Greg Lynn, 59, is charged with the murder of Carol Clay, 73, who went missing from Victoria's High Country while camping in March 2020 alongside her friend Russell Hill, 74.
He was granted a retrial in December and sought bail to live with his son for several reasons including his difficult conditions in custody and health concerns.
Lynn's eldest son Geordie proposed to put his life savings up as a surety to secure his father's release.
His barrister Dermot Dann KC had argued the prosecution's case against his client was weak, as he made the bail application at the Court of Appeal in Melbourne.
"This is a case with particular problems," he told the court on February 26.
Mr Dann said there were exceptional reasons to grant Lynn bail including his heart condition, for which he is awaiting surgery, and that he had been assaulted in custody.
He said there would be a delay until Lynn might face retrial, arguing his client could not face a fair trial this year or next.
Additionally, Mr Dann said prosecutors had accepted Lynn was not an unacceptable risk to endangering the community.
Prosecutors opposed bail, arguing their case against Lynn was quite strong, the accused murderer had not demonstrated exceptional circumstances to permit bail and a trial could begin this year.
It's alleged Ms Clay was shot in the head by a bullet from the ex-pilot's gun at Wonnangatta, in the state's high country, prosecutor Mark Gibson KC said.
However, Lynn continues to maintain his innocence, claiming the incident was accidental.
He nodded at Geordie and wife Melanie, who nervously clutched a white folder, as he sat in the dock at the back of the court on Thursday to learn his bail fate.
Justice David Beach found Lynn had not demonstrated exceptional circumstances to permit his release into the community as he awaits retrial.
"A number of matters relied upon by the applicant are quite ordinary," he said, in his published judgment.
"Neither alone, nor in combination, do these matters rise to the level of right out of the ordinary."
The judge found while Lynn's legal team had emphasised "the uniqueness" of his circumstances, they were not exceptional enough to justify a grant of bail.
He said it was not the exceptionality of circumstances which must be established but the exceptionality of circumstances justifying a grant of bail which must be shown to exist.
Justice Beach said the court could accommodate Lynn's retrial from August, pending any other delays.
"All of that said, having considered all of the material relied upon by the applicant, I am not persuaded that a trial of this proceeding cannot occur in the second half of this year."
Lynn kept his head down as he was escorted back to custody, with his family declining to speak to media as they left the court.
He will return to court at a later date and a trial date is yet to be fixed.
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