The steady increase in volume of goods to be transported over land and water has necessitated the development of efficient and alternative methods of transportation. In current practices considerable amount of transportation delay is caused due to switching between different modes of transportation resulting in economic losses. Another difficulty in the transportation sector arises when handling extremely large objects, such as wind turbines and cargo containers. In order to overcome these difficulties, an alternative method of transportation has been proposed recently. The proposed alternative method consists of the development of a formation control framework using hovercrafts. Formation control is a widely researched topic due its potential benefits in reducing the system cost, structure flexibility and improving the efficiency of the overall system. State-of-the-art methods for formation control are focused towards developing a controller to track a predefined trajectory, and the trajectory generation is an additional problem which is addressed off-line. A path tracking formation control framework is an area which has received less attention in the literature and can have possible improvements. Hence, this thesis work answers the research question of generating a feasible path for a set of initial and final conditions, and tracking the generated path. Model Predictive Controller (MPC) is a promising framework, because of its constraint handling capabilities. Hence, it accounts for the major component of this thesis. A new framework for formation control is proposed which uses spatial-domain parametrization instead of the conventional time-domain parametrization. MPC being a computationally expensive task, the proposed framework reduces the number of decision variables and constraint evaluations which can help to achieve the desired Real Time performance. The specific research question addressed in this thesis work is to develop a path tracking formation control framework while minimising the absolute and relative position error for each vehicle in the formation. A nonlinear dynamic model for the hovercraft is obtained using first principles and its structure is used to design an optimization based controller. An Optimal Control Problem (OCP) is formulated which is solved using direct collocation method. In this method a continuous problem is discretized into a number of collocation points, and the resulting problem is solved using state-of-the-art Nonlinear Program solvers such as, SNOPT and NPSOL. The performance of the proposed framework is illustrated using numerical simulations.