Actually, the U.S. government was eager for the earliest airlines to develop profitable commercial service.

In the 1920s, commercial air transport was primarily mail delivery. Planes were uncomfortable, slow and unreliable--without pressurized cabins, they had to fly very low and so were subject to turbulence in the air and frequent cancellation due to weather, not to mention the frequent stops and (to modern people) very unimpressive speed. Train travel at the time was quite serviceable and definitely preferred among business travelers and vacationers. Additionally, there was a certain Wild West/cowboy element cultivated among pilots, especially at airshows, that only added to public fears of the safety of air travel.

However, being deputized for airmail meant that airlines were heavily subsidized by the U.S. government. Understandably, politicians were not thrilled by this state of affairs. So as the airline industry went through its initial growing pains of mergers and bankruptcies, government officials worked to shepherd the successful nascent airlines (American, United, TWA, Eastern, and Pan Am) and manufacturers (especially Boeing) towards passenger service in terms of both flights and better vehicles.