The airport is located at the southeastern tip of Penang Island, 16 km (9.9 mi) south of the city centre, and serves the country's second largest conurbation.

[6] The Bayan Lepas airport was constructed on mudflats, which necessitated the installation of concrete runways to ensure all-weather operational capabilities.

[9] At the onset of World War II, the Straits Settlements imposed regulations to manage air traffic in Penang, designating specific corridors for aircraft overflying the colony.

[13] The expansion was carried out in the 1970s, during which a terminal building of Minangkabau architecture was built and the runway extended to accommodate Boeing 747s, then the largest passenger jet aircraft.

[15] However, the surging cargo tonnage resulting from industrial demand prompted the Penang state government, under Chief Minister Koh Tsu Koon, to propose a new, larger airport in Seberang Perai in 1993 to accommodate the increase in air traffic.

[17][18][19] Fearing potential backlash from local civil societies and the opposition Democratic Action Party (DAP), Mahathir later relented, stating that the PIA would "still be maintained if investors need it".

[12][20] The then Chief Minister Lim Guan Eng raised concerns that the federal government lacked urgency regarding the issue, as it was still considering the proposal for a new airport in Kedah.

[24] Costing RM1.5 billion, the PIA's expansion includes the addition of new infrastructure, such as the first Mitsui outlet mall outside the Klang Valley, and upgrades to the main terminal and apron, which will increase the aircraft capacity from 16 to 28 at any given time.