Hard Landing (54 page)

Identifying his paper company as a “new entrant,” Kelleher applied for and received the needed slots. He then simply traded them to Southwest.

Someone at the FAA soon wised up to the maneuver and moved to nullify it: slots, the agency decreed, could be traded away only by an operating airline, not a paper company. So Kelleher devised a new sleight of hand. He sold Midway Southwest to a charter company that owned a single Learjet. Then the charter company traded the slots to Southwest. This time Washington could not come up with a reason to disapprove the transaction. Southwest was suddenly serving Los Angeles.

When J. Lynn Helms, the FAA administrator, found out what had occurred at the levels below him, he summoned Kelleher to Washington. Southwest, he told Kelleher, had made a mockery of the rules intended to benefit new entrants. “
Those were the rules,” Helms said sternly. “We changed the rules, and you circumvented the changed rules.”

Then Helms smiled, confessing that he loved Kelleher’s fancy footwork. As he bid Kelleher farewell, Helms instructed him to exit the office with his most convincing hangdog look; Helms wanted his staff to think that Kelleher had been whipped in the woodshed. Kelleher walked out with his shoulders slumped and his head cast down, all the while grinning inside.

Along with California Kelleher added Las Vegas, Kansas City, Little Rock, St. Louis, and ultimately, in 1985, Chicago Midway Airport, Southwest’s first strike east of the Mississippi River. (It had also entered Denver but soon quit; such cold and snow turned out to be enemies of the 10-minute turnaround.) After establishing itself at Midway, Southwest continued pressing east, to Detroit, Birmingham, and Nashville (a town that Kelleher decided to serve after
visiting his daughter at Vanderbilt University). But Southwest did not go near the East Coast. The airports and airspace were too congested there for a 10- or 15-minute turnaround, especially in New York. Southwest therefore remained largely invisible in the East; although the business press covered the airlines as thoroughly as it did any industry, Southwest was still largely undiscovered by the national media.

In the markets that it did serve, however, Southwest instantly became popular. At each new city added to the system Kelleher scheduled flights to two, three, or maybe four destinations, usually cities at which the company had previously established itself. Most were only a few hundred miles distant, close enough that a community of interests, fostered by cars and the interstate highway system, already existed between them (Tulsa and Oklahoma City, Chicago and St. Louis, Dallas and Little Rock). As it spread in two directions from Texas—west to California and northeast to the Great Lakes—Southwest’s route map came to resemble a haphazardly laced army boot.

Southwest typically did not commence service between any two cities until it could devote the planes and personnel necessary to running four, five, or six flights a day—even hourly flights where possible. In big cities (most notably Chicago) Southwest staked itself in secondary, usually close-in airports, just as it had founded itself at the convenient if bedraggled Dallas Love Field. Southwest then blitzed the local market with quirky television and display ads emphasizing
its low, unrestricted fares and high frequency (“Just Say When”). Within a year of offering service Southwest often doubled the ridership of whatever circuitous or direct service existed previously and doubled it again within the second year.

It was unique among the airlines not only because it flew point to point instead of through hubs, but also because it built its markets almost entirely through a direct appeal to the public, bypassing travel agents. Southwest was happy to let other airlines fight for the loyalties of travel agents; doing so had pushed the commissions paid to travel agents to 10 percent of the ticket price, up from 5 percent in the regulated era. Southwest in fact did not particularly need travel agents. There were rarely any complicated itineraries involved in flying Southwest; the trip was usually just there and back, often in the same day. Southwest’s fares were excruciatingly simple, generally just two prices (peak and off-peak) on any route. Travel agents, for their part, were only too happy to let passengers handle their own reservations on Southwest; at such low fares the commissions were hardly worth it, especially since for the most part travel agents had to book reservations on Southwest by phone. Southwest refused to pay transaction fees to the major computer reservation systems.

Such compulsive attention to costs was part of the reason that Southwest could offer low fares in the first place, while simultaneously recording the most consistent profitability in the airline industry. Ten-minute turnarounds (eventually stretched to 15 or 20 minutes, as airport congestion worsened and safety regulations tightened) and an uncomplicated back-and-forth, back-and-forth schedule kept the planes in the air an average of nearly 12 hours a day, far above the industry average. The company’s continuing reliance on a single aircraft type—the Boeing 737 continued to save it vast sums in training and maintenance costs. Southwest also had incomparably small interest costs because Kelleher so assiduously eschewed debt; as it prepared for a big expansion in 1984, for example, Kelleher imposed a temporary
austerity program so that it could be sure of paying for its next 21 jets (worth nearly a half-billion dollars) in cash.

But the most striking factor in the company’s relentless success, and by some reckoning the most significant, was the way that Kelleher managed people.

Kelleher perpetuated the company’s underdog spirit. He had
never fully recovered from the legal battle to get Southwest aloft and the trauma of its harrowing shoestring days, and neither had the earliest generation of employees. Maintaining the culture of martyrdom became so essential a strategy that it overpowered other corporate objectives; Southwest added cities and airplanes much more slowly than it could afford to, for instance, in large part to avoid an influx of new employees, which might
dilute the purity of the “Southwest spirit.”

At the company’s frequent awards ceremonies, with a cigarette burning on the podium and a cocktail never far from reach, Herb solemnly presented sniffing, sobbing, or beaming employees with awards and certificates marking such milestones as a 10th anniversary with the company. (The earliest year in which employees could qualify for a 25-year pin would be 1996.) Kelleher told employees that when they served a cup of coffee or replaced an altimeter or conducted a takeoff roll or took a reservation by phone, they were not simply part of an airline. “You are
involved in a crusade,” he told them.

Like many crusades, Kelleher’s flourished on an element of cultism, maintained not only around the aggrieved history of the company and the personality of the chairman but also through an eerily sophisticated
screening procedure for new employees. There were no psychological tests, per se. But through a profiling procedure established for flight attendants and later adapted to other positions, Southwest rated applicants according to both their qualifications and their compatibility with the other employees in the same department. Job candidates might be required (“invited”) to attend one of the company’s many social functions so that they could be observed interacting with other employees.

Kelleher also took the risky step of actively fostering “fun” in the workplace—risky because employees can easily spot a fake when such efforts are structured to manipulate or offered as a substitute for pay or perquisites. Kelleher’s intentions were indisputably commercial: happy employees are not only more productive but less apt to brood over setbacks and frustrations. More important, an ambiance of cheer—at the ticket counter, on the telephone, in the passenger cabin—was a critical component of Southwest’s no-frills marketing formula. Warmth and mirth suggested a kind of resignation that told passengers, We’re all crammed into this aluminum tube
together, so we might as well make the most of it. The passenger was deemed paramount;
every employee’s paycheck bore the words, “From our customers.”

At least two factors at Southwest rescued this culture from cynicism. For one, Southwest had always encouraged spontaneous acts of frolic, such as a flight attendant’s conducting the preflight safety demonstrations to the tune of the
William Tell Overture
or the theme from
The Beverly Hillbillies
, or trying to see how many passengers would fit in a lavatory, or conducting a contest to see which passenger had the biggest hole in his sock. Instead of homogenizing the product (as no one did better than American, for instance), Southwest rewarded departures from the standard.

Southwest also succeeded in nurturing fun because Kelleher cast himself as the chief jester—and made himself the butt of the most jokes. No personal appearance was too demeaning, no crack too crass. Kelleher joined in the flight attendants’ tradition of wearing
leprechaun costumes on St. Patrick’s Day and bunny costumes around Easter (when in-flight peanuts were served from colorful baskets). When a new corporate staffer named Ed Stewart was hired away from the buttoned-down American Airlines across town, he was invited to Herb’s office for an official welcome and was startled to find Kelleher in his office wearing a black wig and sunglasses—Roy Orbison, of course. Without apology or explanation Kelleher introduced himself and welcomed Stewart to the company. When Stewart reached out his hand, Kelleher pulled him face to face and kissed him.

When the company filmed a welcome for new employees in rap, Kelleher was among the stars with a lip-synching solo:

My name is Herb—Big Daddy-O
,
You should all know me; I run this show
.
Without your help there’d be no love
On the ground below or in the air above
.
Shuffle fun, shuffle shuffle fun
,
Shuffle fun fun, shuffle fun
,
Shuffle
,
Southwest!
Fun fun
.

He began appearing in the company’s television commercials, not in the hearty role of Lee Iacocca or the earnest role of Frank Borman, but as the clown. America West Airlines at one point ran a clever series of ads in Phoenix showing passengers hiding behind their sunglasses and pulling up their turtlenecks to avoid being seen on a low-rent, no-frills airline like Southwest; Kelleher countered as “the Unknown Flier,” with a paper bag over his head. “If you’re embarrassed to fly the airline with the lowest customer complaints in the country, Southwest will give you this bag,” he said—with a pile of dollar bills flopping into the sack as he pulled it from his head. Though an exhibitionist, he shared in few of the usual gratifications of showmanship. He was unwaveringly self-deprecating. He talked incessantly about his unbridled consumption of Wild Turkey and cigarettes—four packs a day.

If Kelleher’s man-of-the-people act was a put-on, none of his employees ever caught him wavering from it, and none of his competitors did either. Steve
McGregor, then a public relations executive at American Airlines, once encountered Kelleher in the boarding area of an American flight in Detroit, introduced himself, and spent the next 90 minutes laughing and gossiping with Kelleher, a perfect stranger, in the first-class smoking section of a flight to Dallas. The encounter was a jarring contrast to one involving McGregor’s own chairman, Bob Crandall, whom McGregor once accompanied on a flight to Los Angeles. Crandall, seated in the smoking section of first class, was approached by a passenger who introduced himself as a coworker of one of Crandall’s children. “That’s nice,” Crandall grumbled, immediately turning back to his work. McGregor watched the humiliated young man slink away.

The sincerity of Kelleher’s shtick, if it was nothing more than that, was never more evident than when Southwest began planning a new headquarters complex on the edge of Love Field in the late 1980s. The first thing anyone saw driving into the parking lot was a volleyball net stretched over a sand pit. The cafeteria was outfitted with a play area and an armada of toys for children visiting their parents at lunch hour. Employees mingled on a large rooftop patio overlooking the tarmac at Love Field, where Southwest’s brown and red 737s took off every few minutes, the Dallas skyline looming in the background. Management would host its Friday afternoon beer
blast and barbecue on that patio; every employee of Southwest Airlines was invited.

As for
Kelleher’s own office, the architect had received specific instructions: no windows. Once word had spread that he had a windowless office, Kelleher explained, how could anyone dare jockey for an office with a better view? To further control new-office politics, his executive assistant, Colleen Barrett, now a corporate officer, banned department heads from the committee planning the move; underlings, she and Herb reasoned, would be less absorbed in issues of office size and more committed to the merits of any space issue.

Kelleher decorated his nicotine-coated office with statues of wild turkeys and icons of his heroes: Harry Truman’s signature, in a frame on the wall; a photo of Churchill and Roosevelt at Casablanca; a front page, encased in plastic and hanging by wire from the ceiling, dated the day that FDR died; an original bank check for $1.25, signed by Orville Wright and payable to the American Society of Mechanical Engineers. Kelleher was a hero-worshiper and a reader of history and literature who could reel off couplets from Wordsworth, aphorisms from Clausewitz, and exchanges from Nixon’s 1950 debates with Helen Gahagan Douglas.

But the principal history on display in the new headquarters was the history of Southwest Airlines itself, all two decades of it. The corridors were specially designed as museum walls for the display of corporate memorabilia, some 2,000 framed items in all: newspaper and magazine clippings documenting Southwest’s struggle to get off the ground, letters from mayors thanking Southwest for putting their cities on the map, snapshots taken at company banquets, photos of Herb in his bunny outfit. To assure that every office employee was exposed to the entire record, each item was mounted on a
different wall as often as once per quarter.