NEW YORK — Herb Kelleher, who turned conventional airline industry wisdom on its head by combining low fares with high standards of customer service to build Southwest Airlines into one of the nation’s most successful and admired companies, died Thursday. He was 87.
The airline announced his death on Twitter. It did not say where he died or give a cause. Southwest is based in Dallas, and Mr. Kelleher had a home there.
Under the fun-loving, chain-smoking, hard-drinking, New Jersey-born Mr. Kelleher, Southwest, which began in 1971 as a low-fare carrier serving three Texas cities — Houston, Dallas, and San Antonio — grew into the behemoth that today carries more than 120 million passengers a year. It is the nation’s most popular domestic airline.
Southwest employs more than 58,000 people and has been profitable every year since two years after it was founded. During Mr. Kelleher’s tenure, the company never had a layoff, furlough, or pay cut, despite being among the most unionized airlines in the world.
His vision for the airline — one that reshaped the industry — centered on using more fuel-efficient, low-cost planes to reduce fares and challenging his employees to provide no-frills service without lowering standards.
Robert Mann, an airline industry analyst and former executive, said that by eliminating onerous fees and unnecessary services and using secondary airports, such as Love Field in Dallas, Southwest brought low prices to the market and stimulated demand for air travel. Now, given a choice between driving and flying, legions of travelers opted for the plane.
At a time when Braniff’s coach fare between Dallas and San Antonio was $62, for example, Southwest’s fare for the same route was $15. Mr. Kelleher stuck to the low-fare concept, believing that lower prices did not mean lower profits.
“He literally brought air travel to the masses on a scale that was unimaginable,” Mann said. Southwest’s entry into a market inevitably led to lower fares across the board. This became known as the Southwest Effect.
By paying his employees well, avoiding layoffs, and instilling a spirit of fun in the company’s culture, Mr. Kelleher also set a tone for Southwest that translated into customer loyalty.
“You have to treat your employees like customers,” he told Fortune magazine in 2001. “When you treat them right, then they will treat your outside customers right. That has been a powerful competitive weapon for us.”
What sounded like a business cliché translated into tremendous cost savings for Southwest. Its employee productivity levels were far higher than those of the competition, and even as salaries rose, the company managed to keep fares low and profits high. The company was a perennial choice for Fortune’s “Most Admired Companies” list.
Mr. Kelleher was so outgoing that it would take him ages to walk through an airport — he seemed to stop every few feet to chat with employees and passengers. He had a booming laugh, a bottomless trove of anecdotes, and a lawyer’s precise way with words.
When Mr. Kelleher stepped down as chairman at the annual shareholder meeting in 2008, he received “the kind of standing ovation usually reserved for rock stars,” The New York Times reported. Even the Southwest pilots union, in the midst of negotiating a new contract, took out a full-page advertisement in USA Today thanking him for all he had done.
Mr. Kelleher’s quick-witted, down-home observations were legend in the industry. “Because I am unable to perform competently any meaningful function at Southwest, our employees let me be CEO,” he once told the National Civil Aviation Review Commission. “That is one among many reasons why I love the people of Southwest Airlines.”
A hard drinker with an ever-present Kool cigarette in his mouth, he liked to dress like Elvis Presley or other characters at company meetings and maintain a level of fun in the workplace.
In 1992, when both Southwest and Stevens Aviation were using the advertising tagline “Just Plane Smart,” the companies got locked into a debate over which had the rights to the idea. Mr. Kelleher suggested that in place of litigation, he and Kurt Herwald, the Stevens chief executive, arm-wrestle for it. And though Mr. Kelleher lost the match, the publicity was so positive that Herwald relented and let Southwest keep the tagline.
Herbert Dwight Kelleher was born March 12, 1931, in Camden, N.J., to Harry and Ruth (Moore) Kelleher. His father was a general manager at a Campbell’s Soup factory. Herb was captain of his high school basketball team.
He credited his mother as his primary influence. She would engage him in long conversations about life when he was a child. “She was very ethical,” he was quoted as saying in “The Art of Business: In the Footsteps of Giants,” a 2004 book about leadership by Raymond T. Yeh.
“She had a very democratic view of life,” he continued. “She had enormously wide interests in politics and business, so it was very educational in that respect, just talking with her. We’d sit up and talk to 2, 3, and 4 o’clock in the morning when I was quite young, about how you should behave, the goals that you should have, the ethics you should follow, how business worked, how politics can join with business.”
After attending Wesleyan University in Connecticut and later New York University Law School, Mr. Kelleher began his career as a lawyer. He married Joan Negley in 1955, and the couple had four children while living in New Jersey. But a desire to start his own firm prompted him to move the family to San Antonio.
His wife, three of their children and many grandchildren survive, Southwest said.Material from the Associated Press was used in this obituary.