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Herb Kelleher on the Record, Part 1

Q: Let's flash back to the beginning, when you and your client talked about creating Southwest. In those days, the industry was regulated. The only way to create an airline was [to use] a fly intrastate.

A: It was a loophole. PSA [Pacific Southwest Airlines] had started as an intrastate in California. We looked at it as a role model. Trans-Texas was a monopoly carrier in small cities, and Braniff was a monopoly carrier in big cities. They had some of the highest fares in the U.S.

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