The company was founded by brothers Thomas and Joseph Caruso, as Bar Harbor Airways. They began flying charters and scenic flights from the Bar Harbor town dock. By 1950, they had established a base of operations at the Hancock County-Bar Harbor Airport.

Bar Harbor Airlines started flying in 1971, using the Hancock County Airport as its hub. The airline's first route was to Boston.

The route proved so popular, especially among those from Maine who had daily jobs in Boston, that by 1972, the airline expanded its route system by 350 percent, including seven cities and becoming an international airline, with a flight from Boston to Quebec City, Quebec, Canada. It adopted the slogan, "Linking Maine With the World".

By 1974, the airline offered round-trip services between each city it served. Being a commuter airline made this easy, as each of its services consisted of short flights with quick turnaround times, and, with a large number of aircraft available, Bar Harbor had hubs in every city it served. During the 1970s, Bar Harbor Airlines primarily used Beechcraft Model 99 aircraft.

The airline also offered cargo service to the destinations it served. Bar Harbor's first crash, on August 16, 1976, was on a cargo flight from Bangor International Airport in Bangor, Maine, to Bar Harbor. The airplane carried only one person, the pilot, and he was not injured. Peter Monighetti, chief pilot for the airline, was ferrying a Beechcraft 99 airplane from Bangor when the plane crashed on a ridge in Lamoine, Maine. Monighetti had been making an approach upon Bar Harbor Airport, located across the Jordan River in Trenton, Maine.

The airline's second accident proved to be tragic. On May 16, 1978, a flight carrying company founder Thomas Caruso, his son Gary Caruso (Vice President of the Company) and two other company pilots, Peter Monighetti and Malcolm Connell, crashed in heavy fog near Bar Harbor Airport in Trenton, Maine. There were no survivors. The cause of the crash was later ruled to be a manufacturer defect and several family members of the crash victims received cash settlements from the manufacturer of the aircraft.

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