Today's airport is located on what was a tidal estuary lake. The site was chosen as it is closer to the city than the original aerodrome, Dawson Farm, located a then considerable 10 km away northeast of Invercargill. The draining and stabilising of land began in 1936. The continual draining of the surrounding land was (and still is) achieved with the use of a large canal and tidal pumping system. It took until 1939 before a rudimentary landing strip was considered acceptable for light aircraft to land. By then World War Two had begun and the RNZAF used it as an auxiliary field while Dawson Farm remained the air force's aerodrome of choice as heavier patrol bombers could land there. The city council built two hangars and the air force a larger facility. Pre-fabricated office blocks provided basic administration facilities.

The airport's first scheduled service was on 7 November 1944 by Union Airways' Lockheed 10 Electra flying from Dunedin. The terminal facilities were little more than two small sheds at the time; and a Union Airways limousine bus service provided passengers a direct link to the downtown terminal located on The Crescent.

When the Government nationalized all airlines to create NAC in 1947, the Electra service was replaced by de Havilland DH.89s. Once the new paved runway was created in 1956 along with a new substantial but temporary terminal, Douglas DC-3s began operating. Meanwhile, a local airline, Amphibian Airways, had started the Stewart Island route in the early 1950s, using Grumman Widgeons. The amphibians also serviced isolated coastal lighthouses and their settlements. Stewart Island Air Services took over in the late 1970s, and was then taken over by Southern Air in 1981, which still provides the air service to Stewart Island as Stewart Island Flights.