The boarding area at Love Field was packed, as it often was in the early morning in the late nineties. I was waiting for a Southwest Airlines flight to Houston, debating whether to fight my way toward the free coffee, when a strange hush came over the terminal, as if the waiting passengers had all gasped at once. Then, the murmurs began. “That’s Herb Kelleher!” a lady near me said. “He’s the owner of Southwest Airlines.” No, Herb wasn’t the owner. Southwest was a publicly traded company, but few publicly traded companies were more closely associated with their chief executive than Southwest was with Herb, as everyone called him.
At the time, Herb was making regular trips to M.D. Anderson in Houston for prostate cancer treatments, but you wouldn’t have known it that day. He worked the room—shaking hands, slapping backs, and unleashing his raucous, echoing laughter among his loyal customers. He was on my flight that day, and he flew, as he always did, in the cockpit jumpseat (smoking—a Herb trademark—was still allowed in the cockpit, but not the cabin). After the flight hit cruising altitude, he emerged to help hand out the airline’s famous peanut packets to passengers.
Herb Kelleher, who lived in Dallas, died Thursday at the age of 87. Few people have done more to change a major American industry. Congress deregulated the airlines in 1978, but Southwest, under Herb’s leadership, democratized it. Southwest’s fares, once far lower than its competitors, made it possible for millions of people to fly who previously couldn’t have afforded it. The U.S. Transportation Department dubbed it the “Southwest Effect”—when the carrier entered a new market, passenger traffic soared.
Herb stories are legendary. There was the classic arm-wrestling match (the “Malice in Dallas”) with another airline executive over the rights to a marketing slogan. There was Herb, in an Elvis jumpsuit, shimmying on the April 1989 cover of Texas Monthly under the headline “Herbie Goes Bananas.” [Full disclosure: Southwest was a major advertiser in the magazine’s early days.]
Beneath the antics was a shrewd businessman. Airlines were notorious money losers, but not Southwest. During Herb’s tenure, it was the most consistently profitable carrier among the majors. It was relentless in its cost-cutting efforts; the company once saved hundreds of thousands of dollars a year by removing three peanuts from each packet.
What set Southwest apart from its rivals, though, was its disruption of industry norms. By the time the carrier hit its stride in the early eighties, until well after Herb’s retirement in 2001, it had the highest level of union representation of any airline but the least labor strife, in part because Herb himself was so well respected by the rank and file. It had the lowest-paid executives in the industry and the highest-paid employees. It had the best on-time performance and the cheapest fares. It was the only growth stock among the major airlines, and it issued shares to its employees. Many of the pilots, flight attendants, and baggage handlers who joined the company in its early days retired as millionaires.
Southwest, or Air Southwest, as it was known when it was incorporated in 1968, spent the first few years of its life fending off lawsuits from competitors such as Braniff and Texas International. Herb, a San Antonio lawyer at the time who cofounded the company with Rollin King, provided his legal services for free. Even after Southwest started flying in 1971, its rivals tried to stunt the company’s growth, convincing U.S. House Speaker Jim Wright to restrict air travel from Love Field as part of the deregulation bill. The other carriers had all moved to the larger DFW International Airport by then, and the “Wright Amendment” restricted commercial flights from Love Field to other cities in Texas and five surrounding states. Kelleher managed to transform the amendment into a competitive weapon, making Love Field Southwest’s fortress and building the carrier into a powerhouse that today carries more passengers than any other airline. It even adopted the stock symbol LUV—a reflection of its customer-centric culture and a defiant rebuke to its rivals.
Herb believed in listening to passengers, even as other carriers treated them as an annoyance. He encouraged Southwest employees to help resolve customer complaints, even if the airline wasn’t at fault and even if doing so cost the carrier money. Gate agents could authorize hotel stays or rental cars for stranded passengers, for example. In other words, he brought the old-school retail mindset to the once staid and heavily regulated world of air travel. His competitors struggled to keep up.
Reporters loved Herb because he always seemed willing to answer our questions. Once, after a luncheon in Dallas, he slipped out a side door for a cigarette, ditching his public relations staff. Several of us caught up to him in the hallway, and he regaled us with stories for probably two hours before his handlers tracked him down. He seemed to be having a good time, as if he had nothing better to do in the middle of the day than shoot the breeze with the press.
I don’t remember what he told us that day, but that, too, is classic Herb. For all his gregariousness, he never forgot his responsibilities as CEO. Rarely did a market-moving comment escape his lips unplanned. Dan Reed, then a reporter for the Fort Worth Star-Telegram, once dubbed it the “Six Flags Effect.” Reed said he would drive to Dallas to interview Herb. He would leave thinking he had gotten a lot of great information, but at about the time he passed Six Flags in Arlington on his way back to Fort Worth, he’d realize Herb hadn’t said anything newsworthy.
Thanks to Herb’s leadership, Southwest was so successful that eventually every one of its major competitors filed for bankruptcy. While Southwest’s competition wasn’t the only cause, its frequent deep discounts made it difficult for its rivals, with their bloated cost structures, to compete. Bankruptcy allowed them to slash expenses, cutting fares in the process. In other words, they went broke and emerged looking more like Southwest.
Herb retired as CEO in 2001, just months before 9/11 threw Southwest’s model of short, frequent flights into jeopardy as new security measures made flying between cities such as Dallas and Houston less attractive. He remained a guiding force, though, first as executive chairman and later as chairman emeritus. He was a regular visitor to Southwest’s offices, meeting with current CEO Gary Kelly and other executives. Herb was a part of Southwest and it was a part of him.
The airline has faced new competitive threats in recent years. It isn’t always the lowest fare carrier anymore; its labor relations, while still good, are less amiable than they once were; and the airline has had to go beyond U.S. borders to find growth markets. But the carrier has retained its fun-loving image. YouTube videos of flight attendants singing safety briefings have become internet sensations. The culture, still very much alive, was inspired largely by Herb’s personality.
Herb’s image as a chain-smoking, bourbon-swilling party animal masked a profound intellect. Born and raised in New Jersey, he was a graduate of Wesleyan University, where he majored in English and minored in philosophy and then received his law degree from New York University before moving to San Antonio to start a law firm—hardly a typical CV for a CEO. A voracious reader, Herb loved words and language, and he had intellectual curiosity that stretched far beyond commercial aviation or even business.
In early 2013, toward the end of my time as a business columnist at the Houston Chronicle, I got a call from Herb. He had just gotten back from a three-day conference of astrophysicists. He went, he said, because they had invited him, and he thought it sounded interesting. I had sent him a copy of a book I’d written about my father, a pioneer in the field of nautical archaeology. I thought it might pique his interest, and it did. “Nautical archaeology? That’s fascinating,” he said. “I didn’t know such a thing existed.” Suddenly, he was peppering me with questions. I believe that was the last time we spoke.
Herb Kelleher was that rarest of businessmen—beloved by his employees, his passengers, and his investors. He infused Southwest with his personality, which continues to define it to this day. He was fiercely competitive, but he also believed business should be fun and that everyone, at every level of the company, should share responsibility and the company’s prosperity. That’s why he regularly took to the tarmac to help load bags or walked the aisle doling out peanuts.
But Herb did more than simply run a company well. He affected the lives of air passengers everywhere by opening the skies, by removing the barrier of elitism that had defined the industry since the Wright Brothers. And in doing so, he brought us all a little closer together.