Australian Federal Police deputy commissioner Michael Phelan told reporters on Friday that they will allege the plot to bring down a plane included an aborted attempt to place an improvised explosive device on an Etihad flight out of Sydney on July 15.
Two men faced a Sydney court on Friday in relation to the plot, and Magistrate Michael Price formally refused them bail and adjourned the case to the same court on November 14.
Khaled Mahmoud Khayat, 49, of Lakemba and Mahmoud Khayat, 32, of Punchbowl, are each charged with two counts of acting in preparation for, or planning, a terrorist attack.
Both counts allege the acts took place at Lakemba, the first between April 13 and July 16, and the second between July 16 and July 29.
In Parramatta Local Court on Friday, their lawyer, Michael Coroneos, said he did not require the men to be shown on the audio-visual link screen.
"They're entitled to the presumption of innocence," he said of his clients.
"Once the brief of evidence is served we can assess their legal position."
Earlier, Phelan said at no point did the IED breach airport security.
"It did not get through security," he told reporters.
A second alleged plot related to the building of an improvised chemical dispersion device to release colourless toxic gas.
"It was designed to release the highly toxic hydrogen sulfide," Mr Phelan said, adding the alleged conspirators "were a long way from having a functional device".
The two men face a maximum penalty of life imprisonment.
A third man remains behind bars, held under special anti-terror laws, while police investigations continue. He can be detained until the weekend under the current ruling.
Police alleged the 49-year-old carried the device to Sydney's international airport in the hope of putting it on the plane in "checked luggage".
"This is one of the most sophisticated plots that has ever been attempted on Australian soil," Mr Phelan 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 well have a catastrophic event in this country."
The parts for the IED came from Turkey, police say.
