By means of the Air Mail Act of 1934, the government once again returned airmail transportation to the private sector, but it did so under a new set of rules that would have a significant impact on the industry. Bidding was structured to be more competitive, and former contract holders were not allowed to bid at all, so many companies were reorganized. The result was a more even distribution of the government's mail business and lower mail rates that forced airlines and aircraft manufacturers to pay more attention to the development of the passenger side of the business.
Several aviation companies sued the government following the February 1934 cancellation of their airmail contracts. All but one, United, had withdrawn their complaints by 1936. United settled their suit in 1942. All suits were settled with the government agreeing to pay the aviation companies for the contract work they missed in February and March of 1934. By this time, the courts had exonerated Postmaster General Brown and the companies who took part in the "Spoils Conference," noting that no fraud had occurred.
The Air Mail Act of 1934 reflected administration policy against monopolies, ruling out all vertical integration in the aviation field. Section 7(a) of the act held that:
"After December 31, 1934, it shall be unlawful for any person holding an air mail contract to buy, acquire, hold, own, or control, directly or indirectly, any shares of stock or other interest in any other partnership, association, or corporation engaged directly or indirectly in any phase of the aviation industry, whether so engaged through air transportation of passengers, express, or mail, through the holding of an air mail contract, or through the manufacture or sale of airplanes, airplane parts, or other materials or accessories generally used in air transportation, and regardless of whether such buying, acquisition, holding, ownership, or control is done directly, or is accomplished indirectly, through an agent, subsidiary, associate, affiliate, or by any other device whatsoever."
In order to keep their airmail contracts, companies such as American, Eastern, TWA and United sold their off their aircraft manufacturing interests. No longer could airplane manufacturing companies and aviation transportation companies be one and the same.