The airline was established and started operations in 1985. It was founded by the Shanghai municipal government as the first independently run local airline in China. It was initially restricted to domestic flights, but in September 1997 won government approval to operate international services.

In October 2002 it began to issue shares on the Shanghai stock market. It launched domestic freighter services in May 2004 [1]. It is the fifth largest airline of China by fleet size. In 2006 a cargo airline, Shanghai Airlines Cargo, was established with Taiwan-based EVA Air[citation needed]