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LONGTIME SOUTHWEST AIRLINE LEADER HERB KELLEHER
He Reshaped The Industry By Combining Low Fares With High Standards Of Customer Service
BY KEVIN CUNEO, GAMMA ‘77
When Herb Kelleher died in 2019 at the age of 87, his obituary in the New York Times described him as “a fun-loving, chain-smoking, hard drinking business giant.” The New Jersey-born Kelleher, who pledged DKE at Gamma Phi Wesleyan in 1949, turned conventional airline industry wisdom on its head by combining low fares with high standards of customer service to build Southwest Airlines into one of the nation’s most successful and admired companies.
At Kelleher’s death, Southwest employed more than 58,000 people and had turned a profit every year since two years after it was founded in 1971. His vision for the airline – one that reshaped the industry – centered on using more fuel-efficient, lowcost planes to reduce fares and challenging his employees to provide no-frills service without lowering standards.
After graduating from Wesleyan in 1953, Kelleher enrolled in law school at New York University. He had a successful law career, but his life changed dramatically in 1967 when one of his clients, Rollin W. King, approached him with what seemed like an outlandish idea: starting an airline that could fly passengers cheaply within Texas.
King, a Deke at Beta Chi-Case Western Reserve, believed that Kelleher “was just crazy enough to sign on,” according to King’s memoirs. “We sketched our ideas on a napkin and in short order were ready to go.”
They soon ran into a wave of hostility from the industry, however. Competitors such as Texas International, Braniff and Continental waged four years of litigation before Southwest Airlines could make its first flight. When the airline began service in 1971, it had four Boeing 737s in its fleet. Southwest was able to reduce fares by flying only within Texas, avoiding prices that would have otherwise been mandated by the Civil Aeronautics Board.
Nevertheless, the airline struggled for its first two years. When it encountered serious financial difficulty in 1973, it chose to sell off one of its planes rather than lay off employees. It was at this time that Kelleher instituted an ambitious 15-minute turnaround at the gate, with flight crews pitching in to help clean and service the planes to get them off the ground more quickly. “Planes are profitable only when they’re flying,” Kelleher said.
“We opted for efficiency over costly frills, which I believed was the only way to increase profits. If somebody makes a proposal, and it infringes on those values, you don’t study it for two years,” he said. “You just say, ‘No, we don’t do that.’ And you quickly go on.”
As the airline’s co-founder and legal counsel, Kelleher fought its many courtroom battles. He became chief executive temporarily in 1978 and permanently in 1981.
With the passage in 1978 of the Airline Deregulation Act, Southwest added service to New Orleans, Albuquerque, Oklahoma City and 14 other cities. In early 1982, it added San Diego, Kansas City, Las Vegas and Phoenix. Southwest was well on its way to becoming a major national carrier.
Robert Mann, an airline industry analyst and former executive, said, “Kelleher literally brought air travel to the masses on a scale that was unimaginable. Southwest’s entry into the market inevitably led to lower fares across the board, which became known as the Southwest Effect.”
Kelleher’s quick-witted, down-home observations became legend in the industry. “Because I am unable to perform competently any meaningful function at Southwest, our employes let me become CEO,” he told the National Civil Aviation Review Commission.
A hard drinker with an ever-present Kool cigarette in his mouth, he liked to dress like Elvis Presley or other characters at company meetings. “My goal is to maintain a level of fun in the workplace,” Kelleher said.
In 1992, when both Southwest and Stevens Aviation were using the same advertising tagline, “Just Plane Smart,” the companies got locked into a debate over which had the rights to the idea. Kelleher suggested that in place of litigation, he and Kurt Herwald, Stevens chief executive, arm-wrestle for it. Kelleher lost the match. But the resulting publicity was so positive that Herwald let Southwest keep the tagline.
In 2008, when Kelleher announced to a large gathering of Southwest employees that he was retiring as the company’s leader, he was greeted with a five-minute standing ovation. “See how bad they wanted me gone?” he joked afterward.
When Kelleher died in 2019, he left behind his wife, Joan, of 64 years, and four children. His personal fortune was estimated to be at least $2.1 billion. Not a bad life for one of DKE’s all-time greats in business and management.
