A Comparison of Leadership Styles and Practices at Major U S Airlines

Executive Summary

This paper provides an analysis of Herb Kelleher’s leadership of during his tenure as CEO of Southwest Airlines from 1971 to 2001. Under the charismatic Kelleher’s servant-leadership approach which placed a high priority on employee empowerment, Southwest transformed from a small regional carrier into the largest domestic low-cost airline in the U.S. Indeed, Kelleher was a textbook example of a “servant-first” leader that was effective in promoting employee satisfaction and a fun workplace culture. These leadership practices resulted in unmatched metrics for the airline industry including Southwest’s consistently high profitability, low employee turnover, immense customer loyalty, and remarkable revenue growth even during periods of economic downturn. The paper points out, though, that Southwest did become heavily reliant on Kelleher’s larger-than-life persona to drive its unique corporate culture, making leadership transitions problematic. The paper also notes that in contrast to Kelleher’s employee-focused leadership, Ryanair’s Michael O’Leary exemplifies ruthless cost-cutting efficiency which succeeded in making Ryanair highly profitable but also created labor disputes and succession planning challenges. The research findings indicate that Kelleher’s leadership principles and practices played a crucial role in Southwest's expansion and transformation into a major player in the aviation industry. The paper concludes with recommendations for modern business practitioners that build on Kelleher’s legacy.

Aviation Leadership: Herb Kelleher

If you're a leader, consider how you might learn from the legacy of Herb Kelleher to build the success of your team and organization. – John Millen, 2022

As the above epigraph makes clear, Herb Kelleher’s tenure at Southwest Airlines (hereinafter alternatively “the company” or “Southwest”) from 1966 to 2001 in various leadership roles had a lasting impact on entire business world. Indeed, Kelleher succeeded in transforming a modest fleet of 27 aircraft flying regional, intrastate routes into a multibillion-dollar global enterprise with a fleet of 800 sleek Boeing 737s and 400 domestic and international flights each day (Singh, 2020). Today, Southwest is one of the largest and most profitable low-cost carriers in the United States, an outcome that is attributable to its reputation for excellent customer service, efficient operations, and strong corporate culture cultivated during Kelleher’s influential tenure as chief operating officer (CEO).

As the review that follows clearly shows, most authorities agree that being the largest low-cost carrier in the country today is directly attributable to Kelleher’s inspired leadership style and principles which have contributed to an existing organizational culture that places a high priority on employee and customer satisfaction. As a result, Southwest has consistently boasted the lowest turnover rate in the industry, and Southwest’s future appears bright despite the wide array of challenges that face the aviation industry at present. The purpose of this paper is to provide a review of the literature concerning Southwest’s cofounder and longtime CEO, Herb Kelleher, who has made a significant contribution to the aviation industry. This review includes a comparison of Kelleher’s effectiveness with Ryanair’s leader, Michael O’Leary, which is followed by a summary of the research in the conclusion together with salient recommendations for business practitioners in any field.

Review and Discussion

A major part of Southwest's sustained success over the years since its founding in 1966 has been its focus on excellent customer service through policies like open seating, free checked bags, and a streamlined boarding process. Southwest operates a fleet consisting only of Boeing 737 aircraft, which allows for operational efficiencies, and provides over 4,000 flights daily to destinations across the US and in several foreign destinations, including Mexico, Costa Rica and the Caribbean (Hawks, 2023). Moreover, and perhaps even more impressively, Southwest is well-known for never having laid off an employee, even during the darkest periods of economic downturns, a feat that has earned it undying loyalty from its thousands of employees and admiration and respect from the flying public (Cote, 2018).

By and large, Kelleher is best known as a charismatic, transformational leader who subscribed to a servant-leader philosophy (Nobles, 2019). Indeed, Kelleher believed that organizational leaders should serve their employees and empower them to do their best work, achieve their personal and professional goals, and embodied a “servant-first” mentality during his tenure at the company (Ahmad et al., 2023). Although it is not possible to pigeonhole all of Kelleher’s leadership exchanges into a specific style since he used multiple leadership styles during his tenure at Southwest which were undoubtedly situation-specific, it is possible to evaluate the effectiveness of his performance by using both quantitative and qualitative data. For example, effective leadership can be evaluated through various quantifiable indicators or key performance indicators that reflect leaders’ impact on their organizations. In this regard, financial performance as reflected in metrics such as revenue growth and profit margins indicate the quality of organizational leaders’ strategic decision-making and operational efficiency (Costa et al., 2023).

Likewise, employee engagement and satisfaction, measured through surveys and retention rates, demonstrate the leader's ability to create a positive work environment. In addition, customer satisfaction and retention levels also reflect leaders’ commitment to quality and customer service. In other words, these types of indicators should also be considered alongside qualitative assessments and organizational context to comprehensively evaluate leadership effectiveness (Ahmad et al., 2023).

The research shows that across the board, Kelleher leadership provided continuous revenue growth, remarkably low employee turnover rates, sustained loyalty among the flying public, a brand that is known the world over for its commitment to safety and customer satisfaction, and an organization that is characterized by a community of caring for its employees (DePaola, 2009). This is not to say, though, that Kelleher never employed other leadership styles, but it is to say that he leveraged his unwavering commitment to sound leadership principles and practices to guide the company during his tenure as CEO (Iriandi & Giliç, 2021).

The net effect of Kelleher’s leadership at Southwest from 1970 through 2001 reveals a pattern of sustained growth and transformation in the aviation industry. During the 1970s and 1980s, Kelleher successfully expanded the airlines’ network and relied exclusively on a fleet consisting exclusively of Boeing 737s to promote operational efficiency. By keeping operational costs low and providing no-frills services, Kelleher also succeeded in attracting new passengers from alternative modes of transportation and the company enjoyed steady revenue growth as a result (Hawks, 2023).

Although it is impossible to categorize all of Kelleher’s countless interactions with employees and other stakeholders during his tenure at Southwest, it is possible to characterize his primary leadership styles and principles based on empirical observations and anecdotal reports from contemporaries. A list of Kelleher’s main leadership styles, a brief description of their key features and some reports from the field, academic literature and mainstream media are provided in Table 1 below.

Table 1

Kelleher’s Main Leadership Styles and Examples

Leadership Style

Key Features

Examples

Participative

? Leader involves team in decision-making

? Actively listens to and incorporates ideas and input

? Consensus through discussion

? Increased flexibility and morale

? Time-intensive

Involving the Team in Decision-Making:

? Kelleher was known for his open-door policy, actively seeking input and ideas from employees at all levels of the organization (Kote, 2018).

? He believed in the power of employee involvement and recognized that those on the front lines often had valuable insights into improving operations (Cote, 2018).

? Kelleher subscribed to the leadership principle that open communications facilitated problem solving and decision making, attributes that played a key role in helping him remain effective during the unending series of crises that the company faced during his tenure (Johnson, 2017).

? In addition, Kelleher was also influential in networking with key stakeholders and enlisting employee feedback preparatory to negotiations.

Example 1: Kelleher regularly held “Roundtable” discussions with employees, where he would listen to their suggestions, concerns, and ideas. These discussions led to important changes, such as improvements in customer service procedures and innovative cost-saving measures (Gittell, 2001).

Example 2: When facing challenging decisions, such as whether to enter new markets or expand routes, Kelleher involved employees in brainstorming sessions and encouraged them to provide input on the potential risks and benefits.

Consensus through Discussion: Kelleher fostered a culture of collaboration and consensus-building. He understood that involving employees in decision-making not only led to better choices but also increased their sense of ownership and commitment (Reingold, 2013).

Example 3: Southwest’s famous “Freedom to Fly” program, which allowed employees to suggest new destinations for the airline, exemplified participative leadership. Employees submitted proposals, and Kelleher and his team would review and implement routes based on employee recommendations, enhancing morale and engagement.

Increased Flexibility and Improved Employee Morale:

? By valuing and incorporating employee ideas, Kelleher promoted a sense of empowerment and ownership among the workforce.

Example 4: Employees appreciated the fact that their opinions mattered and that the company was willing to adapt based on their feedback. This led to a more agile organization that could respond quickly to changes in the industry, ultimately contributing to Southwest’s noteworthy success (Cote, 2018).

Time-Intensive:

? Kelleher's commitment to participative leadership was time-intensive, as he dedicated significant efforts to engage with employees and facilitate discussions; however, he also believed that the benefits of this approach, such as improved decision-making and a motivated workforce, far outweighed the time investment.

? Kelleher’s participative leadership style at Southwest not only allowed employees to have a voice in the company’s direction but also created a sense of camaraderie and shared responsibility that contributed to the company’s legendary success in the industry.

? The camaraderie between Herb and the employees at Southwest Airlines was remarkable. Many years ago, on Bosses Day, 16,000 employees of Southwest Airlines chipped in to purchase a full-page ad in USA Today to express their affection for the boss. They thanked Herb for helping load bags on Thanksgiving, singing at the holiday party and singing only once a year, letting them wear shorts and sneakers to work, being a friend, not just a boss, and remembering every one of their names (emphasis added).

? The reason the people of Southwest Airlines have such a strong affection for Herb Kelleher is pretty simple. First, he was an incredible listener. When you were with Herb, he was 100% all there—totally engaged. He made you feel like you were the most important person in the world at that moment, and to him you were (Freiberg & Freiberg, 2019).

Transformational

? Inspires team commitment to collective goals

? Clear visioning and task significance

? Intellectual stimulation and supporter of autonomy

? Leadership through example and integrity

? Risk of unrealistic expectations

? Kelleher inspired team commitment to collective goals: He communicated a clear vision for the company and the significance of each team member's role in achieving it.

Examples:

? Kelleher’s inspirational vision for Southwest was to provide affordable, convenient air travel while maintaining a fun and friendly work environment – all the while placing the best interests of his employees first.

? He intellectually stimulated employees by encouraging innovative ideas and supported their autonomy in decision-making.

? Kelleher led by example, demonstrating integrity, dedication, and a commitment to the company’s mission.

Servant-Leader

Empathy:

Servant-leaders show a deep understanding of and compassion for others' needs and perspectives.

In sum, Kelleher embodied the principles of servant-leadership throughout his career as the leader of Southwest. In some cases, his servant-leadership style subsumed other leadership practices into a unique “Kelleher leadership brew.” For instance, Kelleher’s empathetic, compassionate approach, combined with active listening and a clear vision, reflective of participatory leadership, allowed him to build a thriving airline known for its positive workplace culture and exceptional customer service. Kelleher's leadership style prioritized the well-being and growth of employees, creating a sense of community and stewardship that contributed to Southwest's success in the airline industry.

Charismatic

? Leader inspires devotion and emotion through force of personality

? Clear vision and high expectations

? Passionate communication style

? Leads by example

? Risks overreliance on the leader

? There is a virtual universal consensus that Kelleher had a charismatic leadership style: He inspired devotion and emotion among employees through the force of his personality and clear vision.

? Kelleher's passionate communication style and unwavering belief in the Southwest culture resonated with employees and instilled a sense of purpose.

? He led by example, often working alongside employees, and his charismatic approach motivated the workforce to embrace the Southwest spirit.

Example: Put Employees First, Customers Second

? Herb believed that employees should be treated like customers and celebrated for going above and beyond the call of duty. He explained it like this, "In business school, they'd say, ‘This is a real conundrum: Who comes first, your employees, your shareholders, or your customers?' My mother taught me that your employees come first. If you treat them well, then they treat the customers well, and that means your customers come back and your shareholders are happy” (emphasis added).

? Apparently, this approach works. Southwest has been recognized for the most productive workforce and the best customer service ratings in the industry which means it can turn more planes, faster, with fewer people, and better service (Freiberg & Freiberg, 2019).

Kelleher's leadership was a combination of these styles, making him an effective and revered leader at Southwest Airlines. While his participative approach involved employees in decision-making and promoted a collaborative culture, his transformational, servant-leader and charismatic leadership inspired loyalty, innovation, and a shared commitment to the company’s success. This multifaceted leadership style contributed significantly to Southwest’s sustained growth and consistent success in the airline industry.

It is important to point out, though, that while Kelleher primarily used participative, servant-leader, transformational and charismatic leadership styles during his tenure as CEO at Southwest Airlines, it is reasonable to suggest that he used virtually every other leadership style and practice that were situation-specific. Indeed, when the circumstances called for it, Kelleher readily adopted more autocratic, top-down directives when time was of the essence. He focused on transactional leadership motives like performance incentives during periods hyperfocused on growth. Likewise, Kelleher delegated extensively at times, empowering self-direction, displaying laissez-faire tendencies.

At heart, Kelleher believed effective leaders modulated based on contexts and needs. Southwest succeeded in large part because he avoided rigid adherence to any singular approach, instead deploying whatever style matched immediate requirements. Kelleher's adaptability aligned to his charismatic persona - he took pride in keeping employees guessing as to what he would do next. Ultimately, Kelleher's legendary flexibility and versatility as a leader was itself a defining trait, transcending attachment to any specific style which is reflective of contingency leadership theories.

Contingency leadership theories posit that effective leadership is not universal but rather depends on adaptively aligning qualities and style to specific situational contexts. This perspective holds that there is no single best leadership approach for all scenarios. Instead, leaders must accurately diagnose needs within a given situation and flexibly adjust their behavior to optimize fit and performance. Because contingency theories of leadership underscore the fact that there is no one-size-fits all approach that works best in all situations, it is little wonder that this theoretical framework has gained increasing credence over the years since its introduction by Fiedler in 1964. In fact, a seminal study by Rice and Kastenbaum (1983) emphasizes that, “There is little question that [contingency] theory is now among the most prominent of contemporary approaches to leadership” (p. 373).

Contingency models stress that leaders must monitor factors like task nature, subordinate characteristics, expectations, and urgency to determine the leadership behavior required. Rather than maintaining a rigid style, leaders must constantly assess contextual variables and modify their approach accordingly. This focus on strategic flexibility and situation-leader alignment aims to maximize leader effectiveness and team satisfaction. In essence, contingency leadership emphasizes savvy contextual analysis over universal formulas for effectively guiding varying teams through changeable circumstances (Monehin & Diers-Lawson, 2022).

To his credit, Kelleher appears to have possessed an intuitive sense about these situation-specific factors, an attribute that is highly congruent with Fiedler’s contingency model which emphasizes that leadership effectiveness depends on the match between a leader’s style and the degree of control afforded by the situation. According to the model, situational control is dictated by three factors - leader-follower relations, task structure, and position power. Favorable situations that give leaders control are those with good leader-follower rapport, structured tasks, and strong position power. Unfavorable situations exist when leader-follower relations are poor, the task is unstructured, and positional power is limited. In sum, Fiedler's model contends that leadership success hinges on appropriate alignment between a leader's immutable style and situational control factors. Flexibility stems from re-engineering situations, not styles. This reflects an early contingency perspective on contextual leadership effectiveness which is a consistent characteristic of Kelleher’s tenure at the company.

The last decade of Kelleher’s tenure as CEO represented yet another important milestone for Southwest as the company expanded its presence nationally by flying to major airports across the United States. Likewise, Kelleher acquired several small, regional airlines to facilitate the company’s continuous expansion and growth, and his commitment to providing low-cost, no-frills air travel helped the company weather the worst days of the economic downturn that characterized this period in American history (Hawks, 2023).

At the fin de siècle, Kelleher was confronted with a rapidly changing aviation industry that was marked by economic turbulence from the dot-com bubble burst and the tragic events of 9/11 which had a dampening effect on the entire industry. In response, Kelleher was forced to reduce its flight capacity, but the company remained financially resilient due to Kelleher’s conservative financial management practices. While the pace of revenue growth moderated during this final period of his tenure as CEO, Southwest Airlines continued to post positive revenue gains, underlining its resilience and adaptability in navigating a dynamic and frequently turbulent aviation industry as the legacy left by Kelleher (Hawks, 2023).

These same external forces were at work during Michael O’Leary tenure as CEO of Ryanair, but these two leaders applied vastly different leadership styles at times to achieve their respective organizational goals. For example, Kelleher’s leadership at Southwest was characterized as charismatic and employee-focused, placing a high priority on providing low-cost but excellent customer service while ensuring employee job security and a positive workplace culture. By contrast, O’Leary is known for his cost-cutting, no-frills approach at Ryanair, which prioritizes financial efficiency and frequently comes at the expense of traditional customer service amenities and harmonious labor relations (Michael O’Leary Profile, 2023).

Employee satisfaction and retention also paint a stark contrast between the two leaders. For example, Kelleher’s sustained commitment to never laying off employees, even during periods of economic downturns, engendered strong loyalty among Southwest’s workforce that remains firmly in place today. In contrast, O’Leary's leadership at Ryanair has occasionally led to labor disputes and criticism from unions, reflecting a fundamentally different approach to employee relations (McGinn, 2004). In fact, some of O’Leary’s attempts to inspire his employees through Kelleher-like shenanigans backfired on Ryanair and its reputation among the flying public. For example, according to Rampen (2017):

In 2003, a group of Ryanair staff dressed in combat fatigues approached Luton Airport, accompanied by a Second World War-era tank. They were there to conduct a mock military attack on a low-cost rival. It was a publicity stunt dreamed up by the airline’s chief executive, Michael O’Leary, 56, who has charmlessly called some of his own workers ‘lazy bastards’ and passengers ‘idiots’ who can ‘f**k off.’ Luton Airport did not see the funny side. It was only two years after the 9/11 attacks. The Ryanair pranksters were banished to a nearby Holiday Inn, where they remained ‘standing around dressed in combat gear, singing songs about easyJet.’ (p. 18)

During an era of ubiquitous social media participation by the flying public, it is little wonder that these high-profile reports enraged Ryanair’s existing customers and discouraged many potential passengers from giving the airline a try in the future.

Unfortunately for Ryanair, though, the leadership disasters did not stop there. For instance, in September 2017, Ryanair experienced major issues due to mistakes in scheduling pilots’ holiday allowances. This left the airline short-staffed and Ryanair was forced to inform more than 300,000 passengers that their flights over the next 6 weeks would be cancelled (Rampen, 2017). More troubling still, the affected passengers were initially told they would not receive reimbursement for expenses they may have incurred as a result of the cancellations such as hotel costs. Making matters far worse, even more flights were cancelled thereafter that adversely affected another 400,000 customers.

In response to these leadership disasters, O’Leary apologized for the disruptions being “a mess of our own making” and promised to make reimbursements for these expenses (as cited in Rampen, 2017, p. 18). In sum, the pilot scheduling misstep and poor handling of the ensuing cancellations resulted in major public relations and severe operational challenges for Ryanair that have not been forgotten by the flying public or his employees (Rampen, 2017). These outcomes also underscored potential weaknesses in O’Leary’s razor-thin business model and lack of flexibility in Ryanair’s ability to recover from its planning errors. Not surprisingly, the large-scale flight cancellations and mishandled response drew intense criticism and scrutiny towards O'Leary's leadership abilities (Rampen, 2017).

In addition, both of these aviation leaders also pursued distinctly different business strategies to achieve their respective organizational goals. In this regard, Kelleher expanded Southwest’s route network and fleet while also focusing on promoting operational efficiency which contributed to the company’s steady revenue growth. In fact, Kelleher maintained a fleet of Boeing 737s exclusively, thereby attracting passengers from other transportation modes. Conversely, O’Leary pursued extreme cost-cutting measures at Ryanair, including charging passengers for various services and optimizing aircraft utilization which succeeded in making Ryanair one of Europe’s most profitable airlines (Michael O’Leary: turbulent times for the man who made Ryanair, 2018).

With respect to their individual legacies and succession planning, Kelleher’s leadership left a lasting impact on Southwest's unique culture and values, making it essential for his successors to preserve these elements. By sharp contrast, O’Leary's leadership is closely tied to Ryanair’s success which also poses significant challenges for the airline’s leadership transition in the future. At present, though, O’Leary is scheduled to remain CEO until 2028 based on his demonstrated track record of effective leadership and sustained growth of Ryanair over the years (Beresnevicius, 2022).

In sum, Kelleher and O’Leary represent different leadership styles and approaches within the airline industry, with Kelleher emphasizing customer service and employee satisfaction and O'Leary focusing on cost-cutting efficiency. Both approaches have achieved significant success, but they leave distinctly different legacies and succession challenges for their respective organizations. For example, while Southwest is well known for its strong culture, Ryanair is renowned for its cost-efficient business model, making leadership transitions a crucial consideration for both airlines.

A comparison of the leadership styles of Kelleher and O’Leary’s effectiveness in achieving their organization’s respective goals is provided in Table 2 below.

Table 2

Comparison of Leadership Styles and Effectiveness: Kelleher vs. O’Leary

Leadership Attribute

Herb Kelleher, Southwest Airlines

Michael O’Leary, Ryanair

Leadership Style

? Servant leadership philosophy

? Charismatic, people-focused

? Cultivated fun, energetic culture

? Ruthless cost-cutter

? Direct, profit-focused leadership

? Centralized authority

Organizational Culture

? Fun-loving, community culture

? Employee empowerment, autonomy

? Open communication and transparency

? Extreme no-frills culture

? Tight oversight and control

? Less emphasis on employee satisfaction

Employee Relations

? Never laid off employees

? Low turnover rate

? High employee satisfaction and loyalty

? History of labor disputes

? Unions have heavily and repeatedly criticized O’Leary’s leadership style

? More strained relations between management and employees which inevitably spills over into customer relations

Customer Service Orientation

? Excellent customer service reputation

? Free checked bags, open seating

? No hidden fees or charges

? Sparing customer service amenities

? Numerous fees for basic services ? Low costs primary focus

Growth and Expansion

? Steady route network expansion

? Fleet limited exclusively to Boeing 737s for efficiency

? Strategic acquisitions of new aircraft when conditions were optimal

? Rapid fleet and route expansion

? High aircraft utilization

? Aggressive cost optimization

Financial Performance

? Consistent profitability

? Steady revenue growth over decades

? One of Europe’s most profitable airlines

? Strong margins through cost discipline

Legacy and Succession

? Strong corporate culture but over-reliance on Kelleher

? Maintaining culture and employee relations key after his departure

? Success closely tied to O’Leary’s leadership

? Replicating O’Leary’s cost discipline is critical for the future success of Ryanair

As can be clearly discerned from the similarities and differences in leadership attributes and effectiveness, Kelleher and O’Leary are not two heads of the same dragon, but rather employ significant different approaches based on their prevailing organizational goals. This does not mean, though, the one CEO can be regarded as being more effective than the other based solely on these qualitative and quantitative metrics, and the similarities in the two leaders’ strategic decision-making are noteworthy. Nevertheless, most authorities agree that Kelleher stands out as one of the most iconic business leaders of the 20th century due in large part to his proven track record of success during an especially turbulent period for the aviation industry, all the while taking care of his employees and passengers.

Conclusion

The research showed that Herb Kelleher was an exceptionally effective leader during his tenure as CEO of Southwest Airlines from 1971 to 2001. He embodied a servant leadership approach that prioritized employee satisfaction and fun workplace culture. Kelleher decentralized authority, empowered employees, and maintained transparency about company strategy and finances. This built an atmosphere of trust and motivated workers. Under his visionary leadership, Southwest transformed from a small regional carrier into the nation's largest domestic low-cost airline. The company achieved remarkable growth in revenues and market share. Metrics like profitability, customer loyalty, and employee retention were top-tier in the airline industry throughout Kelleher's leadership.

It is important to note, though, that Southwest also become heavily dependent on Kelleher's charismatic persona to drive its culture. In fact, after his departure as CEO, his successors implemented “fun time” at the company where employees were essentially forced to have fun – an unlikely outcome. Likewise, Kelleher was also unwilling to make tough cost-cutting choices to avoid negative impacts on employees which contributed to the company’s brand but limited its ability to expand its fleet and routes. Notwithstanding his weaknesses and missteps over the years, it is clear that unlike most business leaders, Kelleher was effective because he was nice – nice to his employees and nice to his consumers. Few business leaders achieve sustained success with this mindset, so it is reasonable to conclude that Kelleher was a natural-born leader who intuitively understood what was important to achieve real success in life and in the business world.

Despite this conclusion, it would be a disservice to both Kelleher and O’Leary to characterize the entire careers as aviation leaders as exemplary or disastrous, and it is reasonable to suggest that both of individuals exhibited leadership behaviors that were completely contrary to their primary leadership styles and practices. After all, these were just two human beings doing the best they can under extraordinary circumstances. Indeed, Kelleher likely lost his temper on more than one occasion and failed to live up to the very high bar he set for himself and O’Leary likely demonstrated leadership behaviors on occasion that were charismatic or transformational in nature.