It is summertime on the Island of Sodor, and the engines are very busy showing lots of holidaymakers, the beautiful sights of Sodor. One day, the Fat Controller (Sir Topham Hatt in the U.S.) announces that a new airport is to be built on Sodor, which will bring more holidaymakers on aeroplanes than ever. Thomas and Percy go to the site of the new airport, only to discover that 'Arry and Bert are on the same job. The twin diesels biff their trucks into Thomas and Percy and make their annoyance of having to work with them clear, which infuriates the steam engines.
That afternoon, Thomas goes to the timber yard and finds 'Arry and Bert there. They boast that they have a very important job to do and claim that they have been given it because Diesels are better than steam engines, which angers Thomas. Then, he has an idea. Whilst Thomas is shunting 'Arry and Bert's trucks so they can be loaded with timber, he biffs them so hard, they miss the crane and the timber falls onto the tracks. Whilst Thomas and Percy are shunting trucks, Diesel confronts Thomas about the trouble he had caused for 'Arry and Bert, and boasts that he too has an important job. Thomas decides to play a trick on Diesel. Instead of shunting something useful for Diesel like timber or bricks, Thomas gives him bananas. Thomas and Percy go to the smelters to collect some steel girders. Upon arrival, they see that Diesel 10 with his giant claw has returned, and are so scared that they run away.
On their way home, Thomas and Percy are surprised to see the Sodor Suspension Bridge is not painted and the new airport is only half-built. Worse still, Tidmouth Sheds have been demolished. Diesel reveals that the rebuilding the sheds was their important job, but because Thomas delayed it giving Diesel bananas, they haven't been able to finish it on time. As a result, all the engines are forced to sleep on different parts on the Island. Thomas has to sleep with Emily at Knapford Sheds; James has to go to the coaling plant; Gordon has to sleep under a tent; Toby is lucky enough to stay in his own shed; Edward has to sleep at the quarry with Diesel; and Henry and Percy have to sleep at the Smelters shed. But there is worse to come. That night, a huge storm sweeps across the island and causes havoc. Trees are blown onto the line and the Sodor Suspension Bridge collapses. The next morning, the Fat Controller tells the engines that the storm damage must be cleared up before the work on the new sheds and the airport can continue.
The next morning, Thomas is sent to collect an iron beam for the suspension bridge from Brendam Docks. Upon arrival at the suspension bridge, Thomas feels tired and the beam needs to be placed. Diesel wants to do it, but the foreman decides to let Thomas try. An exhausted Thomas struggles to hold the heavy beam and nearly is unable to carry it, but using all his strength, Thomas manages to lower the beams into place, much to Diesel's fury.
When Thomas goes to collect paint for the bridge, Diesel biffs Thomas's flatbed so hard that the paint splashes all over Thomas. When Thomas sees 'Arry, he biffs him into a pile of gravel. In retaliation, 'Arry biffs James under the coal hopper. The matter escalates until all the engines are fighting. By the end of the day, everyone is dirty and no work has been done.
The Fat Controller is furious at the delays and warns the engines that any more disturbances will mean they won't be able to open the airport and the railway will close permanently. This leaves the engines deeply worried over their recent actions. As a result, several of them dream what might happen to them if The Fat Controller's warning did come true and the railway closed forever. James has a dream of being a Coconut Shy at a carnival, Gordon is added to a playground, Edward turns into a scarecrow; and Percy turns into a roller coaster. All the while, Thomas has a dream on how to make things better. In his dream, he sees Lady and Rusty working together. Lady tells Thomas about teamwork and Thomas goes off to find Mavis as soon as he wakes up.
Thomas finds Mavis at the wash-down and tells her about his plan: the Diesels and steam engines must work together to save the new airport and their home. Mavis says that they must talk to each other first, so Thomas suggests to have a meeting at the coaling plant the next day. Thomas and Mavis tell the engines about the meeting, and Thomas decides to tell Diesel 10, but gets cold wheels and backs down. The next day, Thomas races to the coaling plant and gets there in time to stop 'Arry and Bert from almost calling the meeting off as the engines start to argue about who is to blame for starting the trouble. Thomas explains that the steamies and diesels must work together in order to save the railway, and at last the engines put their differences aside. When Harold brings the Fat Controller, Thomas explains that the steam engines and Diesels have finally agreed to work together.
Thomas soon gets the Diesels and the steamies to work together to help rebuild the railway. 'Arry and Bert help Gordon to take some workmen to Tidmouth Sheds; Mavis and Percy take some paint to the Sodor Suspension Bridge; and Toby and Daisy take some painters to the airport.
Very soon, the new airport is complete and the first airplane is sent to Sodor, but when Thomas accidentally derails some trucks, they hit the water tower, which falls to the ground and cracks the runway. The workmen quickly fix the runway, but they need George to finish the job and with Harvey on the other side of Sodor, and is too far away to clear the blocked track in time, so they can bring George, who is too slow to come here by himself. There is no chance of the aeroplane landing. Thomas quickly has an idea and rushes off to find Diesel 10. Thomas gathers his courage and asks Diesel 10 to help them and tells him that he will be the most useful engine of the day. Diesel 10 is hesitant at first, but eventually agrees and follows Thomas to the airport. The steamies are shocked to see Thomas and Diesel 10 working together. Seeing Diesel 10 working alongside a steam engine convinces Diesel, 'Arry and Bert to finally respect the steam engines themselves. With the aid of the other engines, they clear up the mess and Thomas collects George to fix the runway.
With the runway repaired, the aeroplane lands at last. The engines have learned that teamwork runs a railway, not opposition about their differences. That evening, the engines are happy to see Tidmouth Sheds rebuilt, especially Emily, when she finds that she is staying at Tidmouth Sheds from now on as an extra shed has been built.
All the members of "The Steam Team" (the main cast of characters as portrayed since Season 8) make appearances in the film. Diesels with major roles include Diesel, Mavis, 'Arry, and Bert. Various supporting characters make appearances in the feature's music videos. Daisy makes her first appearance in the series since Season 4, and Derek appears for the first time outside of Season 5's "Double Teething Troubles." Two engines introduced in Thomas and the Magic Railroad, Lady and Diesel 10 play minor roles in the film.