The Civil Aviation Authority (CAA) says it did not go ahead with a prosecution over fatal plane crash at Fox Glacier because it would not have met the burden of proof required by a court.
Nine people on board the aircraft died in the crash on 4 September 2010 - the tourists, their jump masters and the Queenstown pilot.
The families of four tourists have released an open letter to Prime Minister John Key calling for better safety standards.
Coroner Richard McElrea released his findings on Monday in which he said it was unlikely the cause of the crash would ever be fully understood.
Mr McElrea recommended converted top-dressing planes be fitted with passenger safety harnesses as soon as possible to control weight distribution in the aircraft, and that loads be restricted to six people.
The owner of the skydiving aircraft told the inquest in August last year that the plane was being overloaded, and an earlier Transport Accident Investigation Commission report found the most likely reason for the crash was that there was too much weight too far back in the plane which caused it to stall.
The CAA said it considered prosecuting the company involved, Skydive NZ Ltd, but the tests for taking a prosecution are high and the cause of the crash could not be proven.
General manager of policy John Kay said the Transport Accident Investigation Commission's conclusion was determined only on the balance of probability.
Immediately after the crash the authority limited the number of skydivers allowed on a plane of this sort to six but changed it last year to an overall weight limit that takes account of different sizes. Mr Kay said he would look into calls by the coroner for a six-person limit.
Families demand urgent action
Following the findings, the parents of four tourists who died in the crash released an open letter to Prime Minister John Key calling for stronger safety enforcement across the country.
In the letter, the families of Glenn Bourke of Australia, Patrick Byrne of Ireland, Bradley Coker of Britain and Annika Kirsten of Germany said the need for action is compelling and urgent.
"We continue to lack confidence in the Civil Aviation Authority (CAA) to regulate safety in this type of activity in New Zealand," the families said.
They called on the Prime Minister to "take decisive and unequivocal action to reassure the world that New Zealand is a very safe place to visit".
"Companies in New Zealand need to be incentivised to prioritise health and safety," the letter said.
The families called on the Government to ensure resources are available to enforce the existing regulations.
But the Prime Minister on Monday ruled out changing the law to allow parties to sue negligent tourism operators.
John Key said the Government would not want to change its position on the ACC faults claim that stops parties from being sued. However, he said he is open to suggestions that passenger seat belts could be made compulsory during take-off in skydiving planes.
Call for CAA shake-up
Karen Bourke, whose son died in the crash, said the CAA needs a shake-up. She said she would like to see New Zealand's no-blame system changed and a negligence law brought in. "People have to be accountable, and I don't see that in New Zealand."
Chris Coker, the father of another who died, told Radio New Zealand's Morning Report programme the system in New Zealand is weighted against the victim.
"When companies fail in their duty to protect the public the law in New Zealand does not allow the injured party to hold them to account."
Mr Coker said an improved system would require companies to keep up their safety standards to maintain insurance protection.
Responding to the families' criticism, John Kay said the the CAA had a comprehensive surveillance and monitoring regime of aviation companies is in place.
He said operators are audited on a reasonably regular basis which varies according to the nature of the company and its safety performance.
The five New Zealand residents who died in the crash were: pilot Chaminda Senadhira from Queenstown, Adam Bennett of Motueka, Michael Suter of New Plymouth, Christopher McDonald of Mapua and Rodney Miller from Greymouth.
