The Crazy Story of How Southwest Airlines First Became an All-Boeing 737 Airline

When the business was first on the drawing board Southwest Airlines had considered the Lockheed Electra L-188 turboprop for its flights between cities in Texas, but they feared passengers would choose competitors who had a better product.

So the airline narrowed their consideration down to 6 different kinds of planes: the Boeing 737-100, Boeing 737-200, DC-9-30, DC-9-10, BAC-111-400, and the Caravelle.

The Southwest Airlines model was largely a copy of intra-California carrier Pacific Southwest Airlines, and PSA flew the Boeing 737-200. It made sense for PSA, so they were always going to give the Boeing 737-200 a hard look.

Aloha Airlines was looking to dispose of leased Boeing 737-200s, but Southwest rejected them. Despite having few flight hours the number of takeoffs and landings from doing high frequency inter-island travel in Hawaii was high and so they’d entail significant maintenance obligations.

Boeing, though, had new 737-200s sitting without a buyer, since their intended customers weren’t expanding after the recession of 1969-1970. They had completed interiors but hadn’t been painted in any livery.

As Founding President Lamar Muse relays in his autobiography Southwest Passage, he and Southwest co-founder Rollin King were meeting with the Douglas Aircraft Company about the DC-9 and called Boeing. They told Boeing that they were about to do a deal with Douglas and Boeing had one hour to make or lose a sale. It was a bluff.

Here are the terms Southwest was offering:

  1. Southwest would take 3 parked Boeing 737-200s and an option on a fourth
  2. They’d pay $4 million apiece with no money down, $50,000 payments per month per aircraft for 60 months, and a balloon payment on the balance after five years
  3. 50% down on spare engines, parts, and equipment necessary to operate the planes, with the other 50% due in 24 months.

As the Douglas meeting got underway, Boeing called back accepting the deal. Southwest went out and hired pilots from Purdue Airlines which was going out of business. Since Purdue was a DC-9 operator they had to pay to send the pilots who weren’t type-certified to fly the Boeing 737 to the United Airlines training facility in Denver.

When Southwest Airlines acquired Muse Air (dubbed ‘Revenge Air’ since Lamar Muse had been ousted from the company and this was his son’s venture), they would have acquired McDonnell-Douglas aircraft but opted to run a separate carrier TranStar Airlines before shutting it down two years later. They acquired Morris Air, a Boeing 737 operator. And they acquired AirTran, but didn’t keep their 717s.

As a result Southwest to this day remains an all-Boeing 737 operation, with over 750 of them in the fleet. And perhaps all because of one phone call.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Indeed, an interesting story on a consistently good airline, which enjoyed solid leadership at the top, as noted in the Harvard Business Review article of 1972(?) explaining how Southwest pushed its way into Braniff’s intra-state Texas gravy routes–and won.

    An important point to complement your story is a significant reason Southwest defeated Braniff was based upon asset utilization–turning its 737s faster and in the air more frequently; thus, capable of offering such low fares. From my understanding, the original Southwest team benchmarked across industries and learned how the Indy 500 understood the importance of quickly servicing a car that entered the pit to send it back into the race. This is the operational model Southwest studied to successfully turn its 737s in (allegedly) 7 minutes initially at Love and Hobby Fields.

  2. Nice story. Except it seems PSA flew a variety of aircraft over the years, not just the 737. In fact it was the only airline to ever fly a wide body (L-1011) on intra California routes.

  3. James – PSA was certainly not the only airline to fly widebodies on intra-CA routes. American has, in the past, regularly flown 767 and DC-10s SAN-LAX, and I’ve been on a United 747 SFO-LAX.

  4. Any word on the FAAs changes to oversight of Southwests Flight Ops Gary? There was an article about that in the Wall Street Journal recently. Crickets chirping.

  5. @ Gary,
    I worked for Lamar Muse at SWA, Michael Muse at Muse Air, and Herb Kelleher at SWA. There is certainly more to the story but you are accurate and have it right.

  6. @ Amaya’s,
    You are also correct. WN did operate B727’s for a short time. These aircraft were “leased” from Braniff in a settlement agreement while WN was waiting for the delivery of the new B737-300. The 72’s primarily flew the HOU-SAT/AUS-LAX turns as the B737-200 could not carry a full load and fly SAT/AUSLAX non-stop with adequate fuel reserves. The -300 could and did. But the Muse Air MD-80’s flew HOU-LAX non stop with meals and no smoking (Muse Air was the world’s ONLY non smoking airline at the time) for the same price as WN did with a stop in SAT. WN went out full and MC rarely did. I once flew the leg with 7 passengers in the airplane.

  7. @One Trippe – I am merely relaying Lamar Muse’s version of the story. I was truly privileged to have a regular correspondence with the man late in his life.

  8. @Mike. I meant regularly scheduled flights with a wide body. Think most others were one-off/repositioning flights? But now that you mention it Western may have flown a wide body in CA.

  9. American definitely ran regularly scheduled DC10s and 767s between LAX and SAN back in the day… I don’t know whether anyone else had regular widebody service within CA, but American did for years. They’d fly transcons during the day, then down to SAN to get washed at what was, at the time, the largest washrack in the system, and back up to LAX later that night or the next morning. Those flights were daily revenue passenger legs.

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