In January 1929 a number of new Squadrons were created by the simple expediency of raising the existing flights to Squadron status. On the 1st January 1929, No. 481 (Coastal Reconnaissance Flight), became No 202 (Flying Boat) Squadron, a slight misnomer as none of the squadrons aircraft inventory could be classed as "Flying Boats", the Fairey III D's were little more than float planes.
At this time the Squadron was located at Marsaxlokk Bay, Calafrana in Malta and had it's first public airing in May 1929, when it gave an air show with 5 of it's aircraft.
On the 14th June 1930, the Squadron's replacement aircraft began arriving. These were modified Fairey III's, designated Fairey III F. They were essentially still the same aircraft but fitted with up rated Lion engines, a more streamlined nose and exhaust system and improved floats. Unfortunately, the new floats were in short supply (nothing changes). It was to be a full year before the Squadron was fully equipped.
In July of 1931, the Squadron undertook the first of their Summer Tours. The tour consisted of visiting such exotic locations as Augusta, Corfu, Athens, Mirabella, Aboukir, and Sollum. The tour was not without a few mishaps, one Fairey III F had a total engine failure shortly after take off and had to be towed back to base. A second, suffered a loss of engine coolant and only just made it to Corfu. The Squadron completed their first Summer tour without any other major incidents.
The Squadron took part in it's first Air Sea rescue on 16th February 1932, when they went to the aid of an Italian Wal flying boat that had gone down some 50 miles from Malta. The crew from the Squadron quickly found the Italian flying boat and directed a Royal Navy vessel to the location. This was the start of the Squadrons long association with the Air Sea Rescue role that it continues to this day.
In June 1932 the Squadron toured Sicily, Greece, Cyprus, Lebanon, Egypt and finally Khartoum. In 1933 the tour was to the Adriatic with stopovers at Kotor and Split.