Kelman was born as Margaret Mary McKillop in Scotland in 1909, her father was the Irish nationalist politician William McKillop, and her mother, Rose McKillop was from Orange, Australia. Her father died in 1909, the year of her birth. Her mother returned to Australia and Peggy was educated at Rose Bay Convent, Sydney, as well as in France and England. On 5 November 1936 she married, in London, Colin Kelman, an Australian farmer. Colin and Peggy Kelman then returned to Australia continued as graziers both in Moree, NSW and Julia Creek, Queensland; the couple had 5 children.
Kelman began flying training in 1931 at the Aero Club of NSW and gained her A licence in 1932, followed by a commercial pilot licence in 1935. Her first and only paid job was flying for Nancy Bird Walton, barnstorming in western NSW in 1935. While barnstorming near Moree, NSW, Kelman met a young grazier with his own aeroplane, his name was Colin Kelman. After their marriage in London, Peggy and her husband bought a used twin-engined light aircraft, a Monospar, and decided to fly home to Australia. That adventure began 19 December 1936. They flew by way of France, Italy, Greece, Egypt, Iraq, Iran, Pakistan, India, Burma, Malaya, Java, Timor, Darwin and Moree and arrived home on 15 January 1937. Kelman only ever claimed one flying record; she said she was the first and only pilot to fly from England to Australia while pregnant. She owned many aircraft including a Percival, an Auster, a Tiger Moth, a Beech Staggerwing then one of the first Cessna 182s in 1957. Kelman flew these aircraft to town to do her shopping and to social days on neighbouring properties. Age did not stop her; in her 80s, she went to the Oshkosh Air Show in Wisconsin, toured the US, went twice to the Antarctic and revisited places where she'd been a schoolgirl in Britain, France and Italy.
Aviation organisations
Kelman joined the Australian Women Pilots' Association in 1951, serving as its Queensland president, then Federal president from 1974 to 1976. She joined the international women pilots' association, The Ninety Nines, and became Australian governor of that organisation.
Honours
On 3 June 1978, Kelman was appointed an OBE in Australia "For service to aviation in Queensland, particularly in the promotion of women in aviation."