Airmail scandal of 1934

from Wikipedia, the free encyclopedia

The airmail scandal of 1934 was a corruption scandal in the United States caused by irregularities in the award of airmail contracts. It led to the United States Army Air Corps briefly operating airmail and had a significant impact on the US aviation industry in the 1930s.

background

route Route operator Start of operations
CAM 1 New York - Boston Colonial Airways June 18, 1926
CAM 2 Chicago - St. Louis Robertson Aircraft Corp. April 15, 1926
CAM 3 Chicago - Dallas National Air Transport May 12, 1926
CAM 4 Los Angeles - Salt Lake City Western Air Express April 17, 1926
CAM 5 Elko - Pasco Varney Air Lines 6.4.1926
CAM 6 Detroit - Cleveland Ford Air Transport February 16, 1926
CAM 7 Detroit - Chicago Ford Air Transport February 15, 1926
CAM 8 Los Angeles - Seattle Pacific Air Transport September 15, 1926
CAM 9 Chicago - Minneapolis Charles Dickenson 7.6.1926
CAM 10 Atlanta - Jacksonville Florida Airways September 14, 1926
CAM 11 Cleveland - Pittsburgh Clifford Ball April 21, 1927
CAM 12 Cheyenne - Pueblo Western Air Express December 15, 1926
Columbia (East) Chicago - New York National Air Transport September 9, 1927
Columbia (West) Chicago - San Francisco Boeing Air Transport July 1, 1927

The United States Postal Service began in May 1918 with the gradual development of a nationwide postal network, which the state company initially flew with its own machines. In 1925, the US government decided that state mail flights would be carried out by private companies, who were promised long-term contracts . The privatized flight operations should first be tested on twelve separate routes (CAM 1 to CAM 12) before the transport orders for the important transcontinental main route were put out to tender. The awarding of contracts of carriage for the twelve C ontract- A ir- M ail routes (CAM) took place from October 1925 through separate tenders. In total, more than 5,000 bids were received from mostly small companies, from which the cheapest providers were awarded the contract. The mail flights on the CAM lines began in the course of 1926 (see table).

On November 15, 1926, the contracts of carriage for the transcontinental east-west connection (Columbia Route) were put out to tender. Starting from Chicago , this was divided into an eastern and western section. The manufacturer Boeing Company was awarded the contract for the western section and started operations between Chicago and San Francisco on July 1, 1927 with its subsidiary Boeing Air Transport, which was founded for this purpose . The mail flights on the main line turned out to be very lucrative, allowing Boeing Air Transport to expand rapidly and buy up smaller mail airlines. By taking over Pacific Air Transport and Varney Air Lines , the company also carried out mail traffic on routes CAM 5 and CAM 8 from 1927. Following bought Boeing Air Transport , the company National Air Transport , which in the tender the eastern section of the Columbia route from Chicago to New York had won, and also on the CAM line 3 between Chicago and Dallas flew. In order not to fall behind, other US manufacturers such as Fokker Aircraft Corporation and General Aviation Manufacturing Corporation took part in some of the other postal airlines and continued to run them as subsidiaries. The manufacturers thus also ensured the sale of their products because the subsidiaries usually only ordered the aircraft they needed from the respective parent company. Through the privatization of further mail flight routes, the number of companies active in this area increased considerably by the end of the 1920s.

Air Mail Act of 1930

In early 1930, President Hoover and Walter Folger Brown , then the United States Postmaster General , criticized that the privatized airmail network was too ineffective and too costly. The main reasons for this were that many companies incorrectly accounted for the quantities they carried (“junk mail”) and too large a number of postal airlines that only served short line segments and owned outdated aircraft. The mail had to be reloaded several times for onward transport and handed over to another company, which slowed the delivery speed. President Hoover and Walter Brown therefore thought it better to reduce the number of companies involved in postal traffic and only entrust the transports to the most efficient airlines. However, this approach contradicted the basic idea of ​​free competition.

On April 29, 1930, Walter Brown received the so-called "Airmail Act of 1930" (also known as the "McNary Watres Act") by the United States Congress far-reaching powers to reduce costs and increase the transport services on the postal network . Walter Brown initially let the existing contracts expire and made the following changes for the reassignment:

  • In order to rule out incorrect billing, the airlines were no longer paid for the amount of mail carried, but instead made firm bids for the cargo space that they made available to the United States Postal Service on their aircraft. The remuneration was paid regardless of whether the aircraft flew fully loaded or empty. The fixed price made it easier for companies to calculate and provided an incentive to invest in aircraft with larger cargo capacities in order to generate more income. The transport costs on the entire network could be reduced by this regulation from 1.25 US dollars to 54 cents per mile and thus more than halved.
  • The transport contracts of airlines that had been in the mail service for at least two years and operated sufficiently long routes were extended for a further ten years. Companies that did not meet these requirements had to take part in renewed tenders for contract extensions.
  • Walter Brown was allowed to shorten or expand the existing route network of an airline at any time in the interest of the public. This innovation in particular was viewed critically because it enabled Brown to influence the further development of a company in a targeted manner. He also had the authority to set up new mail routes at any time.

The United States Postal Service wrote out contracts of carriage for two more transcontinental postal routes shortly thereafter. Bypassing the official tendering procedure, Brown invited the representatives of the largest airlines, all of which were owned by the leading aircraft manufacturers or their consortia, to a meeting in Washington in May 1930 . The meeting was later referred to as the "Spoils Conference".

It was agreed that the Boeing company United Aircraft and Transport Company (formerly Boeing Air Transport ) should take over the traffic on the new transcontinental northern route starting from Seattle and cede the central Columbia route for it. Brown announced the central route between Chicago and San Francisco to the two airlines Transcontinental Air Transport and Western Air Express , in which the manufacturer General Aviation Manufacturing Corporation held a majority stake. The award was made on the condition that both companies would have to merge. The merger resulted in Transcontinental and Western Air (T&WA). American Airways , a subsidiary of the Aircraft Corporation (AVCO), was awarded the contract for the new transcontinental southern route, which led via Dallas to Los Angeles . By 1933, the same three consortia and the holding company North American Aviation had won a total of 20 of 22 other route tenders, ultimately increasing their market share in postal air traffic to 91%.

Cancellation of contracts

As a result of the Air Mail Act of 1930, Ludington Airlines , which carried mail between Washington and New York, had to put up a new tender and lost this route to the much larger Eastern Air Transport , which was part of the North American Aviation group . In the fall of 1933, the reporter Fulton Lewis revealed that Ludington Airlines had offered its cargo capacities at considerably lower rates than its competitors and had been ignored in the official tendering process. Because no newspaper wanted to publish his story, Lewis informed Alabama Senator Hugo Black of the incident. Hugo Black, who was actually responsible for sea freight contracts, initiated extensive investigations and discovered a large number of inconsistencies in the award of airmail contracts, which contradicted the official competitive conditions. No evidence could be found for the allegations that Walter Brown had been bribed by the favored airlines. However, he owned shares in these companies.

After the affair became known through public hearings, the newly elected President Franklin D. Roosevelt canceled all mail air contracts on February 9, with effect from February 19, 1934. At the same time, President Roosevelt commissioned the US Air Force to carry out the nationwide mail flights who were overburdened both in terms of personnel and material. The United States Army Air Corps had neither a sufficient number of machines nor aircraft types with the necessary loading capacities to be able to fulfill the transport service. The military crews had not been adequately trained for the task, so that numerous pilots were killed in adverse weather conditions on the postal routes. In addition, the cost of mail delivery increased fourfold due to the use of the military.

Air Mail Act of 1934

Due to the series of accidents and the rise in costs, public pressure on the government increased. As early as April 1934, James Farley , who had taken over the post of US Post Master General from Walter Brown, announced that the mail flight operations would be reprivatised for the summer. The new contracts should initially be limited to one year and awarded according to the principles of free competition. At that time, US air traffic had almost monopoly-like structures. For example, General Aviation Manufacturing Corporation took over the North American Aviation consortium in April 1933 , whereby airlines such as Eastern Air Transport, Western Air Express and Transcontinental and Western Air (T&WA) continued to appear under their own name, but now belonged to the same group . In addition, the group of companies also had majority stakes in aircraft plants, including the Douglas Aircraft Company . Under these economic conditions, small, independent airlines were hardly able to assert themselves in the market or to set up larger route networks.

In May 1934 it was announced that all air transport companies previously operating in the mail air traffic would be excluded from the award. This affected almost all major airlines in the country. The aviation consortia tried to circumvent the regulation by renaming the companies concerned. For example, Eastern Air Transport was named Eastern Air Lines and American Airways was given its current name, American Airlines , without any change in ownership. The name changes made it legally possible for the companies to participate in the upcoming tenders, although the government wanted to prevent this.

In the Air Mail Act of June 12, 1934, the United States Congress decided to re-privatize air mail. Among other things, numerous new routes were identified, freight capacities were determined for individual routes and a new billing model was introduced. In order to ensure fair competition, the Air Mail Act of 1934 enacted that airlines were to be excluded from postal air traffic at the beginning of 1935 if their parent companies owned shares in several air transport companies or in aircraft factories.

Consequences

The Air Mail Act of 1934 had a significant impact on the corporate structure of the aviation industry. Because the big airlines were dependent on the income from postal air traffic and could hardly survive without them in the long term, the manufacturing companies and holding companies were virtually forced to split up their groups by the end of 1934. William Boeing , who saw himself cheated of his life's work, protested the decision, but was turned down.

Most of the consortia sold their holdings in the airlines during 1934. As a result, American Airlines, Eastern Air Lines, General Air Lines , Transcontinental and Western Air (T&WA) and United Air Lines , for example, were taken over by private investors and were subsequently able to continue to take part in mail transport. The new ownership structure meant that airlines, which previously belonged to the same parent company, now became competitors. At the same time, the changed competitive conditions made it possible for smaller companies such as Delta Air Service or National Airlines System to expand.

By selling their shares, the US manufacturers lost influence on the airlines and thus also on their previously secure sales markets. The airlines that had been separated from the corporations were given freedom in their purchase decisions, which intensified competition between aircraft manufacturers. For example, United Air Lines , originally a Boeing subsidiary, put a large number of Douglas DC-3s into service in the following years , while the former General Motors subsidiary Western Air Express ceded their Douglas DC-2s and replaced them with Boeing 247 decided.

Individual evidence

  1. ↑ a b John G. Wensveen: Air Transportation: A Management Perspective. 7th edition. Ashgate Publishing, Farnham 1996, ISBN 0-754671-71-2 , p. 47.
  2. ↑ a b John G. Wensveen: Air Transportation: A Management Perspective. 7th edition. Ashgate Publishing, Farnham 1996, ISBN 0-754671-71-2 , p. 48.
  3. ↑ a b c Aero . Issue 58, year 1984.
  4. ^ A b c John G. Wensveen: Air Transportation: A Management Perspective. 7th edition. Ashgate Publishing, Farnham 1996, ISBN 0-754671-71-2 , p. 49.
  5. ↑ a b c d Camille Allaz: History of Air Cargo to Air Mail from the 18th Century . Christopher Foyle Publishing, Paris 2004, ISBN 1-902579-82-8 , p. 66.
  6. ^ Lyndon Baltazar: Airmail Comes of Age . (PDF)
  7. ↑ John G. Wensveen: Air Transportation: A Management Perspective. 7th edition. Ashgate Publishing, Farnham 1996, ISBN 0-754671-71-2 , pp. 49-50.
  8. ↑ United States Senate, Special Committee to Investigate Air Mail and Ocean Mail Contracts
  9. ↑ a b John G. Wensveen: Air Transportation: A Management Perspective. 7th edition. Ashgate Publishing, Farnham 1996, ISBN 0-754671-71-2 , p. 50.
  10. ^ Arthur Pound, The Turning Wheel - The Story Of General Motors Through Twenty-Five Years 1908-1933 . Edizioni Savine, Ancarano 2013, ISBN 1-781391-82-3 .
  11. ^ Aviation Online Magazine, Air Mail Act 1934
  12. ↑ Federal Aviation Administration (FAA) (Ed.): Historical Chronology 1926-1996 . P. 17 (PDF).
  13. ^ Boeing, Historical Perspective - Emerging Stronger
  14. ^ Delta Flight Museum, Western Airlines, 1930s
  15. ↑ Boeing, DC-3 Commercial Transport