Herb Kelleher, the best CEO in America according to Fortune magazine, was the inventor of the original low-cost airline. He died this month aged 87. Jane Lewis reports.
Some called him “the high priest of ha-ha”; to Ryanair boss Michael O’Leary, he was “the Grand Master Yoda of the low-fare airlines”. But there’s a case to be made that Herb Kelleher, who died this month aged 87, was “the best CEO in America”, says Fortune. The founder of Southwest Airlines is credited with reinventing an industry: he was the capitalist who “democratised the skies”, spawning dozens of imitators, says
The Wall Street Journal. But Herb, as he was known to everyone, also showed what enlightened leadership can do for the bottom line. Famously decent to all his employees, he grew Southwest into America’s biggest discount carrier boasting a continuous annual profit streak dating back to 1973.
An easy-going ethos
Kelleher’s persona as “a chain-smoking devotee of Wild Turkey whiskey” came to encapsulate the airline’s easy-going ethos – without compromising safety standards, or his passengers’ perceptions of them, says Fortune. In the early days, Southwest flouted convention by putting flight attendants in “hotpants and go-go boots”; Herb himself was prone to shimmying onto aircraft wearing an Elvis suit. But success was built on attention to detail, particularly costs. Kelleher, who set a goal of keeping jets on the ground for only 20 minutes between flights, “focused on expenses at every level”. In 2000, Southwest removed three nuts from each bag of peanuts, saving $300,000 a year.
Although Kelleher had a pronounced “Texas swagger”, he was actually raised in New Jersey, the fourth child of Ruth and Harry Kelleher, who was general manager of the local Campbell’s soup factory, says The New York Times. He credits his mother with opening his eyes to the world by engaging him in long conversations when he was a child. “She had a very democratic view of life” and “enormously wide interests in politics and business,” he later observed. She was also big on ethics.
Herb attended Wesleyan University in Connecticut and later law school in New York. After marrying and starting a family, “a desire to start his own firm” prompted a move to Texas. There, in 1966, he was approached by a client, Rollin King, with the seemingly “outlandish idea” of starting an airline that would fly passengers cheaply within Texas. Company lore (sometimes disputed) has it that the pair used a cocktail napkin to sketch a plan for the business.
An affront to idealism
Early on, Southwest’s founders thought the main competition wouldn’t be other airlines, but cars, says The Economist. A bruising legal battle with airborne incumbents determined to “kill off the new business” soon put paid to that notion. Southwest endured a four-year delay before flights began in 1971. But the dirty tactics of rivals “forged the Southwest culture”. Kelleher viewed them as an affront to his belief that you should “treat all people equally and with respect” and as a threat to his belief in what America stood for. He saw his rivals’ dirty tricks as “an affront to my idealism”.
A key distinction Kelleher made was between being “tough” and being “mean”, says Forbes. Anyone who ever competed against or worked with him “knew he could be tough” – and he encouraged the trait in staff when necessary. But he saw “mean” as “dehumanising, shaming and belittling”. “Mean will get you fired,” he used to say. Simplicity was at the heart of his ethos: he under-promised and over-delivered – and didn’t take himself too seriously. “When he saw an opportunity, he didn’t need analysis,” concludes a former rival. “He just went after it.”