On 1 December 1989 two businesses, Net and Silkar, partnered with Aer Lingus to create an inclusive tour charter airline called Pegasus Airlines and services were inaugurated on 15 April 1990 with two Boeing 737-400s. However, four months after the launch, Iraq invaded Kuwait and the seven month occupation that followed had a serious effect on Turkish tourism.
By 1992, tourists began returning to the country and Pegasus grew with the acquisition of a third 737-400. The airline leased a further two Airbus A320s to meet the summer demand.
After two positive years, Aer Lingus and Net sold their shares in the company in 1994 to Istanbul based Yapi Kreditbank, making Pegasus a purely Turkish company.
In January 2005, ESAS Holdings purchased Pegasus Airlines and placed Ali Sabanci as the chairman. Two months later, he changed the airline from a Charter airline, to a Low-Cost airline. In November 2005, Pegasus placed an order for 12 new 737-800s from Boeing which was backed up with an order for a further 12 737-800s in November 2008. The latter order has flexibility in it as the orders can be changed to the 149-seat 737-700 or the 215-seat 737-900 depending on market demand.
In 2007, Pegasus carried more passengers in Turkey than any other private airline. In 2008, it carried a total of 4.4 million passengers.
In 2012, Pegasus Airlines, the second largest airline in Turkey, has signed for up to 100 A320neo Family aircraft (57 A320neo and 18 A321neo models), of which 75 are firm orders. Pegasus becomes a new Airbus customer and the first Turkish airline to order the A320neo. This is the largest single commercial aircraft order ever placed by an airline in Turkey, and was announced on December 18, 2012 at a ceremony attended by Binali Yıldırım, the Turkish Minister of Transport.
Pegasus Airlines formerly operated three Boeing 737-500 which were introduced in 2006. The last of the three aircraft was retired in 2012, leaving the Pegasus Airlines fleet with 42 active aircraft including Boeing 737-400s and Boeing 737-800s.
Pegasus Airlines operates a one-class interior configuration on all of their aircraft. A "Flying Cafe" is available to all passengers whereby hot meals are provided for an additional charge. Pegasus is also considering installing In-Flight-Entertainment and charging for headphones (currently, only overhead screens are available on selected 737-800s and they only display a computer-generated map showing the flight's progress).
Unlike most low-cost carriers, Pegasus runs its own flight crew training centre and Maintenance organisation, Pegasus Technic. Both centres are fully licensed and are used to train new staff members both on the ground and in the air.
On 10 March 2010, Pegasus Airlines Flight 361, an Airbus A319 operated by IZair on a ferry flight, made an emergency landing at Frankfurt Airport in Germany after a malfunction in the nose gear. The flight landed safely but blew both front nose gear tires. The airport closed runway 07R/25L for 3 hours to allow recovery. The nose gear suffered the same problem as JetBlue Flight 292.