Southwest Airlines – GOD Speed Herb Kelleher – #38

My first experience of flying Southwest Airlines came early in 1999 when I missed my flight from Hobby Airport in Houston to Love Field in Dallas. More importantly, I had promised my son, who was playing football late that afternoon, that I would be at the game. I asked the A&A ticket agent about later flights, and she told me that there was this Lovey–Dovey–Airline leaving in a few minutes from a gate down the hall. I pulled off a record run down the hall, and I was about to arrive at the gate when a beautiful blonde dressed in a Cowboy Skirt, Boots and Hat asked where I was going? I told her Dallas and she hustled me aboard the plane and proceeded to close the door. I told her that I didn’t have a ticket, and she simply asked me to take a seat and not to worry. For you millineals and boomers this could never happen again, due to numerous safety factors against terrorists etc. Not only was I a proud father who would see his son play football, but I enjoyed my flight and laughed at the singing and jokes that were presented by the crew in a somewhat phony and cultish way – but they were real. From that day-on I was hooked both as an investor and a Happy Customer.

Herb had a simple Management style – he kept things simple – he was a chain-smoking, Harley riding lawyer who loved Wild Turkey bourbon and made flying cheap enough for people who were use to other modes of transportation. In addition, he made it profitable, as evidenced by the fact that Southwest Airlines has been profitable for the past 45 years in an industry known for boom and bust conditions.

In addition to a simplified theory of life and Management style, he also had a secret in that he put employees first – remembering their birthdays, commiserating their sorrows, letting them figure out how to solve their problems – which translated to them wanting to please Customers, and took care of the bottom line. According to Herb, a company’s spirit is “the most important and powerful thing of all”. It is hard to replicate – with the changing Demographic shifts and the conditions that exist today.

The simplicity factor has been in place with some minor changes over the 50+ years. The business plan sketched out on a cocktail napkin 50 years ago in a Texas Hotel transformed the global industry, birthing copycats including Ryanair and Air Asia as well as the deregulation of the once-clubby U.S. aviation market in 1978. The Customers, to include business persons such as myself, fell in love with an airline that stayed on schedule and most importantly kept prices low due to dedicated reductions in costs in every area of operations? How many airlines on a global basis have been started, acquired or gone out of business during the last 50+ years? That figure might be an interesting future BLOG.

Other simplicity factors differentiates Southwest Airlines from competitors:

    1. They fly one airplane model – the Boeing 737
      • Less expensive planes due to volumed
      • Eliminates varying parts
      • Same Tires – Other Equipment
      • No Pilot Differential Pay grades
    2. Low Cost maintenance and Training – Maximizes Safety
    3. Concentrate on Domestic Market – Limited International Flights
    4. Doesn’t provide meals – if you don’t like pretzels bring your own snacks. Do offer Drink Coupon Rewards
    5. No assigned seats – great boarding procedure
    6. Two bags fly free
    7. Good frequent flyer rewards program
    8. No First or Business Class seats
    9. Generally avoids most congested Airports –get in and out fast
    10. Doesn’t pay travel agent commissions – who for the most part

cater to corporate business flyers

Since 1966, Herb has been on the Board of Directors as the Lawyer, but it wasn’t until 1982 that he became CEO and Chairman of the Board. He stepped down from position of CEO in 2001 and as Chairman in 2008.

No sooner had he left, the new guard initiated a Merger with Air-Tran Airways in 2011 to get gates in more congested Airports and 17 years later the merger seems to be working. Today, Southwest flies to a limited number of international destinations as a result of the merger. However, let me assure you that from the day Herb left, and the moment of the merger, Southwest has not been the same in terms of Service or the Customer feelings that the original group exhibited. Maybe we all are just getting older – and closer to starting another profitable airline in Heaven. However, I have to share one favorite story other than the one that deals with meeting you personally on a flight from Dallas to Houston where we talked about your experience of working in a Campbell Soup plant – that provided you with “best” management education – in that you learned to have respect for the front-line worker and to focus on how to get results instead of excuses. I still remember the fifth of whiskey you offered to every passenger (my staff drank it) who chose Southwest in response to a Braniff Airlines price cut – I laughed when I read that Southwest became the largest liquor distributor in the State of Texas for a two month period.

Herb Kelleher passed on Jan 3rd. The Management lessons he shared with every Customer, Employee and Supplier should lay the foundation for a ton of success. Keeping things simple allowed for every Southwest employee to get the message – that the Customer is a vital factor to success- without them you won’t have a successful business.