During February and March 1942, the RAAF formed four transport units: Nos. 33, 34, 35 and 36 Squadrons. No. 34 (Transport) Squadron was established on 23 February at RAAF Station Darwin, Northern Territory, four days after the city was bombed for the first time. Coming under the control of North-Western Area Command, the squadron's initial strength was six personnel and two de Havilland DH.84 Dragons. They were immediately tasked with transport duties in northern Australia. As well as carrying freight, this involved collecting the first Japanese prisoner of war to be captured in Australia, a navy fighter pilot who had crashlanded during the raid on Darwin. One of the squadron's two officers, Flight Lieutenant J.W. Warwick, became the first (acting) commanding officer on 2 March. The following day, one of the Dragons was destroyed on the ground at Wyndham, Western Australia, by enemy air attack. With its other aircraft unserviceable, and accommodation at Darwin's civil airfield inadequate, squadron headquarters relocated to Daly Waters Airfield on 5 March. On 14 March another Dragon was allocated; this was joined by two Avro Ansons and two de Havilland Tiger Moths in mid-May, by which time the squadron had moved to Batchelor Airfield. By the end of the month, the squadron had thirty-four personnel, including six officers. It lost one of the Tiger Moths to a bushfire on 1 July, a few days after the plane crashlanded south of Katherine. The squadron relocated again on 15 July, this time to Hughes Airfield. It remained at Hughes until 27 August, when it transferred to Manbulloo Airfield; it operated from Manbulloo until it was temporarily disbanded on 13 December and its aircraft transferred to No. 6 Communications Flight.