Don’t believe him. But if Kelleher hasn’t exactly grown up at 67, his airline certainly has. Southwest has quadrupled revenues in the past 10 years and become the nation’s seventh largest carrier by following the gospel of low fares. In 1998 it earned profits of $433 million, carrying 52.5 million passengers to 53 cities, most in the South and West. The average trip: 446 miles for $75. The so-called Wal-Mart of the Skies offers no assigned seats, no meals, no first class. Like its boss, it does have a bent sense of humor. Gate agents hold contests to see which traveler has the biggest hole in his sock. Kelleher has taped a rap number for new employees: ““My name is Herb/Big Daddy-O/You should all know me/I run this show.’’ On March 14 Herb’s show goes on the road again. Southwest will add a 54th city–Islip, in New York’s Long Island. It’s Kelleher’s most ambitious stroke yet in moving Southwest into the Northeast, and a vital part of his bid to make Southwest a truly national carrier.
But Southwest isn’t assured of happy landings in New York, the nation’s most lucrative market. Kelleher himself has regularly professed wariness of the Big Apple’s three C’s–cold, cost and congestion. ““We would never fly into La Guardia or Kennedy,’’ says Colleen Barrett, his longtime No. 2 exec. ““It’s just not who we are.’’ Southwest makes money by getting more out of its assets. Each plane flies nine times a day, twice the industry average, and spends only 20 minutes on the ground. But Southwest-style efficiency is tough to achieve in New York’s big airports. Islip is remote, but Kelleher avoids congestion by serving fringe airports–Baltimore, not Washington; Providence, R.I., and Manchester, N.H., not Boston. The New York market, says analyst Kevin C. Murphy, ““is a very deep shaft he can mine for years to come.''
The majors would like to put Kelleher at the bottom of a very deep hole. They’ve created ersatz Southwests–Delta Express, Shuttle by United–partly to fend off Southwest. They might match Kelleher’s rate structure, but they will be harder pressed to match his style. A few years ago Southwest painted one of its jets to look like Shamu the killer whale. ““What are you going to do with all the whale s—?’’ former American Airlines CEO Robert Crandall asked Kelleher, who then had a large tub of chocolate mousse sent to Crandall with a Shamu-shaped spoon stuck in the center.
Last week cross-town rival American was trying to dig out from some really deep mousse–a pilot sickout that cost it $59 million. In contrast to American and its long history of strikes, Southwest has never lost an hour of flying time to a labor dispute, even though its work force is the industry’s most unionized. Founded in 1971, Southwest was too young to encumber itself with many of the anachronistic pre-deregulation work rules. But CEO-watchers also credit Kelleher, who’s never had a layoff and views unions as a part of his team. ““At most companies, the people get the lip service and the bottom line gets the attention,’’ says Tom Peters, author of ““In Search of Excellence.’’ ““Kelleher heads down both tracks at 1,000 miles an hour.’’ In the high-stakes game he’s playing now, that might prove just fast enough.
