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The airline was established on 1 January 1995 and started operations in June 1997 with a series of charter flights carrying pilgrims to Jeddah. The flights were originally slated to operate from Gaza, but due to an Israeli ban, the services operated from Port Said, in northern Egypt. Scheduled services began on 23 July 1997, operating from Arish to Jordan and Saudi Arabia. Palestinian Airlines transferred its base to Gaza following the opening of the airport in November 1998 and added a number of new routes in the region. The airline was grounded in October 2000 following the start of the Al-Aqsa Intifada and was forced to move to El Arish International Airport in December 2001, after destruction of the runway at its previous base, Yasser Arafat International Airport, where it operated limited services. It is wholly owned by the Palestinian Authority and has 398 employees (as of March 2007).