A Boy and His Airline
No kid ever had more fun with his favorite toy than Herb Kelleher has in running Southwest Airlines.
“Let’s do a Dr. Ruth spoof,” says Herb Kelleher, jumping to his feet in a spasm of creativity. Kelleher is brainstorming with three of his top managers in his cluttered Southwest Airlines office near Dallas’ Love Field. The task at hand is to come up with skit ideas for an airline-industry conference. Kelleher envisions a scene in which Dr. Ruth would be on the telephone talking to Robert Crandall, the abrasive head of Dallas-based American Airlines, which has just become the largest domestic carrier. “Remember. Bob,” Kelleher says, mimicking the tiny sex doctor, “size isn’t everything.”
The focus shifts to New York deal-maker Donald Trump and his attempt to purchase the Eastern Airlines Shuttle, which runs between Boston, New York, and Washington. Someone suggests a musical parody: “The Lady is a Trump.” Then Kelleher lights on the battle for the entertainment-park business. Kelleher’s own Southwest Airlines could be creative fodder for this one; in 1988 it became the official airline of Sea World. Delta has Disneyland and Disney World. Kelleher suggests taking a poke at United, which not only does not have an affiliation but also just lost its place as the largest airline. “Why not make United the official airline of Popeyes fried chicken?” he suggests.
The meeting epitomizes the Kelleher personality: his irreverence, his spontaneity, his zaniness, and, most of all, his competitiveness. The airline he helped found and now runs is a direct extension of that personality—Kelleher himself often stars in the company’s offbeat commercials. In an industry beset by turmoil and takeovers, Southwest thrives by making its own rules.
At 57, Kelleher looks and acts like a first-generation astronaut, a hard-driving, hard-drinking, fast-living sort of guy whose swept-back hair frames a prominent widow’s peak and madcap blue eyes. His office is filled with small porcelain statues of wild turkeys, a tribute to his drink of choice. He smokes five packs of cigarettes a day, rarely drawing a clean breath of air, but so far he is in proud and happy defiance of the laws of health.
To understand that the man and his airline are one, all you need to do is get aboard one of his planes. You know the shtick. It’s seven-thirty in the morning. You’re sleepy. Your stomach is in knots. You’re under pressure. You just want to drink your coffee, read your memos, and get to your meeting. Then it starts: the Southwest Experience. The big-haired flight attendants all look like they went to the same West Texas high school. They are dressed in everything from baggy shorts and wild-print shirts to reindeer outfits. They give you safety information in rap, sing Christmas carols, or tell you the wrong time on purpose. Anything for a laugh. You bury your head in work. They’re not going to get you this time. You wish they would cut it out. “As soon as y’all set both cheeks on your seats, we can get this old bird moving,” comes the microphonic twang from the front of the airplane. There may be no food, no closets, no leg space, but at seven-thirty in the morning, you’re belted in your seat, laughing like a perfect fool.
Since June 18, 1971, when Southwest made its first flight from Dallas to San Antonio with ten paying customers, Texas has never been the same. By making flying around Texas easier than driving, Southwest immediately achieved the impossible—it separated Texans from their cars. Its virtual monopoly of the Texas commuter market has made it a modern-day cattle drive, the primary means of getting our goods—that is, ourselves—to market.
Southwest has radically altered our psychic landscape. The distance between any two of the ten major cities in Texas linked by Southwest is roughly 55 minutes. You can leave Harlingen or Dallas on a morning flight and do a deal in Houston over breakfast. Kelleher is living proof that the airline has made commuter marriages possible: he lives in Dallas, his wife, Joan, lives in San Antonio, and they see each other on weekends via Southwest.
Years ago Southwest issued bumper stickers that said: “Fly Southwest. Herb Needs the Money.” It worked; Southwest has made Kelleher—who is the president, the chairman of the board, and the chief financial officer—a rich man. In salary alone he makes almost $400,000 a year, and he is Southwest’s largest individual shareholder, owning 441,465 shares worth roughly $5 million. Today Southwest is the eleventh-largest airline in the country and one of the strongest carriers in the nation. In 1988, with Texas still in a slump and the airline industry in upheaval, Southwest made $57 million in profits, its best year ever, and it reported $860.4 million in revenues. Kelleher predicts that by 1990 Southwest will top $1 billion, the industry’s own benchmark of a major carrier. (By comparison, American’s revenues last year were $8.5 billion.)
Still, Kelleher clings to an underdog mentality. Before his first plane got off the ground, Kelleher spent three years in bruising legal warfare with Braniff and Texas International for the very right to fly. Southwest now serves 27 cities, 16 of them outside of Texas, and in 1988 Southwest carried 14 million passengers with a fleet of 85 jets. According to airline-industry calculations, passenger traffic as a whole expanded by 4 percent last year; Southwest grew by 16 percent. Kelleher the competitor is always looking for new conquests. His plan is to have the airline double in size—in revenues and number of planes—by the mid-nineties.
It is success achieved the Kelleher way—by being an iconoclast and going it alone. Southwest doesn’t lure us with gourmet meals, leather seats, or free newspapers. It treats us like cattle, but it gets us where we have to go, when we have to go, and usually on time. (After all, who needs food or comfort when we’re having so much fun?) Southwest had an easy time adjusting to deregulation, which sent the rest of the industry reeling in 1978. Because Southwest started out operating only within state borders, it has always existed in a deregulated environment. As a result, Kelleher’s mantra is: simple and fast. Southwest is the only airline in the country that won’t make connections with other airlines. Nor are Southwest’s flights part of travel agents’ computerized reservation system; Kelleher refuses to pay the fee for the privilege. Southwest’s tickets look like grocery receipts, which makes them far cheaper than the multipage tickets issued by other airlines. And Southwest was the first in the industry to sell tickets through automated teller machines.
There’s more. A few years ago Kelleher ordered the closets removed from the front of the planes because he noticed that departing passengers dawdled in front of them. When a cash crunch forced the sale of an airplane in 1972, pilots were ordered to fly the same schedule as before, but with three planes to cover the route instead of four. The only way to do that was to get the plane to the gate and back into the air within ten minutes. Today 85 percent of Southwest flights turn around within fifteen minutes; 30 percent accomplish it in ten. Moves such as those are why it costs Southwest 5.7 cents per passenger mile to operate the airline, the lowest in the industry, which in turn is why Kelleher is able to offer some of the lowest fares around.
Southwest sees its mission as different from that of other airlines. Most of them operate on a hub-and-spoke system. That means, for example, that if you want to go to New York from smaller spoke cities such as Austin or San Antonio, first you have to fly to the hub city of Dallas. Southwest flies from point to point, carving out its own market while avoiding direct competition with the majors. As Kelleher says, “We don’t fly to Dallas because we want to go to New York. We fly to Dallas and Houston because they are worthy destinations in and of themselves.”
“You’re crazy. Let’s do it.”
Among the mementos lining Herb Kelleher’s office—the toy cars and planes, the white shirt he wore on his first solo flight in a private plane—is a framed napkin with a triangle scribbled on it. At the top of the triangle is a dot that represents Dallas, on the left is one indicating San Antonio, to the right is Houston. This napkin is a facsimile of the napkin that businessman Rollin King drew on in 1966 when he came to Kelleher’s San Antonio law office to seek legal help with his charter-airplane business. King pitched the idea of starting an airline to connect Texas’ three largest cities. The reason Southwest Airlines exists is that Kelleher was a very bored San Antonio Lawyer. When King said, “Herb, let’s start an airline,” Kelleher replied, “Rollin, you’re crazy. Let’s do it.”
Or at least Kelleher said something like that. Herb often serves as his own Homer—
he has a tendency to record and embellish legends even as he lives them. King recalls that when he drew the triangle, he knew his idea would work, but Kelleher was consumed with doubts about whether an intrastate airline would ever fly. Nonetheless, Kelleher was seized by the simplicity of the idea, put up $20,000 of his own money, and became counsel to the would-be enterprise.
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