From Mail Carriers to Airlines-1925 to 1930

Before 1930, the airplane industry was a very scrambled lot. The main aircraft manufacturers were Curtiss, Martin, Consolidated, Douglas, Boeing, and Vought. These comprised the list of military contractors, but these companies were also being drawn into the commercial field due to the sudden expansion of participants in the fledgling air transport business. The main engine producers were Pratt & Whitney and Wright Aeronautical, the latter of which merged with Curtiss Aeronautical to become Curtiss-Wright in 1929. The air transport companies, according to Fred Rentschler, numbered as many as one hundred.9 Most of these operators did not have CAM routes and flew one or two airplanes from any place to practically anywhere else hauling what passengers or cargo there was. These companies, operated mainly by aviation enthusiasts, had little realistic hope of ever developing a successful business. Yet they were eager to bid on any government-offered route or proposal, irrespective of their chances of operating success.

To qualify for government airmail contracts, bidders had to establish some reasonable degree of soundness in financial and operating responsibility, which by itself quickly had the effect of separating out the contestants. Among the relatively sound new business entities were Colonial Air Transport, Boeing Air Transport, Transcontinental Air Transport, Western Air Express, National Air Transport, and Pacific Air Transport. But under its competitive bidding requirements, the Post Office had made CAM awards to marginal companies who were operating at a loss and engaging in marginal operational practices, using obsolete, cheaper airplanes and engines. Clear cases of fraudulent billing practices to the government were commonplace.

The larger companies were better capitalized, could afford newer and more modern equipment, and generally observed better operating practices. These attributes translated into greater reliability and safer air transport. In the late 1920s the broad aircraft industry came under the control of a few large companies that combined the primary air industry sectors: airmail carriers, airplane manufacturers, and engine manufacturers. Three groups, in particular, formed the core of the vertical holding companies that were to figure prominently in the future of the airline industry. These groups were:

1. United Aircraft & Transport Corporation

2. North American Aviation (NAA)

3. Aviation Corporation of America (AVCO)