Establishment

In the late 1930s, transatlantic air traffic was dominated by flying boats, and a flying boat terminal was located at Foynes on the south side of the Shannon Estuary. However, it was realised that changing technology would require a permanent runway and airport.

In 1936, the Government of Ireland confirmed that it would develop a 3.1-square-kilometre (1.2 sq mi) site at Rineanna for the country's first transatlantic airport. The land on which the airport was to be built was boggy and on 8 October 1936 work began to drain it. In July 1939, a SABENA Savoia-Marchetti S.73 from Brussels via Croydon Airport was the first commercial flight to use the Rineanna airfield.

By 1942, a serviceable airport had been established and was named Shannon Airport. BOAC began scheduled service to Bristol on 21 February 1942 to provide a land plane connection between England and the flying boat terminal at Foynes. Aer Lingus began scheduled service to Dublin in August 1942.

Transatlantic service

By the end of World War II in 1945, the existing runways at Shannon were extended to allow transatlantic flights to take off. The first Air Services Agreement between Ireland and the United States in 1945 permitted U.S. airlines to serve only Shannon, and permitted Irish airlines to serve only Boston, Chicago and New York.

On 16 September 1945, the first transatlantic proving flight, a Pan Am DC-4, landed at Shannon from Gander. On 24 October 1945, the first scheduled transatlantic commercial flight using a land plane, an American Overseas Airlines DC-4, Flagship New England, stopped at the airport on the New York City–Gander–Shannon–London route. Trans World Airlines began service between New York and Paris via Gander and Shannon on 5 February 1946, and began a Shannon-Dublin tag flight in 1974 after the US Civil Aeronautics Board threatened to ban Aer Lingus from landing in New York. Aerlinte Eireann began service from Dublin to New York via Shannon on 28 April 1958.

In 1947, the "Customs Free Airport Act" established Shannon as the world's first duty-free airport, a move promoted by Brendan O'Regan. Shannon became a model for other duty-free facilities worldwide.

In 1969, it was announced that a new government agency, Aer Rianta (now the Dublin Airport Authority), would be given responsibility for Shannon Airport. Passenger numbers at the airport reached 460,000 that year. With the increase in passengers and the introduction of the Boeing 747, it was decided that a new enlarged terminal was needed. The first commercial operation of a 747 took place in April 1971, while the new terminal officially opened in May that year.

Aeroflot service

Aeroflot began service to Shannon in September 1975 as a stop between the Soviet Union and other Communist bloc countries, such as Cuba and Angola. Aeroflot kept its own fuel storage at Shannon and allowed the airport to sell the Soviet fuel to other airlines.

The United States demanded that Ireland suspend Aeroflot's Shannon operations following the shooting down of Korean Air Lines Flight 007 in 1983, and Ireland temporarily banned Aeroflot later that year. Nonetheless, the Aeroflot operation returned and developed into a hub by the mid-1990s, with flights to New York, Chicago, Washington, Miami, and Havana, largely using Ilyushin Il-62 aircraft.

The cooperation between Aeroflot and Aer Rianta at Shannon also led to a joint venture between the two companies to open duty-free shops at Sheremetyevo Airport in 1987.

On 30 September 1994, Shannon was the site of the "circling over Shannon" diplomatic incident involving Russian president Boris Yeltsin.

The "Shannon stopover"

In 1990, the U.S.-Irish bilateral agreement was changed to allow Irish airlines to serve Los Angeles and additional U.S. airlines to serve Dublin via Shannon. An amendment in 1993 allowed airlines to provide direct transatlantic services to Dublin, but 50% of transatlantic flights had to either originate or stop over in Shannon. During the 1990s, the airport began to struggle. However, 1996 saw the beginning of Continental Airlines flying between Dublin, Shannon and Newark, New Jersey. Shannon began to rebound in the late 1990s with the success of the Irish economy, the improving situation in Northern Ireland and an influx of American tourists.

In 2005, an agreement was reached regarding a transitional period. Beginning in November 2006 and ending in April 2008, the agreement gradually eliminated restrictions on cargo services. For passenger service, it reduced the stopover requirement and allowed Irish airlines to serve three additional U.S. destinations.

In 2007, the European Union and the U.S. announced that an agreement had been reached on an open skies aviation policy (EU–US Open Skies Agreement). The agreement came into effect from 30 March 2008, leading to the abolition of the Shannon Stopover, although this would have happened under the 2005 agreement anyway.