The Airmail Act of 1930
The Airmail Act of 1930 changed the method in which the United States Post Office awarded mail contracts, eliminating competitive bidding.
The Act created a payment structure based on the weight of the load carried by the aircraft per mile rather than a flat rate per mile regardless of the weight of the load. Contracts were awarded based on aircraft payload.
Companies that had large aircrafts were more likely to be awarded contracts rather than those companies with smaller aircrafts.
This Act encouraged airline carriers to purchase large aircrafts increasing the likelihood of being awarded airmail contracts. It also stimulated the carriers to fill space on the aircraft with passengers.
President Herbert Hoover appointed Brown as his postmaster general in 1929. In 1930, Brown, citing inefficient and expensive air mail delivery, requested legislation from Congress granting him authority to change postal policy. The Air Mail Act of 1930, passed on April 29 and known as the McNary-Watres Act after its chief sponsors, Sen. Charles L. McNary of Oregon and Rep. Laurence H. Watres of Pennsylvania, authorized the postmaster general to enter into longer-term airmail contracts with rates based on space or volume, rather than weight. The Act gave Brown strong authority (some argued almost dictatorial powers) over the nationwide air transportation system.
The main provision of the Air Mail Act changed the manner in which payments were calculated. Air mail carriers would be paid for having sufficient cargo capacity on their planes, whether the planes carried mail or flew empty, a disincentive to carry mail since the carrier received a set fee for a plane of a certain size whether or not it carried mail. The purpose of the provision was to discourage the carrying of bulk junk mail to boost profits, particularly by the smaller and inefficient carriers, and to encourage the carrying of passengers. Airlines using larger planes designed to carry passengers would increase their revenues by carrying more passengers and less mail. Awards would be made to the “lowest responsible bidder” that had owned an airline operated on a daily schedule of at least 250 miles (402 kilometers) for at least six months.
A second provision allowed any airmail carrier with an existing contract of at least two years standing to exchange its contract for a “route certificate” giving it the right to haul mail for 10 additional years. The third and most controversial provision gave Brown authority to "extend or consolidate" routes in effect according to his own judgment.
Less than two
weeks after its passage, at the Spoils Conference, Brown invoked his
authority under the third provision to consolidate the air mail
routes to only three companies, forcing out their competitors. These
three carriers later evolved into United Airlines (the northern
airmail route), TWA (Transcontinental and Western Air, which had the
mid-United States route) and American Airlines (American Airways,
the southern route). Brown also extended the southern route to the
West Coast. He awarded bonuses for carrying more passengers and
purchasing multi-engined aircraft equipped with radios and
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