The Air Mail Act of 1925, also known as the Kelly Act, aimed to free airmail from Post Office Department control.
The act, sponsored by U.S. Rep. Clyde Kelly, R-Pennsylvania, allowed the postmaster general to contract private companies to carry mail.
The act established a timeframe for small airmail routes to be bid on. It also determined the rates and subsidies that contractors would receive for transporting mail by air.
Colonial Air Transport, National Air Transport, Robertson Aircraft Corporation, Western Air Express, and Varney Air Lines were the first companies to be awarded contracts.
Contractors were paid $3 per pound of mail for the first 1,000 miles traveled. The surplus of aircraft, particularly the de Havilland DH-4s that resulted from the First World War played a significant role in expanding the aviation industry in the United States.
By 1927, more than 2.5 million miles were traveled by U.S. Airmail Service planes, carrying over 22 million letters. Further regulations followed, including those issued by second assistant postmaster general Col. Paul Henderson, requiring pilots and their aircraft to receive an airworthiness certificate from the Post Office and that each company needed to post at least ten thousand dollars in good faith bonds.
