Airspeed Limited was established in 1931 to build aeroplanes in York, England, by A. H. Tiltman and Nevil Shute Norway (the aeronautical engineer and novelist, who used his forenames as his pen-name). The other directors were A. E. Hewitt, Lord Grimthorpe and Alan Cobham. Amy Johnson was also one of the initial subscribers for shares.

Airspeed Ltd. was founded by Nevil Shute Norway (later to become a novelist as Nevil Shute) and designer Hessell Tiltman. In his autobiography, Slide Rule: Autobiography of an Engineer, Norway gives an account of the founding of the company and of the processes that led to the development and mass production of the Airspeed Oxford. He received the Fellowship of the Royal Aeronautical Society for his innovative fitting of a retractable undercarriage to an aircraft.

The AS.1 Tern, the first British high-performance glider (sailplane), was built to get publicity and attract more capital by setting British gliding records. A glider could be designed and built in two or three months while the design office and workshop were being set up in half of an empty bus garage on Piccadilly in York. Shute flew the Tern's first test flight.

In 1932 Airspeed produced the AS.4 Ferry, a three-engined, ten-passenger biplane designed specifically for Sir Alan Cobham.

In March 1933 the firm moved to Portsmouth where the City Council gave generous terms for a factory building constructed to Airspeed's requirements at the local airport. The first Airspeed Courier was flown from there in 1933, followed by the first of a twin-engined development of the Courier, the Airspeed Envoy, in 1934. Both the Courier and the Envoy were made in small numbers. In the same year, a long-range racing version of the Envoy, the AS.8 Viceroy, was developed for the England-Australia MacRobertson Air Race.

In August 1934, Airspeed (1934) Limited made a public issue of shares, in association with the Tyneside ship builder Swan Hunter & Wigham Richardson Limited.

In 1934 six Couriers had been sold to an operating company for a hire purchase deposit of £5 each. Nevil Shute Norway wrote that they could come back to Airspeed and as an "obsolescent type" might not be so easy to sell again. He got a reputation as being "unscrupulous" for resisting the auditors' attempt to write them down on the books because, with growing talk of war, civil aircraft of any size would sell immediately. As the six were worth nearly twenty thousand pounds, writing them down to half that would add £10,000 to their loss, making the firm's proposed share issue a very unattractive investment. Shute could see from his office the four hundred workers in the workshop with families depending on them. In 1936 most of the unsold Couriers and Envoys were sold and found their way to the Spanish Civil War. The demonstration Envoy was sold to the Spanish Nationalists for £6000, paid for in cash. In 1935, the sole Airspeed Viceroy was nearly sold to Ethiopia for use against Italian forces.

In 1934 Shute negotiated a licensing agreement with Fokker. In 1935, Airspeed signed a manufacturing licensing agreement for the Douglas DC-2 and several Fokker types, with Fokker to be a consultant for seven years. Airspeed considered making the Fokker D.XVII fighter for Greece, which wanted to buy from Britain for currency reasons. Shute and a Fokker representative "who was well accustomed to methods of business in the Balkans", spent three weeks in Athens but did not close the deal. After a year, the drift to war, and their Air Ministry contracts, meant that the Dutch could not go to the Airspeed factory or attend board meetings.