Lugia was initially created as a plot device for, and only meant to be seen in, the Second Pokemon movie, The Power of One (aka Pokémon the Movie 2000). In fact, his designer, Pokemon Anime writer Takeshi Shudo said he was surprised to see Lugia in the games at all. Game Freak seemed to love the creature so much they not only made him canon, but also made him the mascot of Pokémon Silver.
Contributed by PirateGoofy