It has become a legendary tale that Rollin King and Herb Kelleher, fueled by several alcoholic beverages, mapped out their plans for a new intrastate airline to connect the three largest cities in Texas – Houston, Dallas, and San Antonio – on a cocktail napkin at San Antonio’s St. Anthony Club, located in the St. Anthony Hotel, in late 1966.
The new carrier was to be called Air Southwest, and it was not the first airline venture in the Lone Star State for Mr. King.
Interstate VS Intrastate
During the regulated era of commercial aviation in the United States (1938 – 1978), a company that wished to operate scheduled service across state lines – an interstate operation – needed a Certificate of Public Convenience and Necessity from the Civil Aeronautics Board (CAB) to do so. The CAB’s requirements were stringent but, if a certificate was acquired, it granted the authority to transport passengers, freight, and mail, and it guaranteed protection from excess competition while enabling the ability to interline traffic with other certificated carriers.
The Civil Aeronautics Board also regulated fare structures. All CAB-certificated airlines had to charge the same rate for the same class of service and any special or promotional fares had to be approved by the Board.
But the CAB had not issued a Certificate of Public Convenience and Necessity to a brand-new airline – one that had not already been operating in some other capacity – since 1950.
The rules were different for an outfit that wanted to limit itself to airports totally within the borders of a single state – an intrastate operation. In that situation, regulatory oversight was conducted by the state’s licensing authority and not by the CAB. Alaska and Hawaii were exceptions; the CAB kept watch over airlines operating totally within those two states.
Individual states were much more lenient in granting permission to airline managers who wanted to operate totally within their jurisdiction. The economic benefit of having a company that moved passengers quickly among the cities in your state was obvious. And intrastate airlines were still subject to the safety oversight of the Federal Aviation Administration (FAA). Thus, it was a win-win: the airline entrepreneur was able to get his airline off the ground with less red tape than he would encounter dealing with the federal agency (the CAB), and the state benefited from having an airline connecting the cities within its borders.
The most successful of the intrastate airlines at the time was PSA (Pacific Southwest Airlines), which operated totally within the State of California. Regulated by the California Public Utilities Commission, PSA connected three airports in the metro Los Angeles area with three airports in the San Francisco Bay area, plus it served San Diego and Sacramento. The airline was very popular and enjoyed a loyal clientele.
If you wanted to operate a successful intrastate airline, PSA was the model you studied.
A Man From Ohio Who Buys a Wild Goose
West Texas, particularly the area between San Antonio and the Mexican border, was probably not the best place for an intrastate airline to make a go of it. Trans-Texas Airways (TTA), the CAB-certificated local service carrier most closely associated with air travel in the state, had served Uvalde, Eagle Pass, and Del Rio from San Antonio for several years in the late 1940s and early ‘50s, before the CAB allowed it to drop the route due to a lack of traffic.
Stagecoach Airlines, an intrastate carrier, attempted to serve the same cities in 1961 and 1962, but sustained losses that forced the little company out of business.
Undaunted by those failures, Wild Goose Airlines, an intrastate carrier operating as a division of Wild Goose Flying Service, owned by the H.H. Phillips Corporation, began serving the same West Texas stations—Uvalde, Del Rio, and Eagle Pass—from San Antonio in December 1963.
On July 20, 1964, Wild Goose Airlines officially changed its name to Southwest Airlines, and the company soon had a new owner: Rollin W. King.
King, a native of Cleveland, Ohio, an alumnus of both Case Western Reserve and Harvard universities, and a licensed pilot, had relocated to Texas in his capacity as an investment counselor. But, like so many others, he dreamed of entering the airline business. He purchased Wild Goose Flying Service and its associated Southwest Airlines.
It wasn’t long before he was consulting his attorney about liquidating the struggling company.
Rollin King was dissolving his little Wild Goose/Southwest operation, which had experimented with intrastate service by operating eight-passenger Beech D-18s between San Antonio and those small cities in West Texas. The amount of traffic among those places was not enough to sustain a commercial air transportation company. But he still wanted to be in the airline business, only in a bigger way.
Rollin and Herb: Co-Founders
Rollin King’s lawyer was a gentleman named Herb D. Kelleher. Their collaboration that evening in San Antonio’s St. Anthony Club produced an idea that became a reality. Today, the result of that idea is one of the largest airlines in North America.
Air Southwest was incorporated on March 15, 1967, and filed its application to operate an intrastate airline between Houston, Dallas, and San Antonio with the Texas Aeronautics Commission (TAC) on November 27. Instead of reusing the Southwest Airlines name from the business that had just been dissolved, King and Kelleher called their new company Air Southwest. Their choice of aircraft type was Lockheed L-188 Electras, which could be purchased second-hand from American Airlines.
On February 20, 1968, the TAC voted unanimously to grant the new company a certificate to serve the three Texas cities. It seemed that Air Southwest was well on its way to becoming an operating airline.
