Commercial aviation in the United States is one of the growing group of new American industries that owes its origin, growth, development, and present structure to the planning and financing of the Federal government. Before the Wright brothers made their now historical Kitty Hawk flights on December 17, 1903, the United States Government had made an outright grant of $50,000 to encourage Dr. Samuel Pierpont Langley in his experiments preceding the unsuccessful attempt on October 7, 1903, to fly his aerodrome. Before World War I had ended, Congress had appropriated for expenditure in this infant industry around $1 1/4 billion for the purchase of Army aircraft alone.
Commercial aviation, however, received its primary impetus not from military operations or military transport, but from the Government's desire for the speedy carriage of the United States mail. Modern American aviation, with most of the Airlines commencing with the idea of carrying mail instead of passengers, not only has its roots, but also holds much of its development, to the transportation of mail and the influence of the Post Office Department. Because of this intimate relationship with and dependency upon public officials, an outstanding characteristic of the airlines industry throughout its history has been the extent of the efforts of all elements in the industry to stimulate support for their particular interests in both the executive and legislative branches of the Government.
The first airmail service was inaugurated in 1918 by the Post Office Department, which, with Army Pilots flying planes, instituted an airmail route from New York to Philadelphia and thence to Washington. The success of the New York - Washington mail run soon spurred the department to enlarge its airmail services. Routes were established between New York and Chicago in 1919, and between New York and San Francisco in 1920, both utilising Army flyers. The first transcontinental night mail flight was executed in 1921. By 1924 the Post Office Department had constructed 1886 miles of lighted Airways and mail pilots began regular transcontinental night flights.
When lighted Airways made it feasible to conduct regular night flights across the country, the post office department responded to industry requests that the business of carrying the mail be transferred to private operators. Accordingly, the Kelly Act of 1925 authorise the Post Master General to contract with private airport carriers for the transportation of government mail. The law also set a minimum airmail rate 10 cents per ounce and maximum rate to be paid to each airmail contractor of not more than four-fifths of the revenue derived from the mail handled.
The first five airmail contracts were awarded by the Postmaster General in that year to private operators. The successful companies were colonial Airlines, which later became an important part of American Airlines, National Air Transport, Varney Lines, And Pacific Air Transport, all of which were later joined into the United Airlines System, and Western Wear Express which subsequently was most into the TWA system. Thus the very first letting of mail contracts provided the basis for the structural pattern of the airlines industry which exists today.
The insuring boom in the airline industry provided a fertile field for the formation of a number of important combines of air carriers which consolidated into long haul routes the heretofore primarily regional operations of certain Airlines. United Airlines was organised in December 1928. By means of mergers, it later obtained control of National Air Transport and its route from New York to Chicago. Contact to the Pacific Coast was established through Boeing Air Transport which you from Chicago to San Francisco, and through Varney Air Lines which had routes from salt Lake City to Seattle and Spokane. Augmenting UnitedEast West routes was that of Pacific Air Transport which flew coastwise between San Diego and Seattle.
A series of tragic crashes which took the life of a number of aviators showed not only that, overall, the private lines had conducted, at least technologically, a well-run operation, but also how woefully unprepared were the armed forces in flight navigation.
The debacle of the army's mail carriage compelled a policy reversal. It was shortly announced that the transportation of the air mail would be returned to private carriers, as soon as adequate plants therefore could be formulated. This time, however, an effort was made to assure against a repetition of the previous abuses. The Airmail Act of 1934 authorised the Postmaster General to award contracts for mail carriage on a competitive bid basis. In letting new contracts, he was directed to establish at least four transcontinental routes and an eastern and western coastal route as so called primary routes. The Act, however, prohibited mail carriers from having financial interests in other companies in the aviation industry and for any holding company or any company engaged in any phase of deviation to hold stock in a company having an year airmail contract. It also made in legal certain interlocking directorates.
Prior to the passage of the Airmail Act of 1934, postmaster General Farley advertised for bids for temporary mail transportation on certain routes. His advertisement, however, formally precluded bidding by those transport companies whose contracts had been cancelled. It also required that a bidder have no officer or director who had previously entered into any combination to prevent the making of bids for the carriage of mail.
The former disqualifications meant little, however. United Airlines, for example, which had previously functioned as a managing company for United's affiliates, Boeing Air Transport, Pacific Air Transport, National Air Transport, and Varney, now submitted bids in their stead. Transcontinental and Western Air added an "Inc." to its title to comply with the requirement and regained it's old Central transcontinental route. American Airways merely transformed itself into American Airlines. Accordingly, many of the newly offered routes were promptly returned to those companies which, it had been found, had illegally obtained them.
Under the Airmail Act of 1934, the Postmaster was authorised to extend the temporary three month contracts as much as nine months more, and under the 1935 amendments thereto, contracts could be offered for a maximum of three years duration. The requirements for competitive bidding for mail routes still remained in force, however, and while this at least assured the possibility of competition for new routes, absent overt agreement or tacit understandings, also made for a good deal of uncertainty.
Navin Kumar Jaggi