The free event, which attracts up to 100,000 visitors, was due to be staged on the Tower Festival Headland over the weekend of August 8 and 9.
Dates for the 2021 Blackpool Air Show have already been scheduled for the weekend of August 7 and 8.
Cllr Gillian Campbell, Cabinet Member for Tourism & Culture for Blackpool Council, said: “It is with a heavy heart that we are cancelling one of Blackpool’s biggest and most popular events.
“Over the past few weeks we have been closely monitoring Government guidance around social distancing and public gatherings to determine whether the event could go ahead in some way.
“It is now clear that the logistical implications of staging an event of this size under the current restrictions, a number of which are likely to remain in place for some time, mean that it cannot go ahead this summer.
“The health and safety of our visitors and all those involved in the Air Show is of paramount importance. So too is the prevention of additional strain on the emergency services who support our events programme each year at a time when they are helping to lead the UK-wide response to the pandemic.
“It is, of course, disappointing to have to cancel such an important part of our summer programme, but we are working closely with our partners to ensure that our resort emerges from this crisis with a strong and vibrant tourism offer.
“We look forward to welcoming back our visitors when it is safe to do so.”
Other events in the VisitBlackpool programme for this year will continue to be reviewed over the coming weeks in line with Government forward guidance.