A Boy and His Airline
No kid ever had more fun with his favorite toy than Herb Kelleher has in running Southwest Airlines.
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His relationship with Muse took a Shakespearean turn in 1981, when Kelleher—who by then was so totally in command of Southwest Airlines that employees were calling him Southwest’s Father, Son, and Holy Ghost—found himself in an all-out war with his old friend. Bitter over being kicked out of Southwest, Michael Muse had raised enough money to start a yuppie version of Southwest—Muse Air. He started competing with Southwest in Texas, California, and Florida with sleek blue-and-white airplanes, meal service, assigned seats, and non-smoking flights. Employees at Southwest had a nickname for Muse Air. They called it “Revenge Air.”
But Michael Muse couldn’t crack Southwest’s hold, and by 1984 Muse Air was practically bankrupt. Lamar took over the operation and put Muse Air up for sale. Kelleher was fearful that Frank Lorenzo would buy it and use Muse Air’s gate positions at Houston Hobby to go after Southwest.
One day Kelleher telephoned Lamar Muse and suggested a meeting. When Muse walked through the door of Kelleher’s townhouse, Kelleher asked, “Lamar, are you more interested in running an airline or going fishing in Vancouver?” Lamar told him he’d rather go fishing. Two hours later, Kelleher had agreed to buy Muse Air. The price came to $76 million.
Not only did Kelleher knock out Muse Air, but when it was over, Herb, not Michael, had emerged as Lamar’s good corporate son. Michael never forgave his father for selling his airline, and even now Michael refuses to speak to him. But Kelleher and Lamar Muse remain friends. “Herb and I have raised a lot of hell together,” Muse told me. “He’s the best friend anyone ever had and the toughest competitor on earth.”
Corporate Culture
At Easter the head of the eleventh-largest airline in the country has been known to fly as the Easter Bunny. On St. Patrick’s Day Kelleher has flown as a leprechaun. On this day he is traveling as just his zany self. “I just love these three-hundreds,” Kelleher is saying as we make our way to the rear of the Boeing 737-300, which seats 137 customers, 15 more than the 737-200. Most of the passengers instantly recognize Kelleher from the company’s advertising campaigns. They remember the ad in which Herb is locked out of a Southwest plane because he talks too long about the airline’s on-time record. As he distributes peanuts on the flight from Dallas to Houston, the passengers respond to Kelleher with an exuberance ordinarily reserved for old high school buddies. “Would you care for peanuts? I grow them in my basement,” Kelleher says to a beer-drinking businessman from Lubbock. “Herb,” says the businessman, “I gotta tell you. You’re the ugliest flight attendant I’ve ever laid eyes on.” The entire rear of the airplane finds the scene uproarious.
That kind of behavior is woven into the life of Southwest Airlines. More than being just a business, it approaches being a cult, with 6,500 employees for members. The employees own 10 percent of the airline, and ownership begets loyalty. Each new employee is shown the Southwest Shuffle videotape, which describes the workings of each department—from the baggage handlers to the pilots to the secretarial pool—in rap. (This one is sung by the mechanics: “When you need spare parts to put on the plane/We get the right ones/And we order it again.”) Every Friday at noon, the employees in Dallas gather in the parking lot at their headquarters for a cookout. Most companies this size frown on nepotism. Not Southwest. “We’ve got as many as six members of the same family working for us,” says Kelleher. “Why, some of our employees have been married to one employee, divorced, and married to two, maybe three others.” (Since the Michael Muse experience, though, there is an anti-nepotism rule among the company’s seventeen officers.) Kelleher’s list of employees is updated constantly, and he tries to know the names of all of them. They call him Herb or Herbie, but never Mr. Kelleher. On Black Wednesday—the day before Thanksgiving and traditionally the busiest day of the year for airlines—Herb works in the baggage department at Love Field, loading and unloading customer bags.
His management style is fiercely anti-hierarchical. Each week about two hundred letters arrive from passengers, and Kelleher or Colleen Barrett, the vice president for administration, reads every one of them. Barrett is Kelleher’s alter ego. Together, Herb and Colleen—as all the employees refer to them—run Southwest Airlines. If there’s a problem, Herb and Colleen pull together a group of employees and talk until a solution emerges.
Barrett, a friendly, no-nonsense woman of 43, has worked for Kelleher since 1968, when he was a lawyer in San Antonio and she became his secretary. Her first duty was to set up a filing system; Kelleher had ten years’ worth of cases piled on and around his desk. Barrett still performs some secretarial duties, though she is clearly an executive as well. Kelleher calls her his “beeper” because she does her best to move him from meeting to meeting. They unapologetic workaholics who put in jammed days and then go home to more work in neighboring townhouses. “Colleen gives me all the freedom and latitude of a prisoner in a North Korean prison camp,” he says.
All of the primary aspects of Kelleher’s personality—his obsessiveness, his slap-happiness, his combativeness—are not only present within the culture of Southwest Airlines, they are celebrated there. No one gets angry at Kelleher for being late, because no one expects him to be on time (which, however, does not hold true for his airplanes—
Southwest has one of the best on-time records in the industry). His daughter Ruth says her father takes pranks and games so seriously that one night they played a form of tag until 2 a.m. Finally, she fell into her bed exhausted and was in a hazy sleep when she felt her father lightly touch her big toe. “Gotcha,” he said, chuckling off to bed.
Kelleher’s daily schedule is crammed with duties that nurture the organization he has created. Every month he personally hands out Winning Spirit awards to employees who were selected by fellow workers for exemplary performance. In December he gathered thirteen award-winners in a conference room for the company ritual. There sat muscular Vincent Lujan, an Albuquerque ramp agent. While cleaning an airplane, Lujan found a purse containing $800 and several credit cards. He turned it over to his supervisor, who found the owner. That act of honesty won him companywide recognition. Lujan received two free airline tickets and a bear hug from Kelleher. Cindy Burgess, a Dallas flight attendant, earned the same treatment for befriending Kisha, an eighteen-month-old girl who was en route from Amarillo to Dallas for a kidney transplant. Since Kisha had been hospitalized in Dallas, Burgess had run errands for her parents, including washing and ironing their clothes. Kelleher’s voice swelled with emotion as he described how Burgess had hired a baby-sitter to look after her own two children so she could help Kisha. Kelleher was the head of the clan, gathering his favorite few. The more heartrending the story, the better he liked it.
Southwest’s culture is constantly being refined. The pressure to behave like other airlines is enormous; Kelleher fights it at all costs. In a monthly meeting with dispatchers, who supervise the routings of the airplanes, Kelleher says that he has received several letters from passengers who complain that when they call ahead, they receive inaccurate information about their flights. The dispatchers tell him that the solution is to invest in a computerized system at a cost of $100,000 per plane that would give dispatchers up-to-the-minute flight information. It is standard at major carriers. Kelleher thinks it’s not essential and therefore not worth the expense; he likes keeping Southwest low tech.
One of his basic premises is that Southwest must stay on the offensive At a senior-management group meeting, Kelleher hears a disturbing report: If a proposed new noise rule goes into effect in San Diego, Southwest won’t be able to comply. He turns stern and serious. “I’m willing to sue,“ he tells his managers. “The carriers who aren’t opposing it are doing a real disservice. This is the kind of thing that spreads and makes it impossible to do business. Sue ’em.”
The only time Kelleher has run into trouble was when he purchased Muse Air, which he renamed TranStar. The competitive side of him wanted TranStar, and it made good sense for him to block Lorenzo from purchasing it. But TranStar offered meals long-haul routes, and connections with other airlines. It stood in perfect juxtaposition to Southwest. He tried to sole the problem by running the two airlines as totally separate operations, but external and internal pressures proved to be too great.
Externally, he was in a fare war with Lorenzo, who slashed one-way fares between Los Angeles and Houston to $79 to keep TranStar from making inroads at Hobby. Internally, employees from TranStar and Southwest were at odds. Nowhere was the acrimony more apparent than among the pilots. Southwest pilots believed that their job security was threatened by TranStar’s lower wages.
One day, Kelleher faced the Southwest pilots across the bargaining table. He could not understand why they were worried. But the pilots viewed the $76 million he had spent to purchase Muse Air as money that could have upgraded Southwest’s fleet and the pay scales of Southwest’s pilots. To protect their own seniority, the Southwest pilot’s union wanted to represent the Muse Air pilots. When Kelleher insisted on keeping the two work forces separate, one of the pilots looked Kelleher in the eye and said, “This is just the low-down, cutthroat kind of thing Frank Lorenzo would do to his employees.” Kelleher’s image of himself was violated. He flew into a rage and broke off negotiations for weeks. The agreement they eventually reached was rejected by TranStar pilots because it put them near the bottom of Southwest’s seniority system and offered limited job security. When Kelleher refused to negotiate directly with the TranStar pilots, a few even put bumper stickers on their cars that said: “Will Rogers never met Herb Kelleher.”
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