Herb Kelleher built a company with a heart and aided  Wilmington credit card upstart

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Good morning,

A business giant died last week at age 87.

Southwest’s beloved co-founder Herb Kelleher opened the skies to millions of travelers and through the airline helped bolster Delaware’s status as a credit card capital.

The connection came from credit card upstart First USA.

Richard Mikus, a member  of the First USA  team that helped land Southwest,  learned that the airline and its chief executive were different.

During a trip to Southwest’s headquarters at Dallas’ Love  Field, Kelleher “boarded the elevator and immediately began hugging his employees.  I looked on, amazed, both in seeing what he was doing and in how happy the employees were to see him and how they reacted to his presence.  To them, he was  ‘Herb’, not the CEO.  To me, that said a lot about the Southwest culture he had built.”

Even back then, Kelleher was a legend in the airline business. A skilled lawyer, he battled industry giants that attempted to put the airline out of business through regulations and court battles that sometimes ended up in the U.S. Supreme Court.

Southwest responded by winning most of the  battles and  expanding outside Texas.  Costs were kept in line, in part because Southwest’s top priority was not laying off employees. 

Mikus said landing Southwest was  “an important factor both in the bank’s overall growth and in establishing First USA as a key player in the co-branded credit card market.  The fact we were a supplier to SWA meant a lot to many other businesses as they chose a credit card company.”

Mikus noted that Southwest’s credit card was an immediate hit, thanks to features like a free round trip for every 16 one-way flights. “Customers signed up in droves,”  he  said.

Southwest played a part in  First USA and its successor, Chase, emerging as the largest credit card issuer. The Chase credit card headquarters remains in Wilmington.

“Herb and SWA were the ultimate disrupters,” Mikus said.  “On-time, fairly priced, good service with a good attitude.  What a concept! Use only one kind of plane –  All your pilots can fly it; all the mechanics know it and  you always have the right parts in stock.  It was so  obvious, yet it was beyond the thinking of other airlines at the time.”

I can vouch for what is now known as the “Southwest effect”  –  the ability of the airline to lower overall fares when adding an airport.  Their entry into the Baltimore-Washington market allowed more visits to my ailing parents as fares dropped, even when the airline did not have many long routes.

 BWI is now Southwest’s second largest hub or focus city and is home to 5,000 employees. US Airways, now American, became an also-ran.

A similar situation had occurred on the West Coast when Southwest took on Pacific Southwest Airlines.  PSA later merged with US Airways and dismantled most of the short-haul routes.

Kelleher, who grew up in south  Jersey, worked to perform similar magic at the Philadelphia International Airport. 

This time around, US Airways stood its ground and Southwest opted for more lucrative routes. Fares skyrocketed when nonstops to  Pittsburgh and New England were dropped.

Such decisions are part of the DNA  of the disciplined culture at Southwest,  an airline that always kept an eye on the bottom line.

Thanks, Herb, for allowing us to share more moments with family and friends and building more than an airline. – Doug Rainey, publisher.

 

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