Unusually for a man who believed in cutting costs wherever possible, Herb Kelleher, the boss of Southwest Airlines, the United States' most successful carrier, liked being flexible with trade unions.
In 1994, during discussions over an unprecedented 10-year agreement that would freeze pilots' wages for five years in return for stock options in the airline, he promised Gary Kerans, president of the pilots' association, that if the contract went through, he would freeze his own salary and bonus for five years as well. Chairman and pilots should get the same treatment.
The deal was done.
Kelleher died Jan. 3 at age 87 in Dallas. Born in New Jersey, he studied English and philosophy at Wesleyan University and then law at New York University. It was his wife, Joan, whom he met on a blind date, who persuaded him to start a law firm in Texas.
Southwest Airlines was born, not on the back of a cocktail napkin, as he later liked to boast, but when one of his legal clients, Rollin King, owner of a small commuter airline, and his banker, John Parker, came to his office. Both men found traveling between Houston, Dallas and San Antonio inconvenient and expensive, and thought they could do it better.
U.S. aviation in the 1970s was dominated by the hub-and-spoke approach, pioneered by Delta Air Lines in the belief that the most efficient way to fill planes was to fly through hub cities and collect passengers. What King and Parker were proposing was cheap, point-to-point travel using small, convenient airports near to fast-growing centers. The competition was not other airlines, they believed, but cars.
'Affront to my idealism'
After all, the distance between Houston and San Antonio was less than 200 miles, a three-hour journey by road. Pacific Southwest Airlines had made city-hopping efficient in California, so why would it not work in Texas? Kelleher put up $10,000 of his own money and on Nov. 27, 1967, he filed Southwest's application to fly between the three cities.
What he hadn't reckoned on was the airborne competition. Within a day, Braniff, Trans Texas (later Texas International) and Continental applied for a restraining order stopping Southwest from taking to the skies, arguing that Texas was perfectly well served by existing airlines. For the next four years, through the state district court in Austin, the state court of civil appeals, the Texas Supreme Court and the U.S. Supreme Court, the big airlines pleaded for injunctions that would kill off the new business. As the airline's lawyer, and later its general counsel, he laid out its arguments and rebuttals.
The legal battles forged the Southwest culture. Kelleher, who became chairman in 1978 and then also CEO in 1981, was deeply affected by the tactics that his rivals had used to try to strangle Southwest at birth. It offended the sense instilled in him by his mother that you should treat all people equally, and with respect. And it challenged his beliefs about what America stood for.
As he would later tell Kevin and Jackie Freiberg, academics who studied Southwest and went on to write the bestselling "Nuts! Southwest Airlines' Crazy Recipe for Business and Personal Success": "It was an affront to my idealism. If you're going to let these guys get away with this, it's a radically different type of country from the one I wanted to believe in."
Southwest became his cause. When one airline ran an ad claiming that Southwest was a cheap carrier, he had himself filmed with a bag over his head, saying the airline was prepared to offer the same to any mortified passenger. When another started a price war and halved its Dallas-Houston fare to $13, Southwest countered: pay full price and get a bottle of vodka or whiskey in return. When a rival airline complained that Southwest pinched its slogan and began advertising itself as "Just Plane Smart," he suggested the two chairmen settle the matter over three rounds of arm-wrestling instead of using lawyers.
'High priest of ha ha'
Kool cigarette and a glass of Wild Turkey bourbon at hand, he was always ready to tell stories about his airline.
How it hired for attitude; skills, you could always teach. How all its flight attendants wore hot pants. How when it won its first triple crown for best on-time performance, fewest customer complaints and smallest number of mishandled bags, all its customer-service employees were allowed to give up their uniforms and dress casually for a year. He put his workers first, ahead of his customers. Fortune dubbed him the "high priest of ha ha."
That every-day's-a-holiday atmosphere hid some hardheaded business decisions.
In the 1970s Southwest bought three brand-new 737-200s that Boeing had been unable to sell in the slump. The airline paid $4 million rather than the usual $5 million for the planes, and Boeing provided 90 percent of the finance. Southwest used no other aircraft, a boon for servicing and spare parts.
It served no meals; just peanuts. And, to ensure the fastest turnaround, it offered no seat assignments. Planes don't make money when they are on the ground. And making money in good times to ride out the lean years was what it was all about; Southwest has made an annual profit for 45 years.
Without Kelleher, there would have been no Michael O'Leary and Ryanair or Stelios Haji-Ioannou rolling up his sleeves at EasyJet. And yet somewhere along the line something was lost.
Cut-price air travel today is endured rather than enjoyed. It has become a hideous blend of zero-hours contracts and excuses to extort charges for everything from hand baggage that is deemed too big to failing to check in online.
It is hard to imagine today's airline workers taking out a full-page newspaper advertisement praising their chairman. On Bosses' Day in 1994, Southwest's employees did just that, pitching in an hour's salary each to raise $60,000. "Thanks Herb. For remembering every one of our names … For listening … For being a friend, not just a boss."
