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Just got Star Wars: Armada and we're still just playing the introductory scenario. The rules tell us that each round during phase 4 ("status phase") the player with the initiative token will flip it. In the expanded rules I see that after fleet construction we may have a new way of choosing who starts with the initiative token.

Does the initiative token ever pass from player to player? Or does it just stay in one player possession the whole game?

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It does not ever change hands. Initiative stays with whichever player had it at the start of the game. It's not really mentioned in the "starting to play" book, but the Rules Reference is pretty explicit:

Initiative

Initiative determines which player acts first during the Ship Phase and Squadron Phase. It is assigned to a player during the “Determine Initiative” step of setup. That player is the first player and takes the initiative token. His opponent is the second player.

The first player retains initiative for the entire game.

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