(FORTUNE Magazine) – From the moment in 1914 when the first paying passenger boarded the first scheduled commercial flight--a 20-minute hop across Tampa Bay on the St. Petersburg-Tampa Airboat Line--aviation has been a lousy way to seek one's fortune. Airlines and airliner manufacturing are capital-ravenous, low-margin ventures that expose a hapless CEO to a host of risks beyond his control: rising fuel costs, petulant unions, fatal accidents, economic downturns, price wars, and especially before 1978, regulatory politics. Just to survive in this field takes a Jack Welch-like palette of managerial skills and a certain raw willingness to bet it all--to take a flier, as it were.

But over the course of this century, a handful of leaders in the field have done far better than merely survive. Backed by creativity, persuasiveness, and sheer force of personality, they built enterprises that towered above their contemporaries', and altered the course of the century.

Undoubtedly the greatest empire builder of them all was a well-born Yalie and onetime bond broker named Juan Trippe. In its heyday in the '30s and '40s, his Pan American Airways controlled all U.S. overseas air routes. By the time he was 40, his monopoly spanned both oceans and the entire length of South America, extending air travel farther than had ever before seemed possible.

A cold, secretive man but a maddeningly persistent negotiator, Trippe entered the business in 1927 by acquiring (with the help of his high-society friends Jack Hambleton and Cornelius Vanderbilt Whitney) a contract to deliver air mail between Key West and Havana for the U.S. Post Office. Since passenger traffic alone could not yet support an airline, an air mail contract was essential, and it amounted to a U.S. government-subsidized monopoly of the route in question. With that in mind, Trippe quickly set out to win every such contract in the Caribbean and South America. To do so, he relied on a sprawling network of contacts in Washington (his wife was the sister of future Secretary of State Edward Stettinius), in foreign governments, among his Yale classmates, and among U.S. corporate operations overseas. Airlines that resisted Pan Am's attempts to move in on their territories tended to find their landing rights mysteriously rescinded by their foreign hosts, or their U.S. air mail contracts suddenly put up for bid. "Trippe never did anything that was blatantly against the rules," says commercial air historian R.E.G. Davies, "but in this game there just weren't many rules."

To be fair, on many routes Pan Am had no competition: No other carrier had the resources--or audacity--to jump in. To create the transpacific route, for example, Trippe had to build or refurbish refueling bases on Wake, Guam, Midway, Honolulu, and Manila. To accommodate his expanding network, he badgered manufacturers to design ever more sophisticated long-range seaplanes, like the famous Boeing Clippers.

Even when the government ended his monopoly after the war, Trippe continued to be a goad to manufacturers. In the 1950s he backed the first U.S. jet airliner as a way of countering the British jets vying for his transatlantic customers. And as one of his last initiatives, he urged manufacturers to gamble on wide-bodied airliners--the Boeing 747, the DC-10, and L-1011--which could carry up to 400 passengers on Pan Am's transoceanic routes. "To Mr. Trippe," said one admiring subordinate, "nothing is impossible."

Trippe's counterpart on the domestic scene was a bluff, imposing Texan known as Cyrus Rowlett "C.R." Smith. A workaholic bachelor whose aviation career lasted 42 years, Smith built American Airlines from a chaotic jumble of air mail routes into the largest and most efficient passenger line in the continental U.S.

In addition to steering American specifically, Smith played a central role in the rise of the modern air travel system. Under his tenure American introduced jet airliners and pressurized cabins, opened LaGuardia and O'Hare airports, and did much to promote airline safety. Smith himself wrote the copy for a famous 1938 ad that broke the industry's taboo against discussing safety. Under the headline WHY DODGE THIS QUESTION: AFRAID TO FLY? the ad basically reassured travelers that if they tried it, they'd like it.

The advance for which Smith is best known, however, was a joint effort with another giant of the business, Douglas Aircraft founder Donald Douglas. A precise, dour engineer, Douglas was 33 in 1932 when TWA challenged manufacturers to design an airliner that could outperform the impressive new Boeing 247, which was being made exclusively for United (then, as now, one of the country's largest airlines). Competitors doubted such a plane could be built, but Douglas and his team scoured the industry for ideas and by 1933 rolled out a prototype for a sleek, 14-seat liner called the DC-2 (for Douglas Commercial). It proved to be a quantum advance over the Boeing.

C.R. Smith, however, saw further room for improvement, and asked Douglas for a larger version. Douglas hesitated. The DC-2 was already a runaway hit, and it was the middle of the Depression. Nevertheless, in a historic decision, Douglas took a chance that Smith was right. The new model was the famous DC-3, a vastly more practical bird than even the DC-2. With seating for 50% more passengers--and only 10% higher operating costs--it was the first airliner that could turn a profit carrying passengers alone, without air mail. Instantly, every other passenger plane was obsolete. Within six years the DC-3 accounted for 80% of the scheduled flights in the U.S.

Over the next 25 years Douglas built newer and better prop planes that continued to form the backbone of the commercial fleet. His hold on the market was broken only by the arrival of Boeing jets in the late 1950s. Slow to enter the jet market, Douglas never quite caught up. It had, however, been an extraordinary run. "The great thing about Douglas," recalled one satisfied customer with only slight exaggeration, "is that he never built a bad airplane."

If Douglas' story is a tale of evolutionary improvement, Fred Smith's is one of revolutionary invention. With the launch of his Federal Express Corp. in 1971, Smith essentially created a $3 billion industry out of thin air and transformed the way business ships goods. In the process he handed the language a new transitive verb, "to Fedex."

The son of a wealthy Tennessee entrepreneur, Smith attended Yale, where he was an indifferent student but an active member of the Flying Club--over which Juan Trippe, coincidentally, had presided some 40 years before. It was at Yale that Smith wrote his famous junior-year term paper outlining his idea for an express air-freight service--and for which he earned a "C." What the skeptical professor failed to credit properly were Smith's two key insights: that the information age had created demand for the rapid shipment of lightweight goods, and that an air-freight service using a single hub for sorting and transshipping could efficiently and profitably meet that demand.

Successful as that idea proved to be, what has made Smith a truly great businessman is his development from entrepreneur into manager and motivator. In Memphis, where the company makes its headquarters, Fedex is considered the plum employer in town, and the loyalty of employees on the site is almost palpable. That's no accident. "Earning your employees' loyalty makes good, hard-headed business sense," says Smith. "In the service business, you're only as good as your last contact."

Service (like everything else) is a lark to Herb Kelleher, the antic genius of Southwest Airlines. Kelleher has so broken the mold of airline operations that many of the problems that have made aviation CEOs sweat throughout this century simply don't apply to him. Recession? With an average fare of $78, Kelleher's Southwest is the last airline travelers would shun in a downturn. Labor strife? His workers, though 87% unionized, adore him. Cyclicality? Southwest has posted 26 straight years of profits, the last seven of them records. No other airline comes close.

Like Smith, Kelleher has the advantage of a wildly original business model. Discarding the hub-and-spoke system, he shuttles his flights back and forth largely on short hauls between smaller-scale cities like Manchester, N.H., and Nashville (a route on which Southwest flies at an average of 80% capacity). The absence of services like in-flight meals and assigned seating cuts planes' turnaround time to 15 to 20 minutes, vs. at least an hour for most other majors. Southwest also flies Boeing 737s exclusively, which trims millions from training and maintenance costs.

But none of this would work so spectacularly without Kelleher's infectious, madcap personality. No B-school will teach you to dress like Elvis or General Patton to address your employees, as Kelleher has, and you can't compel flight attendants to turn the airline safety lecture into a comic monologue--or to pop out of the overhead luggage bins and surprise the customers.

"It's the intangibles that are the hardest things for a competitor to imitate," says Kelleher. "You can get an airplane. You can get ticket-counter space; you can get baggage conveyors. But it is our esprit de corps--the culture, the spirit--that is truly our most valuable competitive asset." --Eric Schurenberg

This is the second in a series of features nominating finalists for our BUSINESSMAN OF THE CENTURY award. We will announce the winner in the Nov. 22 issue of FORTUNE. Stay tuned.

REPORTER ASSOCIATE Patty de Llosa