In our researches on Space Law, working on the New Space effect and the Commercial Orbital Transportation Services (COTS) NASA program, let’s have a look at the Air Mail Act of 1925, also known as the Kelly Act, which turned over the mail service to private contractors.
The Air Mail Act of 1925, also known as the Kelly Act, was a key piece of legislation that intended to free the airmail from total control by the Post Office Department (the predecessor of the United States Postal Service, in the form of a Cabinet department officially from 1872 to 1971). Prompting many companies to venture into the aviation field, the Air Mail Act of 1925 was the foundation that commercial aviation is built upon. The first sign of commercial interest came on April 3, 1925, when the automaker Henry Ford opened a private air freight service between Detroit and Chicago.
The Air Mail Act of 1925
As airmail began crossing the country successfully in the mid-1920s, railroad owners started complaining that this government-sponsored enterprise was cutting into their business. The Kelly Act, signed into law on February 2, 1925, provided for a four year bidding period that would begin on smaller feeder routes. The Act also set airmail rates and the level of the subsidies contractors could receive for flying the mail. The subsidies would be dependent on the amount of mail carried and the number of zones it travelled through. This was the first major piece of legislation created by Congress in 1925 that would affect the aviation industry. In essence, this Act authorised the awarding of government mail contracts to private carries, established the rates for transporting mail and it set the airmail rates.
It allowed the Postmaster General (the chief executive officer of the postal service) to contract private companies to carry mail. The Act was sponsored by Melville Clyde Kelly (August 4, 1883 – April 29, 1935), a Republican member of the U.S. House of Representatives from Pennsylvania, and became legislation in February that year. The Act created a bidding period for small airmail routes, setting rates and subsidies contractors would receive for flying mail. As of June 3, 1926, contractors were paid three American dollars per pound of mail for the first one thousand miles travelled. As Melville Clyde Kelly explained, the Act “permits the expansion of the air mail service without burden upon the taxpayers”.
The initial contracts were awarded to Colonial Air Transportation, National Air Transport, Robertson Aircraft Corporation, Western Air Express and Varney Air Lines. Due to the surplus aircraft available after the First World War, particularly Airco DH.4, a British two-seat biplane day bomber, the Act bolstered a nascent aviation industry in the United States of America.
The following year, the Air Commerce Act established a bureau to enforce procedures for the licensing of aircraft, engines, pilots, and other personnel. The former Act stimulated design and production of advanced planes to compete with rival carriers; the latter reassured insurance companies, private investors, and banks that safety standards would be enforced. With these elements in hand, American aviation rapidly progressed. Ironically, at the same time that European countries organised subsidised national flag lines and followed practices that often discouraged innovation in the design of airliners, the United States of America turned over civil aviation to commercial operators, where aggressive competition accelerated significant developments in aviation technology and aircraft performance.
Under the Act, which President Calvin Coolidge signed into law, management of air routes was shifted to a newly established aeronautics branch under the Commerce Department. William MacCracken Jr., an aviation law expert who had largely crafted the Act, became its first head. The Air Commerce Act of 1926 established federal regulations regarding aircraft, airmen, navigational facilities and the establishment of air traffic regulations. Aircraft were required to be inspected for airworthiness, and were required to have markings placed on the outside of the aircraft for identification. Airmen were required to be tested for aeronautical knowledge and required to have a physical completed to insure their physical fitness.
The federal government was required to build new airports, institute regulations that would address aircraft altitude separation, develop and maintain airways and navigational aids. The Department of Commerce Aeronautical Division would be responsible for overseeing and implementing this Act. The regulations would be known as the Civil Air Regulations (CARs). Today the regulations are known as the FARs (Federal Aviation Regulations). Improved aircraft technology helped increase the volume of mail and freight that could be carried. Some airplanes could carry passengers, baggage, and airmail. Air-cooled engines replaced water-cooled engines.
The next major step in the evolution of U.S. airmail service came in 1930 with the McNary-Watres Act. Yet another amendment to the original Air Mail Act of 1925, McNary-Watres provided under section 4, that “The Postmaster General is authorized to award contracts for the transportation of air mail by aircraft between such points as he may designate to the lowest responsible bidder at fixed rates per mile… [and] Postmaster General may award to the lowest responsible bidder, who has owned and operated an air transportation service on a fixed daily schedule over a distance of not less than 250 miles and for a period of not less than six months prior to the advertisement for bids. Whenever sufficient air mail is not available, first-class mail matter may be added to make up the maximum load specified in such contract”. Section 6 of the act gave the Postmaster General power to replace contractors if “the public interest will be promoted thereby”.
The McNary-Watres Act brought objections from numerous sources, including Melville Clyde Kelly, author of the original airmail legislation, for placing too much power over the service in the hands of the Postmaster General and the postal service. Through 1926, U.S. mail was being carried by contact fliers on small feeder routes, while U.S. Air Mail Service pilots continued to provide the service along the nation’s transcontinental flyway.
The Commercial Orbital Transportation Services program (COTS)
The year 1869 saw the completion of the first transcontinental railroad that allowed for continuous travel between America’s east and west coasts. A project that would not have been possible without the support of government bonds and land grants. In the first half of the 20th century, the 1925 Contract Air Mail Act (more commonly referred to as the Kelly Act) incentivised commercial aviation by allowing the U.S. Post Office to contract with private companies for mail delivery. This eventually led to the use of commercial aircraft for affordable passenger travel, as air travel transitioned from a dangerous, daredevil pastime to a routine operation.
These examples demonstrated the positive benefits of public-private partnerships for advancing U.S. goals and strengthening the American economy through investment in innovative technologies. More than fifty years after Alan B. Shepard’s historic spaceflight, visionaries in the aerospace community endeavoured to extend the same type of symbiosis to the realm of commercial space transportation.
Commercial companies have been involved in NASA programs as contractors since the Agency’s founding in 1958, but it was not until the 1980s that commercial advocates began to more actively seek turnover of routine space operations to the private sector. Multiple NASA programs laid the foundation for the Commercial Orbital Transportation Services (COTS) program, beginning with early efforts to privatise Space Shuttle and Space Station operations. Although not all these programs reached completion, the principles established for successful relationships with the private sector would become pillars of the Agency’s mission to develop commercially-available ISS transportation services.
NASA has recently suggested that space transportation services procurement may be expanded to orbital fuel depots (an orbital propellant depot is a cache of propellant that is placed in orbit around Earth or another body to allow spacecraft or the transfer stage of the spacecraft to be fuelled in outer space; it is one of the types of space resource depot that have been proposed for enabling infrastructure-based space exploration) and lunar surface deliveries should the first phase of COTS prove successful.