Herb Kelleher, the former Chairman, CEO, and co-founder of Southwest Airlines passed away last week. His grit, humor, and authenticity revolutionized air travel and created a corporate culture, one big family, really, to be envied.


Before Southwest could take flight, Kelleher had to fight the big airlines who’d already cornered the market. Kelleher won and since 1973, Southwest consistently turned a profit.

Many obits out there on Kelleher, but I like this one in The Seattle Times. It speaks of his tenacity, ability to laugh at himself, and how in one of the most contentious industries, Kelleher managed to have fun and create a company whose employees loved him as much as he loved them. Not to mention his innovativeness in a burgeoning marketplace.

…To fly Southwest Airlines in its early years was a travel experience like no other. You’d get on a Friday flight from, say, Houston to Austin. The flight attendants would be cracking jokes over the intercom. The booze would start flowing pretty much the moment the flight was airborne. For the next hour-plus the plane would be filled with laughter. (During one of the interminable fare wars with Braniff, Kelleher offered customers a bottle of whiskey if they were willing to pay a higher fare to fly Southwest.) Every once in a great while, Kelleher himself would be on board dressed like Elvis Presley. You had to be a serious curmudgeon not to have a good time.

…But behind all the fun and games was a revolutionary business model.

Because its original routes were all short-haul flights around Texas, Kelleher and the other early Southwest executives understood that they were competing with automobiles — its customers could always choose to drive from Houston to Dallas instead of flying. So it was imperative to keep prices — and costs — low.

That’s why Southwest only used one type of plane, the Boeing 737 — it was easier and cheaper to maintain a one-plane fleet. That’s also why Southwest didn’t have seat assignments: that made it easier to turn around a plane in 20 minutes or less. (Kelleher used to say that planes didn’t make money sitting on the ground.) Everything Southwest did was designed to create efficiencies that none of the legacy airlines could match. The culture was so ingrained that even after Southwest began flying to contiguous states and then across the country, it never let go of that mindset.

Thus, in the early 1990s, when oil prices skyrocketed and the airline industry was losing billions, Southwest was the one airline that remained profitable. “I’ve always said,” Kelleher told Fortune, “manage in good times so that you’re ready for the bad times.” He added, “Most people think of us as this flamboyant airline, but we’re really very conservative from the fiscal standpoint.” As a result, Southwest never lost money after 1973, an astounding record given the vagaries of the airline industry.

Thanks to Kelleher, Southwest had a second competitive advantage: It treated its employees as akin to family. “We’ve never had layoffs,” he told me in 2008 as he was preparing to step down as the company’s chairman. He added:

“We could have made more money if we furloughed people. But we don’t do that. And we honor them constantly. Our people know that if they are sick, we will take care of them. If there are occasions of grief or joy, we will be there with them. They know that we value them as people, not just cogs in a machine.”

Kelleher’s last formal event as a Southwest director took place in May of that year: the company’s 2008 annual meeting. As I noted in a column I wrote at the time, American Airlines held its annual meeting earlier the same day. The company was losing money, and its chief executive complained from the podium that the state of the industry was untenable. Members of both the flight attendants’ union and the pilots’ union, in the middle of contentious contract negotiations, picketed the meeting and handed out anti-management fliers.

By contrast, the Southwest meeting was a love fest. The company had made $645 million in 2007, but that wasn’t uppermost on shareholders’ minds. They had come to pay homage to Kelleher. When he entered the room, they stood as one, cheering wildly. Southwest’s pilots were in contract negotiations, but instead of picketing they took out an ad in USA Today to thank him.

“The pilots of Southwest Airlines want to express our sentiment to Herb that it has been an honor and a privilege to be a part of his aviation legacy,” said the union president, Carl Kowitzky, in a statement.

From the getgo, Southwest’s commercials were fun. And these are some of the best: