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MUSE AIR

MUSE AIR. 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 (see AMR CORPORATION), 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).

Keli Flynn

Citation

The following, adapted from the Chicago Manual of Style, 15th edition, is the preferred citation for this article.

Keli Flynn, "MUSE AIR," Handbook of Texas Online (http://www.tshaonline.org/handbook/online/articles/epm03), accessed July 11, 2014. Uploaded on June 15, 2010. Published by the Texas State Historical Association.