In this lesson we will discuss how history and legislative acts shaped the Airline Industry.
Be able to recognize the the different legislative acts that historical events that influenced the Airline Industry.
Federal Legislature and the Airlines
Under the U.S. Constitution, the Federal Government has the authority to regulate interstate and foreign commerce. There are several major reasons for regulating the industry. They are:
1. To Stabilize the Industry - Air transportation is a public utility and important to the nation. The industry was unstable in the beginning but because of the importance of the industry to the U.S. it needs to be a stable industry.
2. To Improve Air Safety - Safety in the industry would be influenced by the stability of the Air Carriers. If the Air Carriers are unstable and financially weak, then they would be less likely to invest in safety.
3. To Reduce Cash Subsidies - If the Air Carriers are economically regulated, then fewer of the Air Carriers would need federal subsidies in order to make them stronger.
Early Federal Legislation
Air Mail routes were established in the early beginnings of Air Transportation. The first air mail route was established on May 15, 1918 between New York City and Washington, D.C. This air mail route was a joint venture between the U.S. War Department and the U.S. Post Office. The War Department was responsible for supplying the pilots and airplanes and the Post Office was responsible for supplying the mail and sorting it. On August 12, 1918, the Post Office assumed full control and responsibility for the air mail system.
The first steps of Federal government regulation of the air mail industry was through the Contract Air Mail Act of 1925.
The Contract Air Mail Act of 1925, which was also known as the "Kelly Act", gave birth to the Airline Industry. The act authorized the Postmaster General to contract...