WI: No reorganization of US aviation in the 1930s?

[Hendryk]

Something for interwar aviation buffs.

Walter Folger Brown was, in OTL, the hugely influential Hoover-appointed postmaster-general who basically whipped the US air transport industry into shape:

Brown is considered by some to be the person who built the airline industry in the United States. While that designation is an overstatement, Brown's role in engineering a series of airline mergers in 1929-1930 helped to create a systematic air transportation system that served for several years.

Under the 1925 Kelly Act, and before Brown had been appointed, private airmail carriers received up to 80 percent of the revenue from airmail postage. However, the public did not send much airmail because it was expensive, and neither the Post Office nor the airmail carriers made money carrying the mail. When the Post Office reduced postage rates, use of airmail soared. In 1926, under an amendment to the Kelly Act, the Post Office changed how the airlines were paid from payment by the number of letters carried to payment by the pound of mail.

Airlines immediately realized that they could increase their revenues by sending large quantities of airmail to themselves. They sent thousands of letters stuffed with large reports, telephone directories, and even mailed spare airplane or engine parts to their various branch offices. One airline contractor mailed itself two tons of lithographed material from New York to Los Angeles. The postage cost more than $6,000, but since the airline was paid by the pound, it received $25,000 from the Post Office.

Beginning in February 1926, private airlines gradually took over carrying the mail from the government, and the last government Post Office airmail flight took place on September 9, 1927. The cost to the United States government for airmail service from 1918 until that date had been $17 million. During those nine years, the public had purchased about $5 million of airmail postage. In effect, the federal government had paid $12 million to establish the basic air transportation system in the United States.

When Brown took office with the Hoover administration, there were 44 small airline companies. He saw that most lacked capital and the financial incentive to grow. Many depended entirely on government airmail contracts. He felt they were unwilling to invest in new equipment and were operating obsolete aircraft. Cost cutting led them to fly with questionable safety margins. To Brown, the immediate solution was to eliminate competitive bidding for airmail contracts and direct airmail contracts to large and sufficiently financed companies. Brown worked for two years to pass legislation that would allow him to do that. In 1930, the U.S. Congress gave the postmaster general nearly dictatorial powers over the airlines when it passed the McNary-Watres Act (the Airmail Act of 1930.)

Under provisions of this act, the Post Office paid the airlines for available space on their aircraft rather than actual mail carried. This meant that the airlines purchased larger aircraft because they would receive more money. They then filled any empty space with passengers after loading on the mail, making still more money by selling tickets. The new system also paid extra for things such as flying over difficult terrain, in bad weather, and at night. It paid for radio equipment and safer multiengine aircraft.

Brown believed in the large airlines and that one company should control the transcontinental airmail routes. The McNary-Watres Act allowed Brown to force smaller companies to merge or die. The ones that survived would become the corporate entities we know today--United Air Lines, American Airlines, and TWA. It also led to the creation of Eastern Air Lines, a carrier that was a mainstay of the national air traffic system for more than 60 years.

While his opponents said Brown acted like a dictator and favored large companies, he felt that even they should be able to develop profitably without the help of airmail payments. He believed that competition was necessary in the airline industry to stimulate growth. He did not like reckless competition, but he also did not like monopolies. Brown's solution was a form of selective regulated competition. Brown chose and met with some of the contracting airlines and presented his plan for developing a national air transportation system. His goal was a system of three self-supporting transcontinental airline systems, and so he urged the airlines to form three large transcontinental companies. By the time Brown left his position in 1934, he had largely succeeded in bringing order to much of the airmail business.

However, Brown's life may have taken a different turn:

In 1921 Brown turned down Harding's offer to appoint him ambassador to Japan but did accept an appointment as the president's representative on and chair of the Congressional Joint Committee on Reorganization.

Let us suppose that in TTL he accepts the position of US ambassador to Japan. He possibly spends the rest of his active life in the diplomatic corps and doesn't get to become the "dictator" of the US air transport industry, which remains, like its European counterparts, a largely unprofitable mess of small, undercapitalized companies dependent for their survival on government largesse. This may well delay the hegemonic rise of US aviation until the post-WW2 years, when in OTL it was effective by the end of the 1930s. Which, in turn, is likely to have consequences for aircraft manufacturers themselves, possibly delaying the development of such revolutionary aircraft as the Douglas DC-3, which was designed by request from American Airlines (as an upgraded version of the DC-2, itself an order from TWA).

Furthermore, this may also impact the US Army Air Corps, forerunner of USAF, by butterflying away the 1934 Air Mail Scandal and thus removing the incentive for the Corps' reorganization:

Changes in the Air Corps

The immediate results of the operation were disastrous for the image of the Air Corps. Speaker of the House Henry T. Rainey, echoing comments made by Gen. Billy Mitchell, criticized: “If we are unfortunate enough to be drawn into another war, the Air Corps wouldn’t amount to much. If it is not equal to carrying the mail, I would like to know what it would do in carrying bombs.” (Congressional Record, 73rd Congress, 2nd Session, Vol. 78, Pt. 3, 3144–3145.)

For the Air Corps, despite its public humiliation, the Air Mail Fiasco resulted in a number of improvements, bringing about changes that its previous publicity campaigns were unable to obtain.

On April 17, 1934, well before AACMO ended, Secretary Dern convened a special committee chaired by former Secretary of War Newton D. Baker, to closely examine the program and the overall condition of the Air Corps. Known as the Baker Board, it included all five military members of an earlier board chaired by General Hugh A. Drum, four of them senior Army ground force officers, who tightly controlled the agenda and scope of the board's investigation to prevent it from becoming a platform for advocating an independent air arm. Of the 11 members, only three were Air Corps advocates.

The Baker Board endorsed earlier findings of the Drum Board, supporting the status quo that the Air Corps was an auxiliary force of the Army and opposed to the Air Corps being a separate service equal to the Army and Navy. It rejected the threat of air attack as a major threat to the national defense or the need of a large air force to defend against it. It opposed any expansion of the Air Corps until the needs of the Army as a whole had been addressed.

It did repeat the Drum Board's recommendation for the immediate establishment of a GHQ Air Force, placing under it all air combat units within the continental United States. This provided another, limited step toward an autonomous air force, but also kept authority divided by maintaining control of supply, doctrine, training and recruitment under the Chief of the Air Corps, and airfields in the control of corps area commanders.

Within the Air Corps itself, instrument training was upgraded, radio communications were greatly improved into a nationwide system that included navigation aids, and budget appropriations were increased. The Air Corps acquired the first six Link Trainer flight simulators of a fleet that would ultimately number more than 10,000.

The president also appointed Clark Howell, newspaper editor of the Atlanta Constitution, to chair a five-person committee to investigate all aspects of U.S. aviation, resulting in the creation of the Federal Aviation Commission.

Among the fallout of the scandal was the retirement under fire of Foulois as Chief of the Air Corps. He had been called to testify before the Rogers subcommittee on aviation of the House Committee of Military Affairs during the scandal. Chairman William N. Rogers of New Hampshire was suspicious of Foulois for negotiating aircraft contracts instead of assigning them to the lowest bidder, and during his testimony the Chief of Air Corps had been flamboyant and careless with hyperbole. In the wake of the mail fiasco, Rogers charged him with several violations of law and ethics, including making misleading statements to Congress and mismanagement of the air mail operation.

Without this much-needed electric shock, the Air Corps may be at a lower level of organizational efficiency and war-readiness by the time the US becomes involved in WW2. Thoughts?