Following World War I, the United States found itself swamped with aviators. Many decided to take their war-surplus aircraft on barnstorming campaigns, performing aerobatic maneuvers to woo crowds. In 1918, the United States Postal Service won the financial backing of Congress to begin experimenting with air mail service, initially using Curtiss Jenny[26] aircraft that had been procured by the United States Army Air Service. Private operators were the first to fly the mail but due to numerous accidents the US Army was tasked with mail delivery. During the Army's involvement they proved to be too unreliable and lost their air mail duties.[27] By the mid-1920s, the Postal Service had developed its own air mail network, based on a transcontinental backbone between New York City and San Francisco.[28] To supplement this service, they offered twelve contracts for spur routes to independent bidders. Some of the carriers that won these routes would, through time and mergers, evolve into Pan Am, Delta Air Lines, Braniff Airways, American Airlines, United Airlines (originally a division of Boeing), Trans World Airlines, Northwest Airlines, and Eastern Air Lines.
Ultimately, the federal government provided $4.6 billion in one-time, subject-to-income-tax cash payments to 427 U.S. air carriers, with no provision for repayment, essentially a gift from the taxpayers. (Passenger carriers operating scheduled service received approximately $4 billion, subject to tax.)[49] In addition, the ATSB approved loan guarantees to six airlines totaling approximately $1.6 billion. Data from the U.S. Treasury Department show that the government recouped the $1.6 billion and a profit of $339 million from the fees, interest and purchase of discounted airline stock associated with loan guarantees.[50]
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