[3][4] After clerking for a New Jersey Supreme Court justice, Kelleher moved to Texas intending to start a law firm or a business.

Kelleher and one of his law clients, Texas businessman Rollin King, created the concept with banker John Parker that later became Southwest Airlines.

[6][7] They originally devised a very simple plan of connecting the Texas Triangle with low-cost air service, patterned largely on California's Pacific Southwest Airlines.

[7] Reflecting back on that time Kelleher said, "I think my greatest moment in business was when the first Southwest airplane arrived after four years of litigation and I walked up to it and I kissed that baby on the lips and I cried.

[6] In 1981, after Putnam left to head Braniff Airways, he was appointed the full-time CEO and president, positions he held for 20 years.

[7][9] Under Kelleher's leadership, Southwest succeeded by a strategy of offering low fares to its passengers, eliminating unnecessary services, using a single aircraft type (the Boeing 737) (except for use of the Boeing 727 and use of MD-80 by TranStar and 717 by AirTran), avoiding the hub-and-spoke scheduling system used by other airlines in favor of building point-to-point traffic, and focusing on secondary airports such as Chicago-Midway (instead of Chicago-O'Hare), Dallas Love Field (instead of DFW), and Orange County, California[10] but later some hub flights were operated at airports, such as ATL, LAS, PHX, DEN, STL, and BWI and some major airports, like ORD, LGA, LAX, SFO, and DEN.

Kelleher's outrageous personality created a corporate culture which made Southwest employees well known for taking themselves lightly but their jobs seriously.

[19] Kelleher was given the title of chairman emeritus with an office at Southwest Airlines headquarters and he remained connected to the company until his death in 2019.

On a blind date at a basketball game, he met Joan Negley who was a student at Connecticut College in New London.