The mid-1930s were a difficult time for airlines. The federal government had broken up the large companies that had dominated the aviation industry and had cut its subsidies to airlines. Air transportation regulation was in a state of confusion. 

To survive in these challenging times, airlines needed bigger, better, and faster airplanes that could profitably fly passengers as well as mail. New navigation and communications equipment was also required to enhance safety and efficiency.  

The aviation industry responded. By the mid-1930s, the first modern, high-performance airliners were taking to the air. 

The government provided bonuses to airlines if their aircraft could fly at night or had multiple engines, two-way radios, and other equipment that promoted safety and speed. The first aircraft produced under these terms was the Boeing 247 in 1933, the world's first modern airliner. It could carry 10 passengers, fly 50 percent faster than the Ford Tri-Motor, and cross the country in less than 20 hours.

T.W.A. needed an airplane to compete with United's new Boeing 247s. Douglas Aircraft responded with the DC-1, which was faster and more comfortable and could carry 12 passengers. When it was then stretched to seat 14 and redesignated the DC-2, it easily surpassed its competition. Douglas went on to dominate airliner production until the jet age. 

At the request of American Airlines, Douglas created a larger version of the DC-2 with sleeping berths, the Douglas Sleeper Transport. The daytime version became the famous DC-3. First flown in 1936, the 21-passenger DC-3 became the first airliner that could make a profit without subsidy, and it helped airlines survive cutbacks in government assistance. The remarkable aircraft took less than 16 hours to fly from Los Angeles to New York, and its sleeping accommodations made the flight quite bearable. Even with sleeper service, ticket prices remained fixed at $160 one way and $288 round trip. 

To evoke the comfort and ease of ocean liner travel, American Airlines called its airplanes "flagships." Each flagship Douglas DC-3 flew this type of pennant, seen below, from its cockpit when taxiing before takeoff and after landing. 

Underscoring the nautical theme, American instituted an early frequent flyer plan, in which frequent passengers were designated "Admirals" and received access to comfortable airport lounges and other benefits. Competing airlines soon followed suit. 

The Boeing 307 Stratoliner was the world's first pressurized airliner. While other airliners flew no higher than about 3,000 meters (10,000 feet), the Stratoliner could cruise at 7,500 meters (25,000 feet). By ascending "above the weather," it could fly faster and more efficiently and provide its 33 passengers with a smoother and quieter ride. 

Because of the onset of World War II and the development of improved designs, only 10 Stratoliners were built. One, Pan American's Clipper Flying Cloud, is in the Museum's collection. 

Other technology also helped improve and create the modern airliner in this period, such as the first lightweight radio transmitter built for use on aircraft. It featured a loop antenna, which could be turned to find the signal direction. It replaced traditional visual dead reckoning navigation methods.  

Designed and built by Hugo Leuteritz of Pan American, the transmitter enabled aircraft to navigate accurately along Pan Am's first route, between Key West, Florida, and Havana, Cuba, in 1928. Leuteritz designed other devices that allowed Pan American aircraft to navigate safely throughout the Caribbean and across the Pacific and Atlantic. 

The ARC Model D was the first commercial navigation receiver. Designed by the Aircraft Radio Corporation in 1929, it pioneered the use of the four-course radio range system. 

Automatic direction finders (ADF), developed by the Sperry Gyroscope Company, were first installed on aircraft in the mid-1930s. They replaced the existing four-course radio range system. Displayed in the photo below are the control unit and indicator and the loop antenna in its streamlined housing. 

The ADF locates known stationary radio transmitters and displays the radio's location relative to the aircraft. This was a much more flexible and accurate system, as aircraft no longer had to fly in one of four radio courses. It also led to instrument approaches for landing, which helped pilots locate runways at night and in bad weather. Most aircraft built in the late 1930s and 1940s, including the Douglas DC-3, were equipped with ADF, with its distinctive "football" antenna housing. 

While technology continued to improve throughout the 20th century, the advancements made during the 1930s—whether it first lightweight radio transmitter or the first pressurized airliner, to name just a few—set the foundation for the modern airliner as we know it today.