Pt. 1 examines the practical application of parameter estimation methodology to the problem of estimating aircraft stability and control derivatives from flight test data. The primary purpose is to present a comprehensive and unified picture of the entire parameter estimation process and its integration into a flight test program. Pt. 2 covers areas such as flight path reconstruction, nonlinear model identification, optimal input design and flight test instrumentation. This approach is referred to as the Two-Step Method (TSM), also known as Estimation Before Modelling (EBM) in the literature. It will be shown that this approach has significant practical advantages over methods which no attempt is made to decompose the joint parameter-state estimation problem. The two-step method is generally applicable to flight vehicles such as fixed wing aircraft and rotorcraft which are equipped with state of the art inertial reference systems.