Labuan, located 8km from the coast of Sabah, was declared a Federal Territory in 1984 and is a thriving duty-free port and Malaysia's major offshore international financial center.  It has become an important venue for business and commerce.

The new 16,000sqm terminal opened in 1999, is equipped to handle up to 1.2 million passengers annually and 500 passengers during peak hours.  In 2006, the airport handled 575,684 passengers with 9,332 aircraft movements.