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Cleared for takeoff

The 1925 Air Mail Act launched the commercial airline industry by allowing private companies, like Boeing, to bid on airmail routes.

March 03, 2025 in History

The Model 40A with its air-cooled radial engine was very efficient and economical, and maintained an impressive safety record. It became the workhorse of the airline industry in the late 1920s and early 1930s. The Model 40A with its air-cooled radial engine was very efficient and economical, and maintained an impressive safety record. It became the workhorse of the airline industry in the late 1920s and early 1930s. All photos courtesy of the Boeing Archives.

The year 1925 was very consequential for aviation in the United States. At the beginning of the year, airplanes weren’t a priority for the U.S. Army and Navy. Moreover, aviation had very little government support and was barely considered in the business world. The result was a rapidly shrinking industrial base and the United States falling far behind the rest of the world in commercial aviation. It took a literal act of congress to create change. That action came on Feb. 2, 1925, when Congress passed the Air Mail Act of 1925, also known as the Kelly Act, named for Pennsylvania Representative Clyde Kelly who sponsored the bill.

Since the beginning of flying the mail in 1918, the U.S. Post Office had complete control of airmail. The Kelly Act was an effort to relieve the Post Office of that direct responsibility, empowering the Postmaster General to contract with private companies to fly the mail. That private public partnership became the catalyst that formed the airline industry in the U.S.

The first U.S. airline dates to 1913, and in the years that followed only a handful of small passenger airlines were formed, but none were successful. It was the Kelly Act that made it possible or an airline to be profitable and stay in business. The first major carriers to form included Delta, Western Air Express (predecessor to TWA), National Air Transport (a predecessor to United Airlines) and Ford Air Service.

A DH-4 refurbished by Boeing. Boeing increased the safety and quality of this British design by replacing the wooden fuselage frame with a welded steel frame and moving the fuel tank away from the cockpit. A DH-4 refurbished by Boeing. Boeing increased the safety and quality of this British design by replacing the wooden fuselage frame with a welded steel frame and moving the fuel tank away from the cockpit.

At the time, the U.S. Post primarily used surplus U.S. Army de Havilland DH-4 light bombers, some of which had been modified by Boeing. DH-4s had been flying since 1921 and were getting worn out, so the Post Office turned to Douglas to develop a new mail plane. Douglas developed a plane based on the O-2 observation biplane it had built for the Army, designating the new model the DAM-1 (Douglas Air Mail One). Douglas delivered the DAM-1 to the Post office in July 1925, and its ability to carry over twice the payload of the DH-4 made a good impression. Douglas offered a modified version, designated the M-3, in early 1926 after the Post Office invited bids for production airplanes – specifically to be powered by surplus Liberty engines – to replace its aging DH-4s.

Douglas won the 1926 U.S. Post Office airmail plane competition with the M-3 and was awarded a contract for 10 airplanes. The Army ordered 40 more as M-4s. A number of the M-3s and M-4s went on to fly with National Air Transport. Douglas won the 1926 U.S. Post Office airmail plane competition with the M-3 and was awarded a contract for 10 airplanes. The Army ordered 40 more as M-4s. A number of the M-3s and M-4s went on to fly with National Air Transport.

Boeing also entered the competition with a new design: the Model 40. Making its first flight on July 7, 1925, the Model 40 was a conventional single-place biplane powered by a water-cooled Liberty engine.

The Model 40 had conventional wood and fabric wings and tail surfaces, but used an odd combination of structures for the fuselage; the center and forward fuselage were made of steel tube construction, but the rear fuselage was made of wood veneer over laminated wood formers. The Model 40 had conventional wood and fabric wings and tail surfaces, but used an odd combination of structures for the fuselage; the center and forward fuselage were made of steel tube construction, but the rear fuselage was made of wood veneer over laminated wood formers.

Boeing had built three airplanes intended for commercial or sport use, the B-1, BB-1 and BBL6, but the Model 40 was the first intended for series production and served as the prototype for the first Boeing production commercial airplane.

The Model 40 lost the Post Office competition to Douglas but it wasn’t the end for the airplane. Soon after the mail plane competition, the Post Office put up for bid the main trunk line which was split in two: Chicago to New York and San Francisco to Chicago.

Bill Boeing and his leadership team made a bold move by bidding on the San Francisco to Chicago route and won with a surprisingly low bid. The Boeing team was able to make a low bid based on a redesign of the Model 40. The new version, the Model 40A, featured an all-steel tube construction fuselage and a two-place passenger cabin. The biggest change, however, was replacing the water-cooled Liberty engine with a new air-cooled engine from a new manufacturer.

Not only was 1925 the beginning of the airlines and airliners but it was also the year that saw the founding of one of the great engine companies. Fred Rentschler was a leader of the Wright Engine Company, and when the board decided not to pursue his new design of an air-cooled radial engine, he set out on his own. Rentschler bought up a tool company in Hartford Connecticut and decided to keep its name: Pratt & Whitney. His new engine produced twice the horse power of the Wright engine and when it was first tested, Rentschler’s wife Faye proclaimed that it sounded like a wasp – the name stuck.

The combination of the Boeing Model 40A airframe and the Pratt & Whitney Wasp engine led to great success and the friendship between Bill Boeing and Fred Rentschler would lead to the formation of United Aircraft and Transport Corp. (UATC) – one of the largest and most successful corporations of its day. UATC is credited with creating America’s first transcontinental airline.

Bill Boeing and Fred Rentschler were friends and partners in administrating the success of United Aircraft and Transport Corp. Bill Boeing and Fred Rentschler were friends and partners in administrating the success of United Aircraft and Transport Corp.

The Kelly Act was not the only action taken by the U.S. government to support aviation. Congress had already established the select Lambert-Perkins committee, followed by the Hoover Committee, which was started by then-Secretary of Commerce Hoover. President Coolidge also created an aircraft board chaired by Dwight Morrow of the banking firm JP Morgan.

From these committees, it was firmly established that there was a need to support the aviation industry, especially through military procurement and support of aircraft development.

But most importantly, it was decided that safety standards need to be enacted for aviation to reach its full potential in the United States. The result was the Air Commerce Act passed in 1926. This landmark legislation created oversight of air commerce by empowering the Secretary of Commerce to enforce air traffic rules, including issuing pilot licenses, aircraft certification, creating and maintaining navigation aids and establishing airways; it was the beginning of today’s Federal Aviation Administration.

Following the Air Commerce Act, the Boeing Model 40A was one of the very first commercial airplanes to be certified; Boeing was awarded type certificate No. 2.

All together these actions changed the character of aviation in the U.S. from dreadful to hopeful throughout 1925, and the industry was recognized at the beginning of 1926 in the Aviation Year Book:

“…positive and definitive attention has been given by the administration and Congress; and finally, with the entrance of responsible men and substantial capital into air transport, the place of aviation in commerce and industry is now very generally recognized.”

The actions that took place 100 years ago saw the foundation of a partnership between the U.S. government, the aviation industry and the airline companies to promote the growth and safety of an aviation infrastructure. That partnership saw spectacular results, and since then, commercial aviation has become the safest form of transportation in history.

Looking toward the future, the legacy of the public-private cooperation that started in 1925 and led to the formation and success of the commercial aviation industry in the U.S. is a template for commercial spaceflight, to assure the same tremendous success in humanity’s next step of becoming a spacefaring race.