commence immediately by 41 Squadron personnel.

On 22 October 1942, a Rescue Launch proceeded to Cockle Bay on Magnetic Island where a Beaufort Bomber had crashed into the sea approximately 50 yards off shore. The bodies of the four crew members were locate din approximately 3 to 4 feet of water.

On 1 November 1942, a Rescue Launch proceeded to Magnetic Island where a practice bomb had exploded, injuring two children. The two children were transported to Townsville General Hospital.

On 2 November 1942, a Rescue Launch proceeded to a location 3 miles due west? (did the record mean east?) of Cape Pallarenda were a B-25 Liberator had crashed into the sea. Five bodies were recovered in approximately five feet of water.

On 7 November 1942, a Rescue Launch proceeded to Herald Island after being notified of planes, received S.O.S. calls, where five members of the Military Forces were stranded without water. Their boat "Tape" had become stuck on a reef and had floundered the previous day.

On 20 November 1942, Squadron Leader Hampshire finished up as the Commanding Officer and Flight Lieutenant J. L. Grey assumed temporary command of 41 Squadron. Squadron Leader Hampshire resumed duties of Commanding Officer of 41 Squadron on 24 November 1942.

On 25 November 1942, a contractor started work on a new site for 41 Squadron in the Police Paddock near the Townsville Botanical Gardens.

On 10 December 1942, A18-14 departed Townsville at 1630 hours to search for a Beaufort bomber lost in a position off Palm Island. A18-14 crewed by S/Ldr J. M. Hampshire and F/Lt J. L. Grey) returned to Townsville at 1930 hours after a fruitless search. on 11 December 1942, Crash Boat 08-10 (Sgt. Moody) left Townsville at 1750 hours to search for the crew of the lost Beaufort bomber. The crew had been reported to be afloat in a rubber dinghy. They did not locate the dinghy but they were able to flash a message to a passing steamer and asked it to divert its course and help with the search. The steamer found the dinghy a short time later. The crew of the dinghy was later transferred from the steamer to the RAAF launch and landed at Townsville at 0420 hours on 12 December 1942.

Work commenced on the new Squadron slipway on 28 December 1942 located on the south side of Ross River in a convenient position near the ferry. It was capable of taking any of the Squadron launches.

Squadron Strength as at 1 January 1943 was as follows:-

19 Officers
2 Warrant Officers
5 Flight Sergeants
35 Sergeants
28 Corporals
113 Aircraftsman
202 TOTAL

On 3 January 1943, RAAF Marine Section started to install three additional moorings to cope with the four Dornier Flying Boats that were expected to arrive at the Squadron. Buoys were made from 44 gallon drums as standard "Short" Buoys were too long for the shallow water inside the breakwater that the Dorniers would be moored to.

Crash Launch 08-12 made three trips to Liberty Ships moored in Cleveland Bay on 5 January 1943 to carry stores and provisions to the ships and returned with injured men. On 6 January 1942, Crash Launch 08-12 carried airmen and stores to Cape Cleveland for the Signals Unit stationed there. On 8 January 1943, Crash Launch 08-12 carried airmen and stores to Cape Cleveland for the Signals Unit there and to Arcadia on Magnetic Island carrying Air Commodore Cobby and his party. 08-12 returned to Cape Cleveland again on 10 January 1943 with more stores and personnel for the resident Signals Unit.

Crash Launch 08-12 made a trip to a Liberty Ship in Cleveland Bay on 20 January 1943 carrying Medical Officers to collect patients. 08-12 proceeded 5 miles north east of Magnetic Island for R.D.F. calibration of HMAS Kytra from 0600 hours to 11 hours on 26 January 1943. 08-12 traveled to Arcadia to collect two hospital cases.

The new Marine Craft Slipway was completed on 7 February 1943 and the first boat was slipped that same day. The slipway could carry launches up to 60 tons.

Crash Launch 08-12 made two night time trips to Liberty Ships in Cleveland Bay to pick up patients on 8 February 1943.