Herb Kelleher: An Industry Giant Passes
Herbert D. “Herb” Kelleher, the maverick and much beloved co-founder and Chairman Emeritus of Southwest Airlines, passed away on Thursday, Jan. 3. He was 87.
Herb was a young lawyer recently relocated from the East Coast to Texas when a client, Rollin King, approached him about helping him start a low-fare intra-Texas airline. The eventual airline, born after the conquest of a flurry of lawsuits attempting to stop them in their tracks, first flew June 18, 1971. Today, Southwest Airlines flies more than 4000 flights a day to 99 destinations in 11 countries with much more growth on the horizon. It is the largest U.S. domestic carrier in terms of daily passenger enplanements. In an industry famous for creating small fortunes from large ones, Southwest Airlines is arguably the most successful airline enterprise in global industry history. Equally as successful as the airline has been the long-term performance of its stock, LUV, one of the bluest of the blue chips.
The airline industry is famous for some of the larger than life personalities that it often attracts in its leadership ranks. In that small cadre of colorful “Conquistadores del cielo” (how airline titans refer to themselves during periodic fraternal gatherings), Herb had no equal. Call it charisma, chutzpah or balls, Herb could simply get away with antics and behavior that most stuffed suits would never even contemplate, and about which some surely rolled their eyes.
He could be the court jester or the biggest kid in the room. He could also be your worst nightmare if you were trying to impede his airline. He loved to laugh and get others laughing with him. Behind the disarming clown face facade, however, was a brilliant business mind, a savant-like memory for names and details, and a steely eyed and fierce negotiator. For a picture commemorating the signing of a hard-fought labor contract, Herb and the union negotiators all dressed up and posed as Mafioso, complete with machine guns. Get Herb started on airline business, taxation, regulation and so on and get ready to take notes because graduate school was about to start. He could be profoundly serious at one moment and prancing around in a silly hat the next.
Herb deeply understood business because he deeply understood people ... customers and employees alike. Out of the veritable encyclopedia of Herb stories—most of which are likely true—one of my personal favorites was when Herb “accidentally” left a cigarette lighter etched with the logo of Airbus Industries on the conference table at Boeing headquarters as a new aircraft purchase deal was being negotiated. Classic Herb.
The entire amazing package that was this man served to endear Herb to his employees and associates with near maniacal devotion and commitment.
Herb’s business plan was as elegant as it was simple, and it was sermonized continuously to all employees. Low costs equal low fares that equal steady profits. Steady profits fuel low debt, system growth and job security. Good times were not for feasting nor for the gouging of our customers, but were for preparing for the lean times that were always just around the corner. (The latter concept was not always warmly received by labor negotiators.)
During the heyday growth period of the 1980s and 1990s, Herb, armed with his industry-leading low costs per seat mile, could enter any market of his choosing and set the market price of airfares at a level that would assure profits for him and losses for his competitors. This gave birth to the term “Southwest Effect” that industry watchers and analysts started using as competitors painfully tried to match Herb’s fares.
Herb led his faithful employees like a general in battle, referring to employees as warriors and competitors as the enemy. There was always a battlefront somewhere. Several attempts to clone or copy Southwest’s winning formula came in with a bang and usually went out with a whimper. Without a doubt, billions of dollars have been saved by the traveling public on airfares as a result of the Southwest Effect.
At no time was the brilliance of Herb’s mantra more plainly proven in the field than during the horrific aftermath of 9/11 and its devastating impact on the airline industry. Southwest Airlines, by virtue of its low costs and low debt, was the only airline of its peer group to escape that dark period without furloughing employees or filing for bankruptcy to shed debt and pension obligations. Sometimes job security is never fully appreciated by employees until it is lost.
No discussion on the business life of Herb Kelleher would be complete without mention of his right-hand person, Colleen Barrett. Their professional relationship started when she was the young lawyer’s legal secretary and culminated with Colleen retiring as the president of Southwest Airlines. Together they were a one-two punch of mutual magnification. A duo far greater than just a sum of the parts. As long as Southwest Airlines exists, each of their respective DNA will be woven into its fabric. At Southwest Airlines, the scheduling of operations is done in Central Time. However, it is never internally referred to as Central Time; it is simply referred throughout the company as “Herb time.”
I first met Herb in 1991 as a new-hire pilot. Our class of 20, as were most when Herb’s schedule allowed, was privileged to be able to have a luncheon with Herb and Colleen. Our particular luncheon was unique in that one of the major news networks would be filming our meeting as part of a news special they were putting together on Herb. As the new employees, we weren’t quite sure what to expect, but even amidst the lights and cameras, Herb was simply Herb, even if the network editors would have some bleeping and editing to do afterwards.
He regaled us with stories and nuggets of wisdom until our bellies ached from laughter. After just a simple introduction in that new hire meet and greet, I had a purely happenstance encounter with Herb almost four years later in an elevator at the company headquarters. Not only did he remember my name, but he quoted verbatim a comment that I had made during the luncheon.
Many years later I got a personal note from him complimenting me on an article I had published. This from a guy who had to have met over 50,000 employees over his career. He had a magical way of making everyone in his presence feel special. Hundreds of thousands of employees and their family members have their livelihoods, fortunes and retirements built upon the creation of this incredible man.
That was Herb. There will never be an equal.
Myron Nelson is a Southwest Airlines Captain.