Air Panama is a regional airline based at Albrook "Marcos A. Gelabert" International Airport in Panama, and is currently the second-largest air carrier in the country, surpassed only by Copa Airlines. The carrier offers both scheduled and charter passenger flights to more than 31 destinations from its hub at Albrook International Airport.

The airline was founded in 1980 as PARSA, though certain services were operated as Turismo Aéreo. At the time of its start-up, Panama had been ruled by a military dictatorship government since 1968, but together with Aeroperlas, the company became one of the biggest and most prominent airlines in the country. On 20 December 1989, on the wake of the United States invasion of Panama, two Britten-Norman Islander aircraft owned by PARSA were damaged beyond repair in fighting actions. Despite this, the airline expanded rapidly to other destinations around Panama and Costa Rica during the 1990s, and began to acquire newer aircraft.

On New Year's Eve 1997, PARSA suffered its first fatal accident, when a Britten-Norman Islander crashed into the jungle 6.5 kilometres short of Rio Sidra Airport, Darien, killing all on board.

In January 1999, the airline moved its headquarters to the new Albrook - "Marcos A. Gelabert" International Airport, when the old airport located in Paitilla was shut down after 70 years of operation. In 2005, the Air Panama trademark rights were acquired. The name had been unused since the demise of Air Panamá Internacional in January 1990, and PARSA formally adopted the new name that year.

After the purchase of the trademark rights in 2005, Chairman George Novey unveiled in a Fokker F-27 aircraft PARSA's new identity under the Air Panama name. Shortly after, the airline introduced new scheduled services to other regional destinations around Panama and began to acquire modern turboprop aircraft, such as the Saab 340 and the Bombardier Dash 8-300 series, in replacement for the aging British Aerospace Jetstream 31 and Fokker F27 Friendship fleet.

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