Sydney terror plot accused 'tried to trick his brother'

New South Wales Police officers stand outside the Parramatta Local Court following a brief appearance of two terror suspects in Parramatta. Photo / AAP

A man charged over a NSW-based terror conspiracy to bring down a plane tried to have his unsuspecting brother take a bomb on a July 15 flight out of Sydney, authorities allege.

Khaled Mahmoud Khayat, 49, allegedly accompanied the unnamed brother to Sydney's international airport ahead of his Etihad flight to Abu Dhabi. His brother was unaware a military-grade explosive was stashed in his luggage.

Australian Federal Police deputy commissioner Michael Phelan said the luggage didn't make it on to the plane and Khayat took it from the airport.

"There is a little bit of conjecture as to why it didn't go ahead," he told reporters yesterday.

"It did not get through security." Khayat's brother is still overseas and had "no idea" he was to carry an improvised explosive device (IED), Phelan said.

Authorities allege a second attack was planned after the first plot failed. It involved an attempt to build an improvised chemical dispersion device to release colourless toxic gas.

"It was designed to release the highly toxic hydrogen sulfide," Phelan said, but he stressed the alleged conspirators "were a mile-and-a-half from having a functioning chemical dispersion device".

There was no evidence the device was designed to be used on a plane.

Khayat, of Lakemba, and Mahmoud Khayat, 32, of Punchbowl, had their matter mentioned at Parramatta Local Court yesterday, after each was charged with two counts of acting in preparation for, or planning, a terrorist act on Thursday night.

Their lawyer, Michael Coroneos, said his clients were "entitled to the presumption of innocence".

"Once the brief of evidence is served we can assess their legal position," Coroneos told reporters outside court.

The men, who were refused bail ahead of another court mention on November 14, face a maximum penalty of life imprisonment.

A third man remains behind bars held under special anti-terror laws. He can be detained until the weekend.

Phelan said the aborted July 15 plot involved a high-end explosive concealed in a meat grinder.

"This is one of the most sophisticated plots that has ever been attempted on Australian soil," the deputy commissioner said.

"If it hadn't been for the great work of our intelligence agencies and law enforcement over a very quick period of time then we could very well have had a catastrophic event in this country."

Authorities believe the bomb wouldn't have made it on to the plane. They've since created a mock IED to test the airport's security.

"We had a 100 per cent success rate in terms of our mock IED being picked up," Phelan said.

It's alleged parts for the IED came from Turkey, with a senior Isis (Islamic State) member sending components to Australia by air cargo.

"It's concerning it got through ... it's hard to deny that," Phelan said.

Justice Minister Michael Keenan said there would be extra screening for air cargo, and the federal Government would continue to assess "what we learned" as a result of the alleged conspiracy.

The men came up with the plot after being put in touch with an Isis controller in Syria, it's alleged.

Authorities are confident they have "completely disrupted" the conspiracy, Phelan said.