The 1927 Territory of  Hawaii Legislature, by Act 257, appropriated funds for airport development in the Territory, including $25,000 for Hilo.  In February 1928, Major Clarence M. Young, then Secretary of Aeronautics, U.S. Department of Commerce, came to Hawaii to inspect aviation facilities and promote commercial aviation in the Territory.

On February 11, 1928, Major Young was flown to Hilo in the Bird of Paradise for the purpose of dedicating the new airport.  This was the plane that Army Lts. Lester Maitland and Albert Hegenberger used in making the first successful flight to Hawaii on June 29, 1927.

Hilo Airport was developed on land belonging to the Hawaiian Homes Commission, and prior to 1937, $34,148 in WPA funds were expended on the landing area.

In 1937, an accelerated airport development program was undertaken with WPA funds.  From 1937 to 1941 an amount of $261,613 was invested at Hilo Airport.  In 1941, the Civil Aeronautics Administration contributed $314,000 of National Defense Funds to this development.

According to the Department of Public Works' Annual Report of June 30, 1941, $125,243 of Territorial money had also been spent on the airport from 1927 to that date.

The expansion of Hilo Airport in 1938 required relocating the prison camp and the hangar and office of Inter-Island Airways.

At the outbreak of World War II, Hilo Airport was taken over by the Army Engineers, and an Air Corps fighter squadron was stationed there.  The Engineers constructed military installations and continued the expansion of runways, taxiways, and parking aprons.  In 1943, the Navy occupied the field under agreement with the U.S. Engineers.

The construction of a Naval Air Station was started with all the necessary facilities to base and train two full air groups.  While the Navy had more extensive installations and greater use of the field, the Air Corps continued to operate the control tower, and, from their own reservation, serviced a sizeable transport operation conducted by the 19th Troop Transport Squadron.  The Naval Air Station also serviced a similar naval activity. Civilian passenger service continued under the authority of the Army.

The name of Hilo Airport was changed to General Lyman Field by Joint Resolution of the Territorial Legislature on April 19, 1943.

After the war, military operations at Hilo Airport steadily decreased, and in September 1946 it was returned to the Territory for operation as a civil airport. 

However, operational control was retained by the Air Force.  Pending cancellation of the existing lease under which the field was operated during the war, operation of the control tower was continued by Air Force personnel. This situation continued until October 1948, when operation of the control tower was turned over to the Hawaii Aeronautics Commission.  Commission funds were appropriated for operation of the tower by Civil Aeronautics Administration personnel.

Difficulties were encountered in the release of this territorial-owned airport, but the Commission, with the help of the Delegate to Congress, succeeded in obtaining Congressional action to provide Federal funds for control tower operation commencing July 1, 1949.

No major projects were undertaken at General Lyman Field during the years 1948-1949 in view of the questionable status of the airport under the War Department lease.

The Hawaii Aeronautics Commission used certain facilities under a 30-day revocable permit.  The Air Force still maintained personnel on its reservation at the airport and, at first, many jurisdictional problems arose because the Air Force operated the airport "on paper" while the Hawaii Aeronautics Commission operated the airport "in fact."

On April 8, 1952, the airport was returned to civilian control by the surrender of leases, easements, licenses and permits and improvements were transferred to the Territory by the Federal government.

In May and June of 1949 all suitable buildings on the airport were rented for the storage of a backlog of raw sugar created by a shipping strike.

During 1951, extensive improvements to the main entrance and access road to Hilo Airport terminal area were completed.  In 1952 a new maintenance area, consisting of five buildings and a large maintenance yard, were constructed.

In July 1952, a new maintenance area, consisting of five buildings and a large maintenance yard was constructed.

In July 1952, ground was broken for the new terminal at General Lyman Field, and a contract was let for installation of high intensity lights on Runway 8-26.

In March 1953 bids were opened for the construction of roadways, aprons and parking area, followed by the opening of bids in April for a freight terminal building.  In May 1953 bids were requested to construct an airplane hangar.

On December 5, 1953, Hilo's new terminal was dedicated with pomp and ceremony.

The new freight terminal was completed in June 1954 and declared to be the finest freight terminal in the Territory.

By 1955, General Lyman Field was comprised of 650 acres of land.  It had two runways, 3-21 which was 200-feet wide by 6,000-feet long, and 8-26, which was 200-feet wide and 6,500-feet long.  The airport had a passenger terminal, freight terminal and a parking area.  Aeronautical services and facilities included paved runways, taxiways, parking aprons, lighted, free-swinging tetrahedron, fuel was available by truck from Hilo, Runway 8-26 had high intensity lights, there was CAA Communications and a Control Tower, as well as rotating beacon and omni-range beacon.

Scheduled service to Hilo was provided by Hawaiian Airlines, Ltd., and Trans-Pacific Airlines, Ltd, as well as non-scheduled operators.