Ball sold his interests in November 1930 to Pittsburgh Aviation Industries Corp., and the airline became Pennsylvania Air Lines (PAL). It was reorganized as Pennsylvania Airlines after the Air Mail scandal of the early 1930s. Central Airlines, otherwise notable for hiring Helen Richey, the first female commercial pilot in the U.S., became PAL's main competitor after its founding in 1934. The two companies merged to form Pennsylvania Central Airlines, or PCA, on November 1, 1936.

Pennsylvania Central Airlines PCA, based at the new Allegheny County Airport near Pittsburgh, continued to add routes, notably to Chicago in 1938, and aircraft, notably the Douglas DC-3 in 1939.

In 1941, PCA moved its headquarters to the new Washington National Airport in Arlington, Virginia, becoming one of its three original tenants; PCA had been consulted during the airport's design. The row of office buildings adjacent its hangars gained the nickname "mahogany row" and the airline adopted the slogan "The Capital Airline," with its aircraft dubbed "Capitaliners." By 1947 its route network no longer reflected its name, and on April 21, 1948, the airline adopted a new insignia, colors and name: Capital Airlines. 

In 1946, the airline became the launch customer for the Douglas DC-4. In 1948 it created the "Nighthawk," the first coach class service, designed to compete with the railroads between Chicago and New York City as well as the dominant carriers on the route, United, TWA and American.

In 1948, the first airborne television was installed on a Capital airplane. In 1950 Capital Airlines received its first Lockheed Constellations, enabling it to compete more effectively on longer distance routes. In 1955 it became the first U.S. operator of Vickers Viscounts, the first passenger turboprop. The Viscounts were deployed on the flagship Washington-Chicago route and the airline hoped to use them on expanded service, but they were mostly stymied by the Civil Aeronautics Board.

On July 20, 1952, a Capital pilot reported seeing a blue-white ball in the sky. The Unidentified Flying Object reports caused a sensation in the Washington area.

The airline also encountered labor difficulties. Maintenance personnel went on strike in 1958, crippling operations for 38 days. On April 1, 1960, the New York State Commission Against Discrimination faulted Capital Airlines for failing to hire Patricia Banks, an African-American woman who had been denied employment as a flight attendant despite meeting all job requirements. She became one of only two black flight attendants in the country.

These problems compounded slow revenue growth in the late 1950s, and the airline began to struggle financially. In May 1960, Vickers foreclosed on Capital's entire fleet of Viscounts, and bankruptcy for the airline seemed certain. However, on July 28, 1960, it announced a merger with Chicago-based rival United Airlines, saving it from that fate. When completed on July 1, 1961, it was the largest airline merger in history.

In 1981, former employees formed the Capital Airlines Association to preserve their memories of the old carrier. A retired United Airlines pilot, Milt Marshall, bought the Capital trademark and operated a charter business under the Capital name out of Waterbury-Oxford Airport in Connecticut.

In a bizarre final chapter to the brand's story, in July 2004 Capt. Marshall was transporting a passenger in a Capital Airways Piper Navajo from Waterbury to upstate New York. The plane crashed as it made an approach in clear weather near Lake George. Both pilot and passenger were killed. Their bodies were mangled and burned in the wreckage. An ammunition clip with two missing rounds was found at the crash scene but no gun was ever found. Many people believe that the passenger, a businessman who was facing both bankruptcy and indictment for fraud and who had attempted to buy a large life insurance policy just prior to the flight, killed the pilot and himself causing the crash. The bodies were so mutilated that no official cause of death was determined and the case was closed. This marked the last chapter in the tragedy strewn history of Capital Airlines.