Design of the 523 was attributed to engineer Roy Chadwick of Avro, one of the original key members of the firm when joining the company in September of 1911 at age eighteen. The type was conventional by historical standards and consisted of a traditional fuselage frame with a biplane wing arrangement. The biplane wings were set ahead of amidships and featured three bays with parallel support struts. The undercarriage was fixed in place and centered around a wheel pairing under the bulk of the airframe weight forward. The empennage was supported with a simple skid. The tail unit was also conventional. The aircraft was crewed by three personnel that included the pilot and two dedicated gunners - the latter pair in a forward and rear cockpit gun position. All positions were "open air" providing for excellent unobstructed views but exposing the crew to the elements.
Engines were fitted between the upper and lower wing spar and set up in a "pusher" type fashion with the propellers facing rear. Each power plant was a single fitting of a Sunbeam Nubian engine delivering up to 160 horsepower. This supplied the 523 with a given endurance time of about seven hours and a top speed of 97 miles per hour. Empty weight was listed at 4,000lbs with a gross weight equal to 6,064. The 523 managed a wingspan of exactly 60 feet with a running length of just over 39 feet and a height nearing 11 feet, 8 inches.
Standard armament consisted of a 7.7mm Lewis machine gun in a flexible mounting at the forward gunnery cockpit. Similarly, there was a 7.7mm Lewis machine gun in a flexible mount at the rear gunner's compartment, aft of the wings but ahead of the empennage. An optional bombload of 2 x 112lb bombs could be held in an internal bomb bay.
The 523 was developed in response to a British Royal Flying Corps (RFC) requirement for an airframe capable of scouting duties as primary with the role of bombing as secondary. The type would have also stocked the stables of the Royal Naval Air Service (RNAS). The primary role would counter the usefulness of German Zeppelins providing vital reconnaissance report by engaging and destroying such targets. The secondary role opened up a tactical advantage for the RFC that could see the 523 engaging enemy land targets and surface ships as needed. First flight of the original Avro 523 prototype occurred in May of 1916 and this was followed by a second version fitting a pair of Green E.6 water-cooled engines. The difference in engines meant that the second prototype received the formal designation of "523A".
The British Admiralty took the Avro prototype under evaluation in November of 1916 and thought the type was already an outdated design when compared to the up and coming contemporaries available elsewhere. As such, the RNAS did not set in motion a procurement contract and the Avro design floundered before being more or less forgotten to history. At the very least, the Avro firm found some use for the two prototypes as aerial testbeds to evaluated various engine and aerodynamic concepts for the rest of the war. The British Admiralty was interested enough in the 523, however, that it ordered two prototypes of a larger version as a long-range bomber - this would become the Avro 529 model.
The RFC went on to procure the Handley-Page O/100 series bombers instead while the RNAS elected to order the Short Bomber for its inventory.
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