[3] Adam Air was founded in 2002 by Agung Laksono, an Indonesian businessman and the Speaker of Indonesia's House of Representatives, and Sandra Ang.

[6] The airline was established in 2002 and began operations on 19 December 2003 with two Boeing 737-400 aircraft leased from GE Commercial Aviation Services with first flight was from Jakarta to Medan and Denpasar.

The company already owned a stake in PT Indonesia Air Transport Tbk, a subsidiary of Pt Media Nusantara Citra Tbk, the southeast Asia's largest and most integrated media group, and president Hary Djaja says that "Given our experience with IAT, which has an excellent safety record, we're certain that we will be able to create positive synergies and improve the way Adam Air is run.".

[8] Aviation consultant Gerry Soejatman stated that Adam Air was successful because of its "fresh image", referring to the bright colors of the airline's livery and uniforms.

[3] Pilots had reported repeated and deliberate breaches of international safety regulations due to the airline's attitude towards them and aircraft being flown in non-airworthy states for months at a time.

They said that there had been such incidents as: The Associated Press quoted one Adam Air pilot as saying that "Every time you flew, you had to fight with the ground staff and the management about all the regulations you had to violate."

Furthermore, Laksono's position gave him the unfair advantage of receiving heavily regulated licenses and airport landing rights.

[11] After an incident in which an Adam Air aircraft landed 525 km (326 mi) away from its intended destination, the pilots blamed a malfunctioning navigation system.

[3] The airline claimed the equipment to be in good working order, and had the pilots arrested on charges of endangering passenger safety.

The airline was then required to conduct a total of thirteen test flights with DGAC inspectors aboard before the aircraft could return to commercial service.

[10] On 10 January 2007 there was a report that Indonesian consumer and labour groups were planning to lodge a US$100 million suit, claiming the airline neglected safety in order to save money.

[10] A Liputan 6 article stated that Adam Air was not attempting to claim for damage caused by the pilots' public accusations of poor safety standards.

[15] Although no details were immediately released, it was revealed that the airline had had a string of recent accidents, making Adam Air a likely candidate.

"[16] It was announced on March 22 that Adam Air was one of seven airlines that would lose their licences within three months unless they could improve their safety standards.

On 16 March 2008, Adam Air was given 21 days by the Indonesian government to decide whether to close down after safety concerns prompted an investment group to unload its 50 percent stake in the airline.

The aircraft was subsequently flown into a radar "black spot" and was lost for several hours, eventually making an emergency landing at Tambolaka Airport, Sumba (on a different island 481 kilometres (299 mi; 260 nmi) away from their intended destination, and southeast from their origin, instead of northeast).

Adam Air broke multiple safety regulations, including removing an aircraft before it was due for inspection by aviation authorities.

The flight recorders and suspected debris were located, but were not initially recovered due to a dispute between Adam Air and the Indonesian Government over who should pay recovery costs.

The investigation disclosed that the accident aircraft, including the faulty IRS and several other systems, had been the subject of more than 40 pilot complaints, or "write ups" in the months prior to the crash.

On 21 February 2007, Adam Air Flight 172, a Boeing 737-300 aircraft flying from Jakarta to Surabaya with registration PK-KKV (c/n 27284), had a hard landing at Juanda International Airport.

[27] Adam Air described this as "harsh punishment" for an accident it blamed on poor weather conditions, but Vice President Jusuf Kalla has said that all Boeing 737-300s should be checked.