Ok, I've cleared out the first level of this ice palace and was wondering if and when I need to return to fix Oswald's ship? Am I too late already? Is there even a need?

it is best to repair the airship after finishing level 2 of ice temple... i dont know if you can do it later....

AFAIK, its an optional quest... you dont have to complete it but why miss out easy experience?

There is also a dialogue option that pops up when you talk to Nathaniel. nathaniel will take the necessary spell components and return them to Oswald which will ALSO complete the airship quest. I believe it is actually better in terms of xp to talk to Oswald rather than nathaniel.

Yeah, it's better to bring back the components yourself. I always did that before entering the ice temple. However, that isn't mandatory. You can go back to Oswald with the stuff any time before you finish up the temple.

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