Herb Kelleher on How I built this

In an interview with Guy Raz for NPR’s podcast “How I Built This,” Herb Kelleher shared how his company, Southwest Airlines, went from being an underdog to one of the biggest airlines in the world.

His strategy of bringing the cost down was, initially, severely criticized in the industry by those who could not believe that this approach could possibly be successful. Yet, after several profitable years in a row, it became clear that Southwest was onto something. Competitors have since started trying to imitate their technique.

The beginnings

It was in 1966 when Herb Kelleher, the legendary founder of Southwest Airlines, was approached with the idea of starting a regional airline that would operate only in Texas. When Guy Raz asked him what he knew about airlines at that time, he said:

“Well, I knew nothing about airlines, which I think made me imminently qualified to start one.”

Kelleher wanted to try something different with Southwest. He wanted to get away from the traditional way airlines had done business in the past. “I always had a great deal of curiosity.”

In term of marketing analysis, there was a huge market to serve, since most of the population did not consider flying because it was too expensive and primarily reserved for business people on business accounts.

What was the situation with their competitors, the other airlines, when Southwest made its debut? “They were not exactly warm, welcoming, and hospitable,” Kelleher answers. Seed money was raised in 1967, but legal challenges with competitors kept them from flying for four and a half years. The first flight didn’t take off until June 18, 1971.

It took tenacity. It took perseverance.

How did he stay motivated to fight for 4 years to launch Southwest? He had his vision and wanted to validate the free enterprise system. “I was idealistic about it.” It was a huge gamble. Did he ever get stressed or depressed? How did he keep his spirit? He said, he doesn’t “handle” stress; he likes it!

It was like David facing Goliath.

The first flights served only three routes in Texas, and the fairs were as low as $10.

How was he able to charge such low fairs compared to other airlines in Texas? “Through enormous productivity,” Kelleher recommends. “We decided to fly on a 4 airplane schedule with 3 airplanes. 10 minute term at the gate. »

• Instead of flying to every destination, he deliberately chose to offer only point-to-point flights.
• Instead of jacking up prices to cover the cost of meals, he decided that the airline would not serve any.
• Instead of assigning seats in advance, he preferred to let people choose them as they got on the plane.

Today, nearly 50 years later, Southwest is one of the biggest airlines in the world and valued at “probably $20 billion,” indicates Kelleher. Moreover, many of Southwest’s early competitors, and even some of the iconic airlines from the time — like Pan Am and TWA — don’t even exist anymore.

Profitability vs. Market Share

Perhaps more impressive than surviving in the competitive airline industry, Southwest has been profitable for 43 years in a row. What mistake did the other airlines make that Southwest seems to have avoided? “Well, we just did things differently,” the former CEO told Raz.

Southwest decided to focus on profitability rather than market share.

“If we have 4% of a market and being profitable, than it’s better to have 90% of a market and being unprofitable.”

Passionate Joy

Was he wired differently to handle such a large amount of stress and survive in the brutal airline industry? “I never look back. I don’t spend a lot of time regretting things that went wrong, and I always got a great deal of fun out of what I was doing.”

Now 86, Kelleher never burnt out. How? “It’s easy when you have a passionate joy in what you’re doing.”

Listen to the complete interview at https://www.npr.org/podcasts/510313/how-i-built-this.