In 1925, the Congress passed the Contract Air Mail Act, more commonly known as the Kelly Act. It was the first move to pass on the Air Mail to private ownership. By 1926, eleven contracts were bid and commercial flights were in full force. All of the Air Mail property was passed on to the US Department of Commerce. All airports except for Chicago, Omaha and San Francisco were also transferred. In September of 1927, the Post Office relinquished all involvement with Air Mail forever.

The privatization of the Air Mail was the beginning of modern air transportation. Soon, Air Mail contract carriers were also carrying people as passengers. This gave birth to today's airline industry. The originating companies of TWA, American and United were three of the first five contracts granted by the government.