The airline began to expand its operations with the introduction of more prop-airliners like the Handley Page Dart Herald in 1965 which it operated 6 of the type. Later the Vickers Viscount 800 in 1967 and -700 version also joined the fleet in 1969, consolidating the airlines domestic and European routes.

Minster Assets, a London-based investment and banking group, acquired the airline in 1968, and in 1969 promoted former Mercury ground handling manager Michael Bishop to become the company's general manager.

From this point, Bishop drove the company forward, with domestic and European expansion continuing apace. As a first step, in November 1969, BMA took over Autair's Heathrow–Teesside route, which marked the airline's Heathrow debut.

In 1970, BMA entered the jet age with the introduction of three new BAC One-Eleven 500s, followed by an ex-Pan Am Boeing 707-321 in 1971.

Following his appointment as managing director in 1972, Bishop withdrew the One-Elevens from service, two of which were swapped for three Handley Page Dart Heralds. As the early-model, high-time second-hand 707s commanded a low resale value, the airline decided to keep these aircraft and lease them out to other airlines on a wet lease basis.

The success of the airline's wet lease operation resulted in an increase in the number of Boeing 707s allocated to this activity, including the addition of several later model 707-320B and -320C aircraft from 1976.

On 1 November 1974, BMA began operating between London Gatwick and Belfast, where it replaced the service previously operated by British Caledonian. London–Belfast was BMA's first UK domestic trunk route and the first all-year round route it served in [indirect] competition with British Airways (BA).

BMA's Gatwick debut also made it the only airline at the time to operate scheduled services from all five contemporary London airports – Gatwick, Heathrow, Luton, Southend and Stansted.

On 1 September 1976, jets began gradually replacing the turboprop fleet on most of BMA's domestic and European services, when the airline's first Douglas DC-9 replaced Viscounts on the Heathrow–Tesside route.

In 1978, Minster Assets sought to sell the company. With the help of a Californian entrepreneur, Robert F. Beauchamp, Bishop raised £2.5 million to lead the management buy-out, and was appointed chairman as a result.

That year, British Midland and British Airways agreed to swap some of their routes, resulting in BMA relinquishing its routes from Birmingham to Brussels and Frankfurt, and BA handing over its routes from Liverpool to London Heathrow, Belfast, Dublin, Jersey, the Isle of Man and Glasgow. Annual passenger numbers topped 1 million for the first time in 1979.

On 31 March 1980, British Midland replaced British Airways on the Leeds Bradford to London Heathrow route, initially operating with their remaining Viscount 800 aircraft. Within a year or two these were replaced by the DC9-15.

In 1982, BMA, together with British & Commonwealth (the owners of AirUK at the time), formed Manx Airlines, and the following year it purchased a 75% stake in Glasgow-based regional airline Loganair from The Royal Bank of Scotland. Following BMA's success on the Heathrow–Glasgow route, the airline began flying between Heathrow and Edinburgh (1983) and Heathrow and Belfast (1984). With the introduction of these services, BMA and BA were now in direct competition on the UK's three busiest domestic trunk routes. BMA's competitive pressure on BA resulted in the latter replacing its no frills shuttle service with an upgraded Super Shuttle that included a full breakfast, hot drinks and a free bar service on both Heathrow–Glasgow and Heathrow–Edinburgh from September 1983.

In October 1984, the Boeing 707 fleet was withdrawn, having been used extensively on lease operations for other airlines across the world.

In 1985, a new aircraft livery featuring a dark blue upper half and tail, with a light grey lower half separated by a thin, white stripe, was introduced. At this time, BMA was branded simply British Midland, and a new logo featuring a stylised red BM crowned with a white diamond shape appeared on aircraft tailfins.

BMA was able to compete directly with BA between Heathrow and Amsterdam from 29 June 1986. This resulted in BMA becoming the first private, independent airline to compete with then wholly government-owned BA on an international trunk route from Heathrow.

In the following years, British Midland increased its operations from Leeds Bradford, and introduced other routes including Glasgow, Paris CDG and Brussels. When the DC9s were phased out, the Boeing 737 200 became a regular on the Heathrow route in 1986. (Later the 737 300, 400, and 500 were all operated prior to the arrival of the newly acquired Fokker 70 and Fokker 100).

The Diamond Club frequent flyer programme (FFP) launched on 1 October 1987, coinciding with the introduction of an enhanced business class style, single-class Diamond Service featuring a full meal and free onboard drinks service for all passengers, regardless of the fare paid, as well as airport lounges at the airline's major UK destinations.

British Midland operated its final Viscount flight on 20 February 1988, 21 years after the airline had first operated the type. That year, British Midland also became the first to operate the British Aerospace (BAe) ATP for which it had been the launch customer. The BAe ATP was the airline's last turboprop type.

In 1992, British Midland became the first airline to offer a vegetarian choice of in-flight meals on UK domestic flights and one of the first in Europe to do so on domestic services.

On 30 September 1996, British Midland began offering Diamond EuroClass on all its domestic routes, becoming the second airline in the UK after Jersey European Airways to offer a separate cabin for business travellers on domestic routes.

The holding company become British Midland Plc in 1997, when it was de-merged as part of major corporate restructuring. Towards the end of the 1990s, British Midland switched its aircraft suppliers from Boeing and Fokker to Airbus and Embraer, selecting A319/320/321s and ERJ 135/145s to replace 737s and F70/100s. In July 1999, Bishop formally opened the British Midland Training Centre in Stockley Close. That year, Scandinavian Airlines System (SAS), a shareholder in British Midland since 1987, sold half its stake to Lufthansa followed by British Midland joining Star Alliance. This takeover upgraded slightly the colours, the livery subsequently featured a darker blue upper half and tail, with a deep grey lower half separated by two thin stripes.

Following research that had established that people in the UK tended to confuse British Midland with the Midland Bank or British Airways and that many outside the in In 2001, the major event was the rebranding of the airline as BMI British Midland (subsequently shortened to BMI). Aircraft received a new livery of royal blue, white and a fading Union flag on the tail, along with the new lower case BMI logotype. Also in 2001, BMI introduced the Airbus A330-200, its first widebodied aircraft type, into the fleet to enable it to serve the United States and other long-haul destinations.

Bmi launched flights from Manchester to Washington Dulles and Chicago O'Hare in May and June 2001 respectively. Initially, the new A330s operated both routes; however, the Washington service was subsequently downgraded to a narrowbody operation using a Boeing 757-200 leased from Icelandair before being axed in 2005.

BMI operated a service to Mumbai from London Heathrow between May 2005 and October 2006, after the UK and India amended their bilateral air services agreement. Services to Riyadh followed, commencing on 1 September 2005, after British Airways ceased to serve Saudi Arabia earlier that year. BMI also launched a scheduled service to Moscow Domodedevo in co-operation with Transaero Airlines on 29 October 2006, which used a dedicated A320 aircraft (G-MIDO) with special seating for the service, including leather seats and a 40" seat pitch. In 2007 the airline launched non-stop services from its Heathrow hub to Cairo and Amman, raising the airline's profile in the Middle East significantly.

In February 2007, BMI bought British Mediterranean Airways (BMED), a British Airways franchise partner, and as a result gained access to new markets in Africa, the Middle East and Central Asia that were served by that carrier. BMED was fully integrated into BMI on 28 October 2007.