During the 1940s and 1950s, several political leaders proposed an expansion of the island airport to enable scheduled passenger airlines and reduce the annual operating costs.

[13] A consortium known as Forum Infrastructure Partners, composed of firms Arup, PCL and Technicore, designed, built, financed and maintains the tunnel.

[18] The 509 Harbourfront streetcar line, which connects to the subway, serves the intersection of Bathurst Street and Queens Quay, one block north of the ferry dock.

"[24] In August 1935, Council reversed its position and approved the airport project by a vote of 15-7, against the opposition of Toronto mayor Sam McBride (who was serving as a Councillor at the time).

By the end of 1952, the accumulated cost of running the island airport, and paying the interest on the debt of construction, totalled $752,000[38] ($8.32 million in 2023 dollars).

[39] The Government of Canada was amenable to the deal and expanding the island airport, and installed an air traffic control system in 1953, but no comprehensive agreement was yet made.

[49] The decline was attributed to two factors: the limited access and poor service the ferry provided and the opening of the Buttonville Municipal Airport north of Toronto in 1962.

A 1969 proposal to build a new airport by the new headland was met with opposition from local residents and Toronto City Councillors and was dropped.

[64] In April 1978, Transport Minister Otto Lang announced a plan to provide daily scheduled airline service between the airport, Ottawa and Montreal, using de Havilland Dash 7 STOL planes.

At its annual meeting on September 3, 2009, the TPA announced that it would rename the airport after William Avery "Billy" Bishop, a Canadian First World War flying ace.

[90][91] Later in September, Jazz chief executive officer Joseph Randell reiterated the comments stating that it intended to restore service as early as April 2010.

In 2014, the TPA announced that it would move the terminal closer to Hanlan's Point and turn the facility into a restaurant for the general aviation community at the airport.

The City of Toronto started consultations in September 2013, both online and at "town hall" sessions, to produce a report from staff for presentation to Council.

[113] The board of Waterfront Toronto endorsed the report, stating "serious transportation, road congestion, and community impact issues created by the airport's current operations" be addressed before any new plans are considered.

In November 2015, after the federal election that saw the Liberal Party of Canada return to power, the new transport minister Marc Garneau announced that the government would not re-open the tripartite agreement to allow the expansion.

Canadian federal agencies such as the TPA make a Payment in Lieu of Taxes (PILT) for property they own that is not leased to third parties.

Pursuant to the agreement, TPA and the City agreed, among other things, to meet and work together to review and resolve issues regarding PILTs.

Pursuant to the terms of the agreement the TPA agreed to pay the City $6.4 million on account for PILTs for tax years 1999–2008 on a without prejudice basis, with the parties maintaining their rights to request a new DAP or apply for judicial review.

[153] In July 2001, at a news conference held with representatives of the Sierra Club, the David Suzuki Foundation and the Toronto Environmental Alliance, the group proposed converting the airport to parkland.

In November 2002, City Council met to debate the competing proposals, that of closing the airport in favour of some parkland, or of approving the TPA's plans and having uncontested title to the port lands.

Despite pleas from former mayor David Crombie, urban planner/activist Jane Jacobs and Harbourfront residents, the TPA plan was supported by then-mayor Mel Lastman, who argued that the estimated $190 million of annual economic benefit the airport would create, was too good to pass up.

"[165] The Government of Canada later transferred $35 million to the TPA in May 2005 to settle claims arising from the cancellation from Deluce, Aecon Construction and Stolport Corp.[166] Compensation terms were not disclosed.

In one specific incident in September 2008, a late Porter flight was advised by air traffic controllers to divert to Pearson, but instead landed at Bishop.

Their Northrop N-3PB seaplane was taking off from the harbour waters, when a ferry boat, travelling from the mainland to the Toronto Island, the Sam McBride, crossed their path.

The plane crashed into the upper level of the ferry, then sank into Toronto Harbour (the Sam McBride was damaged, but remained afloat).

The plane was used by owner Charles Catalano's Aerial Advertising Service to pull signs behind it over the annual Canadian National Exhibition (CNE).

According to Donald Saunders, the Ontario District Air Regulations supervisor at the time, it was the first plane crash within Toronto since the island airport opened in 1938.

Dick Oliver was killed when he crashed his F-11 Tiger into a breakwater at the Island Airport, while performing in the Canadian International Air Show.

[192] On January 12, 1992, Graham Sellers, the pilot and only occupant of a Piper Twin Comanche two-engine four-seater plane, died when both engines failed on his final approach to land at the airport.

[194] On October 9, 1993, Nigel, Louise and Sarah Martin and Dennis Kaye died in the crash of a Beech Baron that had just taken off from the island airport.