Wild Turkey whiskey and Kool cigarettes finally caught up with Herb Kelleher. The co-founder and former CEO of Southwest Airlines has died at age eighty-seven. Southwest began flying in 1971, serving three Texas Cities: Dallas (Love Field, not DFW), San Antonio and Houston. Today, Southwest, with 58,000 employees, carries more domestic passengers than any other airline, serving ninety-nine U.S. cities and ten foreign countries. It is the most, actually the only consistently profitable airline, even without charging fees for checked baggage or itinerary changes and with a highly-unionized workforce.
Kelleher’s business model never followed industry practice. “We’re not competing with other carriers. We want to pull people out of backyards and automobiles, and get them off the bus.”
Southwest adopted the motto “Just Plane Smart” in the early 1990s. They heard from Stevens Aviation, a much smaller aircraft-service company, claiming infringement of their service mark, “Plane Smart.” An old business adage has it that if you’re a small company in litigation with a large corporation, you’ve already lost. Not so this time. Kelleher and Stevens CEO, Kurt Herwald decided to settle it with an arm wrestling match, two out three with the loser of each paying $5,000 to charity and the winner getting rights to the slogan. The “Malice in Dallas” was rigged, though. The physically-fit Herwald beat the bourbon-and-cigarettes training Herb Kelleher, but immediately agreed that both companies could use the slogan. Charities gained $15,000, lawyers zero.
Kelleher’s business practice was to put employees first. He believed, “Your people come first, and if you treat them right, they’ll treat the customers right.”
Inc magazine profiled Herb Kelleher in 1992. It’s still worth a read today.