Muse Air, also known as TransStar Airlines, was
a regional commuter carrier originally based at
Love Field and headquartered at Muse Air Centre
in Dallas and then later in Houston.
Company founder M. (Marion) Lamar Muse, a
Houston native and former Price Waterhouse
accountant, drew on more than thirty-two years
of experience in the industry when he decided to
start an airline.
He had begun at Trans Texas in 1948, and then
had worked at Continental Airlines, American
Airlines, and Southern Airways (later Republic),
and also served as president of Central Airways
(merged with Frontier), Universal Airlines, and
Southwest Airlines.
In 1978, however, he was fired from the
Southwest presidency when he attempted to oust
founding member Rollin King and take control of
the board. Muse bought a Yamaha and a small
trucking company, learned to drive an
eighteen-wheeler, and traveled the Texas
highways for a time, but returned to the airline
business at the encouragement of his son
Michael. Michael Muse, an attorney and certified
public accountant, had worked for Southwest
Airlines from 1976 to 1978 and served as its
chief financial officer before he resigned.
For the next two years, in a career move much
like his father's, Michael had served as a tax
manager for the Dallas office of Price
Waterhouse. Considering Southwest a monopoly in
need of competition, M. Lamar Muse decided to
start an airline which would use as its first
route one that provided a large part of
Southwest's business-the route from Dallas Love
Field to the William P. Hobby Airport in
Houston. (In 1981 Southwest carried 250,000
passengers a year on this route.)
Muse secured commitments from Continental
Illinois Bank and Trust Company of Chicago and
the First National Bank of Dallas on debt
credit-lines subject to the airline meeting
earnings and working-capital requirements. He
also obtained a lease financing-plan agreement
with McDonnell Douglas providing Muse with two
DC-9-80 planes and an option to expand.
The company was incorporated in January 1980 and
announced its formation in October of the same
year. The enterprise began as a publicly held
corporation known as Muse Air in 1981, only a
few years after its founder had left Southwest
Airlines. Muse made an initial public offering
to raise more than $35 million to commence
operations between Dallas and Houston, and the
company began with twenty-eight daily round-trip
flights.
The air-traffic controllers strike, which in 1982
reduced the numbers both of controllers and of airport
landing "slots," stagnated Muse's plans for growth and
expansion. In September Lamar Muse stepped down as chief
executive officer and was replaced by his son. Michael
Muse was only thirty-three when he took over Muse Air
from his father; he was unsuccessful in expanding the
firm. By December 1984 the company was actively seeking
a sale or merger to combat its continuing losses.
On
the condition that the elder Muse return as president
and chief executive officer, Harold C. Simmons of the
Amalgamated Sugar Company offered the airline the money
to continue. He also joined its board and forced Michael
Muse to resign. Though the senior Muse regained the
airline's top position, the company was never able to
generate a consistent profit, even though it relied on
nonunion labor from the beginning and offered fares
comparable to those of Southwest.
The company was doomed to failure by its high
debt-service costs and the insistence on competing
directly with the much larger Southwest; this even
though Muse prohibited smoking on the airline long
before federal law required this restriction and though
the company offered money-back guarantees on tickets and
free flights for heavy smokers who turned in packs of
cigarettes. One of Muse's other controversial marketing
techniques to generate sales was the creation of a
sophisticated flight staff whose image contrasted with
the "hot pants and sex appeal" image that he had given
Southwest flight attendants.
Muse Air also offered a free Wall Street Journal and
roomy leather seats to passengers to stress the idea
that the airline provided a higher quality of air
travel. Finally, Muse appeared before Congress to
encourage regulation of frequent-flyer programs and
computer-reservation systems controlled by the larger
carriers; he succeeded only in generating criticism.
Although by 1984 the airline had $102 million in
revenues, Muse's chief rival and former employer,
Southwest Airlines, bought out the fledgling airline,
making it a wholly owned subsidiary in 1985 and renaming
it TransStar Airlines. Southwest restructured the
company's route system to emphasize long-haul service,
starting out with flights from California to Florida,
and restricted TransStar from carrying mail, air
freight, and interline passengers traveling partly on
other airlines. Muse himself became vice chairman of the
board, but was removed from active management of the
company.
William W. Franklin, who had been with Southwest
since 1971 and who had most recently served as
executive vice president, became president of
TransStar. Southwest moved the company
headquarters to Houston's Hobby Airport and
later to Houston Intercontinental Airport. At
its peak TransStar served fourteen cities in six
states and employed 900 workers, but in 1987,
though the company took in almost $80 million in
revenues, it still posted an operating loss of
more than $10 million.
In October 1987, citing "unacceptable losses"
and prohibitive competition, TransStar ceased
operations.BIBLIOGRAPHY:
Charles
O. Tatsch, "Battle of the Air," Austin Magazine,
November 1984. Vertical Files, Dolph Briscoe
Center for American History, University of Texas
at Austin (Airlines-Muse; Lamar Muse).
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