Southwest’s Kelleher gives Lindbergh Lecture

Herb Kelleher, the legendary founder of Southwest Airlines, proponent of low fares, and friend of deregulation, delivered the Charles A. Lindbergh Memorial Lecture tonight at the National Air and Space Museum in Washington, D.C. He reflected on his long career in aviation, on the fundamentals of Southwest, and offered a few comments about the future of the airline industry. As usual, Kelleher’s lecture was full of humor — most of it at his own expense.

Kelleher recounted a number of critical moments in Southwest’s history, from the four years of litigation just to get started to the fight to operate out of Dallas’s Love Field. When Southwest launched with $26 fares, its competitors undercut the price by half. Kelleher said that he would still offer the same fare, but that every customer would get a bottle of whiskey. “We became the largest liquor distributor in the state of Texas!” he chuckled.

Even though almost all the major airlines opposed deregulation, and although observers thought Southwest would get stomped in a competitive environment, Kelleher said, “Southwest Airlines supported deregulation of the airline industry throughout the 1970s.” A sign of deregulation’s success? When Southwest launched, only 15 percent of American adults had been on a commercial airline flight. Today, 85 percent have, although this is not only due to lower fares but also a growing economy and general better standards of living.

Kelleher then discussed Southwest’s culture and philosophy, encapsulated in its mission statement:

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit. We are committed to provide our Employees a stable work environment with equal opportunity for learning and personal growth. Creativity and innovation are encouraged for improving the effectiveness of Southwest Airlines. Above all, Employees will be provided the same concern, respect, and caring attitude within the organization that they are expected to share externally with every Southwest Customer.

Employees come first, Kelleher said. “If you honor, respect, care for, protect, and reward your employees . . . they will treat each other and their customers with caring, respect, and hospitality.” Any airline can buy planes, but the “Southwest Spirit” is an intangible that cannot be purchased. It has to be cultivated deliberately. For example, Kelleher could be found answering the phones at Southwest, loading baggage, serving drinks onboard, checking passengers in — sharing the work of the employees. He argued that putting employees first and investing them directly in the company’s mission is a winning strategy: “Esprit gets things done, fast and well — just ask the U.S. Marine Corps.”

To promote that spirit, Southwest has a “culture” program to help spread the Southwest Spirit across a growing operational network. If, like me, you’re a regular reader of Southwest’s blog — which is sporting a great new look, by the way — you can see this culture seep through. The blog is professional, and it’s by definition a corporate product, but it reflects its employees attitudes and experiences so organically that nothing about it rings of corporatese. The airline used the blog to communicate forthrightly when the 737 inspection affair broke, and it let its readers take it to the woodshed, fairly or not, in the comments.

Kelleher said that he was often approached by consultants offering to help Southwest “refresh” its mission statement. He prefers to stick with the one he has, joking “that’s like wanting to refresh Deuteronomy or Leviticus!”

During the Q&A session, he delved deeper into some of the business and policy issues facing the industry today. Unlike previous oil price spikes, which were driven by shocks, he thinks the current rise is a result of long-term demand, and that high oil prices are here to stay. Regrettably, he said, a reduction in capacity is inevitable.

With acting FAA chief Robert Sturgell and former administrator Marion Blakey in the audience, Kelleher joked that the agencies that regulate his airline are fantastic, but other agencies, not so much. Even so, he said, “Our government needs a transportation policy with respect to aviation.” Since aviation is so important, he asked, why do we tax it more than any other industry — even more than alcohol and tobacco. “So they hit me on all three fronts,” he cracked. We must act quickly to improve our aviation infrastructure, he said, lest we fall behind.

And finally, in response to a question about airline consolidation, Kelleher offered a warning disguised as a joke: “It it looks like everything’s going down the tubes, sometimes you like to hold hands!”