The airline was established in 2000 and started operations on October 29, 2000. It was one of several new carriers formed to take advantage of the deregulation of the air transport industry in Thailand and the Thai government's "Open Skies" policy, which came into effect on September 1, 2000.
Air Andaman's services included a domestic route between Bangkok and Phuket and flights to Singapore. In 2003-04 it had an extensive network with 13 regional destinations served from Bangkok and Chiang Mai.
But by the end of 2004, the airline was defunct. In March 2006, Thailand's Civil Aviation Department said it was withdrawing the airline's license.
The airline's major shareholders were Atichart Athakravi and Prathip Boonprasom, who in March 2006 was planning a comeback with German investor Hubert Joseph Trunser and Swiss investor Bernan Luthee in a joint venture called Asian Aerospace Service. The new airline aimed to run chartered flights from Bangkok with two Jetstream aircraft.
The Air Andaman fleet consisted of the following aircraft (at 2003-04):