In the late 1950's, Boeing decided that it needed to respond to a market threat posed by the medium-ranged four-engine ``880'' jet being offered by Convair. Convair was pitching the jet as a natural complement to those airlines flying larger DC-8's and 707's. The 880's primary mission target was transcontinental one-stop and two-stop routes. (For example, New York-Chicago-Los Angeles, or Miami-New Orleans-San Francisco.) As airlines took delivery of the first 707's and DC-8's for non-stop transcon routes, most relegated their piston aircraft to routes like these.
After TWA and Delta signed up for the 880, Boeing knew it had to act fast before United, American, and Eastern followed their lead. A quick fix came in the form of a modified 707, one with a new wing design, shorter fuselage, and lighter-weight alloys to give a speed and performance profile competitive with that of the 880.
Boeing initially considered dubbing it the 707-020 series, since it essentially was a derivative 707 model. Moreover, its external (and more especially its internal) appearance was so similar that to an untrained eye (like a typical paying passenger's) it would appear to be a 707 model of some sort.
William Patterson, CEO of United, told Boeing that he liked the new design but disliked the notion of naming it the 707-020. He explained that since this was a newer model than the original -100 series, it ought to have a ``higher'' number. A lower number like 020 might give people the impression that somehow it was a ``lesser'' or inferior model to the -100 and soon-to-be-flying -300 series.
Boeing management pondered this, and since it very badly wanted a launch customer (and to prevent a sale to Convair), it decided to name the new model the ``720'' instead. Soon afterwards, United ordered twenty 720's for delivery starting in the summer of 1960. Eastern and American followed, along with Northwest.
What Mr. Patterson didn't tell Boeing was the real reason he wanted the number changed. United had been a launch customer for the DC-8, and he didn't want to make it appear that United management had come to the conclusion that it had blundered in ordering the DC-8 by going out and ordering a 707. He and Boeing both knew that only the larger -100 and -300 series 707's competed with the DC-8, but he nevertheless felt it would ``look bad.''
In the meantime, C. R. Smith, Patterson's archrival CEO at American, got wind of Mr. Patterson's plea to Boeing to change the name of the 707-020. He always enjoyed every opportunity to tweak his competitor's nose, so when American took delivery of its 720's, it decided to refer to them in all publications and advertising as ``Boeing 707's (model 020).'' Unlike United, American had bought 707-100's, (instead of DC-8's) so this arrangement suited them nicely: now most of the flying public would believe they were simply expanding their already large 707 fleet. To ensure this illusion, he made sure that the newly delivered 720's all had the same decal placed on them as their large 707 brethren: ``707 Jet Flagship.'' Nowhere on the aircraft did it refer to 720, or 020 for that matter.
American was the only airline to engage in this deception. In fact, most other carriers proudly trumpeted the ``720'' tag, since the higher number did make it appear that it was a more advanced model than the 707's being produced at their side at the Boeing factory.
The moral of this story: launch customers have a lot of clout, and manfacturers tend to do whatever they want, even if it isn't always logical.