Boeing, the well-known American aerospace company, has been a leader in aircraft manufacturing for more than 100 years. Although many people believe that Boeing has its own airline, this is not the case due to various regulations and financial factors. In this article, we’ll delve into the reasons why Boeing doesn’t have an airline and look at the company’s distant past, because back in the day, Boeing had its own airline.
Why doesn’t Boeing have its own airline?
There are several reasons why Boeing does not have its own airline the most important being the Air Mail Act of 1934 which prohibits airlines and aircraft manufacturing companies from being under the same corporate umbrella. This means that Boeing, as an aircraft manufacturer, cannot legally own or operate an airline. However, it is possible for Boeing to set up its own airline only if it ceases manufacturing services, but this is not financially practical as the company makes more profit as a manufacturing company than many airlines.
What’s little known today, Boeing had its own airline before the introduction of the Air Mail Act of 1934, called Boeing Air Transport, which was established in 1927. However, after the Air Mail Act was passed, the company was separated from Boeing and eventually became United Airlines.
The Air Mail Act of 1934
Immediately after World War I, the airmail industry was a significant part of American aviation. Initially, airmail was transported by the government, but they wanted to develop the airline industry in the country, so the first airmail law was passed in 1925. Through it, the Post Office was allowed to contract with private airlines to transport mail, resulting in the creation of a multitude of airlines. In those days, airlines were paid by the weight of mail carried, so many small airlines inflated their revenues with junk mail carried over short distances. This led to a new change in the airmail law in 1930.
The new Air Mail Act of 1930 imposed new conditions on airlines such as longer routes and lower rates. To survive, the airlines merged, which led to the creation of United Aircraft and Transport Corporation (which incorporated Boeing), Transcontinental Air Transport, and AVCO. However, in addition to airline operations, these companies also manufactured airplanes and airplane parts, so smaller airlines had no chance to compete with them. For example, after Boeing launched the Model 247 airplane in 1933, they waited for the first 60 aircraft to be delivered to their airline, then called United Airlines, trying to create a monopoly in the aviation industry of the time. So, after a huge political scandal that lasted for almost a year, known as The Airmail Scandal, the airmail law was changed again in 1934.
On June 12, 1934, the Congress passed the Air Mail Act, which reversed the provisions of the earlier Air Mail Act of 1930 and led to the fragmentation of the major aviation companies. The main ideas of the act were:
- The value of contracts was significantly lower, which made it difficult for airlines to survive on mail alone, thus encouraging passenger transport
- Airlines, aircraft manufacturing companies and aircraft components manufacturing companies could not exist under the same corporate umbrella and had to be separated, so United Aircraft and Transport Corp. was separated into three companies: United Air Lines – responsible for transportation, United Aircraft (later called United Technologies) – responsible for production in the eastern United States, and Boeing Airplane Co. – responsible for production in the western United States.
- Old contracts provided to commercial airlines by the Airmail Act of 1930 barred them from acquiring new contracts for a period of 5 years.
A look at the airline that Boeing had
In 1927, the improved version of the Boeing Model 40, known as the Model 40A, won the contract from the U.S. Post Office to transport mail between San Francisco, California and Chicago, Illinois. This led to the creation of a new airline named Boeing Air Transport, which conducted its first airmail delivery flight on July 1, 1927. In its debut year, Boeing Air Transport successfully transported 837,211 pounds of mail, 149,068 pounds of express packages, and 1,863 passengers.
A year later, in October 1928, Boeing Airplane and Transport Corp. was established to cover the operations of airline and airplane manufacturer. Just a few months later, it changes its name to United Aircraft and Transportation Corp. which, by the end of 1929, expands its operations and buys several companies, including Pratt & Whitney Aircraft Co.
After the Air Mail Act of 1934 was passed, all large companies performing airline services and aircraft manufacturing services were required to be separated. As a result, United Aircraft and Transport Corp. was split into three separate entities: United Air Lines (today’s well-known United Airlines), which handled transportation, United Aircraft (later renamed United Technologies), which handled production in the eastern U.S., and Boeing Airplane Co. which oversaw production in the western U.S. William Boeing, the company’s founder, was deeply disappointed by the split, and because of this he sold all his shares and left Boeing at the end of 1934.