Air Mail Contracts Suspended

By the early 1930s the American airline industry was expanding rapidly, propelled in large part by lucrative government air mail contracts. These contracts had been awarded under the system established by the Air Mail Act, but the process was frequently non-competitive, and by 1934 it appeared that a handful of large carriers were consolidating control over the routes and forming effective monopolies.

Amid allegations of collusion in how the contracts had been distributed, often called the Air Mail scandal, President Franklin D. Roosevelt in 1934 ordered the cancellation of the existing air mail contracts. He directed the U.S. Army Air Corps to take over the flying of the mail until new arrangements could be made.

The Army was poorly equipped and inadequately trained for the demanding all-weather, night-flying mail routes, and a series of fatal crashes followed during the winter of 1934. The resulting public outcry forced a swift return of the mail to commercial carriers under reformed, competitive contracts established by the Air Mail Act of 1934, which reshaped the regulatory framework of American commercial aviation.