Aviation has a long history in San Antonio. In 1910, the first military flight took place at Fort Sam Houston and in 1916, the Stinson sisters launched their flight school on the city’s South Side. Nearly every military aviator in U.S. history had come through one of the city’s Air Force bases, including Charles Lindbergh himself.
In the summer of 1966, San Antonio’s St. Anthony Hotel was the site of another piece of that history — the place where Herb Kelleher and Rollin King met for drinks and began to talk about their own plans in aviation. Kelleher was managing the liquidation of King’s charter flight company, Wild Goose Flying Service, and despite lamenting how difficult it was to make money, King wasn’t giving up. He wanted to go after the bigger market of commercial airlines.
The established domestic carriers controlled access to the limited number of gates at major airports, all while charging overpriced fares. Knowing he couldn’t play the game better than the major airlines, King had a way to work around the regulatory moat built by the airlines.
Established in 1938, the Civil Aeronautics Board, or the CAB, oversaw the development of safe and economic air travel and the regulation of ticket prices and flight routes. In order to remain profitable, the major airlines began consolidating and eventually abandoning less-profitable routes. Fewer options led to higher prices, which the CAB routinely approved, removing any incentive for cost control or effective fleet operation. By the 1960s, the U.S. aviation industry had become a syndicated oligopoly, controlled by a few major airlines.
In Episode 10 of The Engines of Texanity, we talk about how Kelleher and King built a long-lasting Texas airline with their brilliance, tenacity and a little good luck.
On a fresh cocktail napkin from the St. Anthony bar, King drew a triangle and labeled the vertices Houston, Dallas and San Antonio: the three largest cities in the state, connected by cheap, direct daily flights. If the routes were entirely within Texas’ borders — a concept borrowed from California’s own intrastate airline, Pacific Southwest Airlines — they could avoid federal regulation. Effective state regulation had kept Pacific Southwest growing for more than a decade.
On March 15, 1967, Kelleher and King incorporated Air Southwest. Although Kelleher and King’s original goal was to be operational in time for San Antonio’s Hemisfair ‘68, the three most active Texas airlines — Braniff International Airways, Texas International Airlines and Continental Airlines — sued the Texas Aeronautics Commission when it approved Air Southwest’s charter application in February 1968. Kelleher took the case all the way to the Texas Supreme Court, where Air Southwest prevailed.
On June 18, 1971, Air Southwest — now renamed Southwest Airlines — made its first flight from Dallas Love Field to San Antonio International Airport, three years later than anticipated. The airline promised to provide a new type of commuter-oriented service with low fares, simplified ticketing and all nonstop flights, reducing costs by eliminating meals, connections and cargo. Benefiting from a lot of good luck, Southwest hired pilots from a bankrupt airline and purchased four brand-new Boeing 737s from canceled equipment orders.
Southwest embraced its underdog persona with catchy marketing that played off its base at Love Field. Calling routes “Love Lines”, the three destinations the “Love Triangle” and the airline’s stewardesses “Lovelies,” Southwest brought some needed levity to an industry that wanted it to fail.
The major airlines’ legal challenges forced Southwest to sell one of its planes to cover court costs. Instead of cutting routes, Southwest successfully implemented procedures to land, deplane, clean, board and take off in about 10 minutes at each destination — a feat the airline accomplished until modern safety regulations and industry procedures made it impossible. When denied access to the other airlines’ joint credit card and booking system, Southwest developed its own system and used the savings to pay travel agents higher commissions and charge passengers lower fares. Then the competitors lowered their prices. Southwest gave its customers a choice: pay the competitor’s lower fares or pay full fare and get a free bottle of whiskey. The competitors’ tactics pushed Southwest to adopt its point-to-point model, flying directly between mid-size and secondary airports.
By 1976, Southwest was carrying 70% of all passengers in the Love Triangle. By 1978, the number of Texas air passengers had skyrocketed to 4 million — and 3.5 million of them were flying on Southwest. That year, Congress passed the Airline Deregulation Act, effectively dismantling the CAB. Braniff and Texas International were eventually indicted for conspiracy under the Sherman Antitrust Act for colluding to drive Southwest out of business. Throughout the next decade, most of the major domestic airlines either went bankrupt or consolidated.
Southwest is the only major airline in the country never to have declared bankruptcy, boasting 47 years of consecutive annual profits, a streak ended only by the coronavirus pandemic. Southwest’s story does seem to be inextricably Texan. Airline deregulation was Texas’ gift to the nation, the product of centuries of wrestling with the best ways to manage distance, energy density and economic activity far from the centers of power and finance.
Click below to listen to Episode 10 of The Engines of Texanity.
