Trust me, just putting the flight suit on him (not to mention the toweling) would be enough to make any bird terrified of you/your hands. Think of it this way: birds are prey animals. Untamed prey animals generally do not like situations that cause them to feel trapped, restrained, or have their movements constricted (i.e. with a contraption that is strapped to their bodies) by creatures that are much larger, and thus much scarier, than them. Personally I think these experiences may have traumatized him, and if that is the case you really do need to muster up all of your patience and start over from square one. You no longer have just an untamed bird on your hands, you have an untamed as well as phobic one.
Start off by working with him in his cage so he can't just fly away when you come close. Obviously you can already tell that this will get you nowhere, and only continues to reinforce his fears ("oh no, now the monster is chasing me!"). And try to figure out what could be used as a reinforcer for him, until you are finally able to give him treats. For example, in the book "Getting Started: Clicker Training for Birds" the author talks about how she worked to tame a wild caught cockatoo named Rosie. Unfortunately, Rosie was so terrified of people that if you came within 6 feet of her she would begin to frantically flap and throw herself against the bars of her cage. Because the author knew that she would never be able to approach Rosie to give her a treat, she instead decided to use what Rosie wanted most - for her to go away - as the reward for being calm and relaxed. Acting as calm and "unpredatory" (i.e. not making direct eye contact, etc) as possible she would stand at the point just before Rosie would start to freak out, pause for a few seconds, then click and leave. After a minute or so she would return to the same spot. As soon as she saw Rosie begin to relax, click again and leave. Over the days she slowly closed the distance, inch by inch, to Rosie's cage as the bird began to let down its guard. Over time she began shortening the time spent out of the room and instead would just click and turn her back, and walk a few steps away. Finally she was able to get close enough to Rosie to drop a treat in her cup. After that it was easier for her to use successive approximations to get Rosie to approach her on her own. This method is called systematic desensitization.
I'm not trying to say these are the exact steps that will work with you and your bird. I'm just trying to show you how you can use some creativity and perseverance to get to the point where you can use more "conventional" rewards. Hope this helps.
