"The frequent fliers who flew too much"

Orphia Nay · 7th May 2012, 07:14 PM

"Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers."

http://www.chicagotribune.com/busine...819,full.story

I found this to be an amusing and interesting story.

Quote:

There are frequent fliers, and then there are people like Steven Rothstein and Jacques Vroom. [...]

Passes in hand, Rothstein and Vroom flew for business. They flew for pleasure. They flew just because they liked being on planes. They bypassed long lines, booked backup itineraries in case the weather turned, and never worried about cancellation fees. Flight crews memorized their names and favorite meals.

Each had paid American more than $350,000 for an unlimited AAirpass and a companion ticket that allowed them to take someone along on their adventures. Both agree it was the best purchase they ever made, one that completely redefined their lives. [...]

But all the miles they and 64 other unlimited AAirpass holders racked up went far beyond what American had expected. As its finances began deteriorating a few years ago, the carrier took a hard look at the AAirpass program.

Heavy users, including Vroom and Rothstein, were costing it millions of dollars in revenue, the airline concluded. [...]

"We thought originally it would be something that firms would buy for top employees," said Bob Crandall, American's chairman and chief executive from 1985 to 1998. "It soon became apparent that the public was smarter than we were."

[...]

American Airlines lodged court cases against Rothstein and Vroom for violating their contracts (and Vroom countersued), but those cases "were thrown into limbo when American's parent company, AMR Corp., filed for Chapter 11 bankruptcy protection in November."

Did the men make an incredibly canny investment then spoil it by exploiting it?

"In 1990, the airline raised the price of an unlimited AAirpass with companion to $600,000. In 1993, it was bumped to $1.01 million. In 1994, American stopped selling unlimited passes altogether. [...] In 2004, American offered the unlimited AAirpass one last time, in the Neiman-Marcus Christmas catalog. At $3 million, plus a companion pass for $2 million more, none sold."

Did American Airlines have the wrong idea about the unlimited pass?

Doesn't it make the airline look better if there is at least one person in the first class section?

Cleon · 7th May 2012, 07:37 PM

They sold a pass for unlimited travel, and now they're complaining because people are using it?

**** 'em.

TragicMonkey · 7th May 2012, 07:47 PM

The airline actually attempted to bribe, and extort, false accusations from passengers in return for perjury against their own customers? WTF? And they dare to complain about "fraud" from other people?

If American Airlines remains in existence, I'm never flying them again.

Babbylonian · 7th May 2012, 07:47 PM

Well, it's hard to feel too bad for individuals who have $350,000-1,000,000+ to blow on a single [non-primary-home] purchase (however many flights that ends up paying for). Still, I'm skeptical that they were actually costing American millions per year. Unless the flight is fully booked, at most they were costing them the prices of meals and the fuel required to transport their bodies and luggage.

I'd further be interested in knowing what the money they paid up front - which in a way is akin to investing in the company - bought American. $350,000 invested wisely can generate a nice return over time, $1,000,000 obviously even more. Just comparing their flights versus the money paid up front doesn't generate an honest cost analysis.

Finally, if offering these unlimited passes really did end up costing them a ton of money, why wasn't that foreseeable? They could have limited the passes to, say, one round-trip a month and that probably still would have been worth it to someone with the means and desire to trot the globe.

The bottom line is that it should have been easy for them to figure out whether this was a good deal for them or not. Seller beware...

crimresearch · 7th May 2012, 07:48 PM

So how high up did they promote the dolts who failed to do the math in the first place?

'Let's see. if someone buys this pass for $350K, and they and a friend fly 100 times a year, at an average fare of 400 dollars each...and they live for 20 years... and the cost of gas, and planes, and salaries, keeps dropping... Wooo-hoo!! We'll be rich!!'

Cavemonster · 7th May 2012, 08:04 PM

Originally Posted by TragicMonkey

The airline actually attempted to bribe, and extort, false accusations from passengers in return for perjury against their own customers? WTF? And they dare to complain about "fraud" from other people?

If American Airlines remains in existence, I'm never flying them again.

I don't think there's any airlines that don't have something despicable you could say about them.

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I AGREE

JeanFromBNA · 7th May 2012, 08:22 PM

Jacques Vroom is a great name for a character in a novel.

Mercurial Artism · 7th May 2012, 08:40 PM

Whoever failed to put a limit to it (which would defeat the point of calling it Unlimited, but they could've called it something else), so that whoever used it would still get their money's worth, but that after X amount of times it would no longer be useful.

Those kinds of disclaimers are all over the place on coupons (e.g. limit one per purchase), free passes, etc. Even for stuff that's pretty cheap, there's almost always some kind of way they limit it to prevent someone from using it to an extreme and getting a much better bargain than the company intended. Trying to make a lawsuit is just a silly desperate measure, it seems.

lionking · 7th May 2012, 08:50 PM

Originally Posted by Babbylonian

Unless the flight is fully booked, at most they were costing them the prices of meals and the fuel required to transport their bodies and luggage.

That was my thought too. I'm a frequent flier, and it's only the commuter flights which are regularly booked out. Perhaps AA should have said "Unlimited on non- peak flights". This wouldn't have inconvenienced the card holders too much.

I cost my company $20 - 30,000 a year in flights. A card like that, where I could have gone with a colleague often, would have been good value.

Beerina · 8th May 2012, 05:25 AM

Originally Posted by Orphia Nay

"Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers."\

The state of Michigan offered to gladly pay your baby's college Tuesday in about 17 years if you gave them a couple of thousand dollars today.

They took it and spent it and left it to future politicians to find the money.

Beerina · 8th May 2012, 05:29 AM

Originally Posted by Orphia Nay

"Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers."

http://www.chicagotribune.com/busine...819,full.story

I found this to be an amusing and interesting story.

American Airlines lodged court cases against Rothstein and Vroom for violating their contracts (and Vroom countersued), but those cases "were thrown into limbo when American's parent company, AMR Corp., filed for Chapter 11 bankruptcy protection in November."

Did the men make an incredibly canny investment then spoil it by exploiting it?

"In 1990, the airline raised the price of an unlimited AAirpass with companion to $600,000. In 1993, it was bumped to $1.01 million. In 1994, American stopped selling unlimited passes altogether. [...] In 2004, American offered the unlimited AAirpass one last time, in the Neiman-Marcus Christmas catalog. At $3 million, plus a companion pass for $2 million more, none sold."

Did American Airlines have the wrong idea about the unlimited pass?

Doesn't it make the airline look better if there is at least one person in the first class section?

I'm not understanding where they think they're losing money. Aside from the drinks and food, which the money easily covers many times over, the fuel cost is no different, they carry a body on the plane, doesn't matter where it sits.

If they're pushing out others in first class who would have paid, then that is a sort of loss, but their calculus earlier was to get the profit out of it early on. In crappy times, with empty first class seats, it worked for them. In good times when first class is full, well, that's an issue, but 64 seats spread over thousands of flights a day? Please.

MG1962 · 8th May 2012, 06:20 AM

Originally Posted by Beerina

I'm not understanding where they think they're losing money. Aside from the drinks and food, which the money easily covers many times over, the fuel cost is no different, they carry a body on the plane, doesn't matter where it sits..

The fuel cost is actually a major component in these calculations - with luggage easy run to 250 pounds. But I would agree the food and facilities would be a major factor.

Another thought - I know some airlines maintain a passenger to crew ratio in first class. Adding one extra passenger may see the airline having to pay for an extra staff member on the flight

Careyp74 · 8th May 2012, 06:30 AM

Originally Posted by Babbylonian

Well, it's hard to feel too bad for individuals who have $350,000-1,000,000+ to blow on a single [non-primary-home] purchase (however many flights that ends up paying for). Still, I'm skeptical that they were actually costing American millions per year. Unless the flight is fully booked, at most they were costing them the prices of meals and the fuel required to transport their bodies and luggage.

I'd further be interested in knowing what the money they paid up front - which in a way is akin to investing in the company - bought American. $350,000 invested wisely can generate a nice return over time, $1,000,000 obviously even more. Just comparing their flights versus the money paid up front doesn't generate an honest cost analysis.

Finally, if offering these unlimited passes really did end up costing them a ton of money, why wasn't that foreseeable? They could have limited the passes to, say, one round-trip a month and that probably still would have been worth it to someone with the means and desire to trot the globe.

The bottom line is that it should have been easy for them to figure out whether this was a good deal for them or not. Seller beware...

I was wondering that too, the real cost versus the worth of the money back then compared to the worth today.

Also, they were racking up frequent flyer miles with this deal? Come on now, this airline is much stupider than I thought.

rustypouch · 8th May 2012, 07:14 AM

Originally Posted by Cleon

They sold a pass for unlimited travel, and now they're complaining because people are using it?

**** 'em.

This.

tyr_13 · 8th May 2012, 07:44 AM

They are also probably assuming that the people would have still flown paying full price for all the flights they did without the program. This is almost certainly untrue.

ZirconBlue · 8th May 2012, 08:40 AM

Pretty douchey behavior on the part of the airline, IMO.

Ian Osborne · 8th May 2012, 08:57 AM

Reminds me of Hoover's free flights fiasco.

Mycroft · 8th May 2012, 09:13 AM

Originally Posted by Cleon

They sold a pass for unlimited travel, and now they're complaining because people are using it?

**** 'em.

Yeah, it's hard to understand the airlines thinking on this. Of course people buying into a deal like this will expect to get more value over time. Also, isn't it likely they also sold some of these super-tickets to people who didn't use them that much?

luchog · 8th May 2012, 01:50 PM

The companies that offer these sorts of "unlimited" deals do so knowing that the average punter will rarely use up the market price value of the service, let alone achieve any significant discount. That's why you see so many places, from the corner gym, to museums, to airlines offering "unlimited" passes for a large up-front cost. There will be an initial spike in use, then it will taper off and only see occasional use, if at all, from that point.

Take the "lifetime membership" at your local gym as an example. "Lifetime" members are going to start out going a few times a week, but will taper off, and be lucky if they show up once a week, or once a month. Between the time they get the membership, and the time they stop using it, it would have cost them less to get a monthly pay-as-you-go membership, than they paid for the "lifetime" card; which means a big profit for the gym. On top of that, those with monthly memberships are more likely to go regularly, or to simply cancel when they realize that they're not actually using what they're paying for.

That's why so many companies offer loss-leader rebates. They know that most of the punters are too lazy to go through the effort of filling out the forms and mailing in the paperwork to claim the rebate; so they're able to clear out last year's model quickly, while not actually losing much, if anything.

This time, it blew up on them.

superfreddy · 8th May 2012, 01:57 PM

The two guys featured in the article were unjustly making money from the program. They were charging people to fly with them, clearly going against the way the program was designed. AA had the right to be upset about the loss of income

Mycroft · 8th May 2012, 02:04 PM

Originally Posted by superfreddy

The two guys featured in the article were unjustly making money from the program. They were charging people to fly with them, clearly going against the way the program was designed. AA had the right to be upset about the loss of income

Is it against the rules?

superfreddy · 8th May 2012, 02:09 PM

Originally Posted by Mycroft

Is it against the rules?

It is now. It was for one guy, not for the other, since they put the rule in place after he bought it. Regardless, it goes against the spirit of the program - you buy unlimited flights so you and your companion can enjoy, not for you to make money of it.

sarge · 8th May 2012, 02:15 PM

Originally Posted by superfreddy

It is now. It was for one guy, not for the other, since they put the rule in place after he bought it. Regardless, it goes against the spirit of the program - you buy unlimited flights so you and your companion can enjoy, not for you to make money of it.

Try that "spirit of the program' argument with an insurance company. There can be no fault associated with strictly following the published rules of such a program. I can see no room for siding with the airline in this case.

superfreddy · 8th May 2012, 02:53 PM

Originally Posted by sarge

Try that "spirit of the program' argument with an insurance company. There can be no fault associated with strictly following the published rules of such a program. I can see no room for siding with the airline in this case.

Then one of them was clearly wrong about it. I suppose the rule was not made retroactively, so it did not affect the older account. So, because it was legal then and not legal now but you got grandfathered it makes it right... I know know.

On the other hand, the way the airline went about the investigation was very unethical.

tomwaits · 8th May 2012, 02:59 PM

Originally Posted by Ian Osborne

Reminds me of Hoover's free flights fiasco.

Wow, hahaha. That is something. I'd never heard of this before.

Quote:

David Dixon, a horse trainer from High Seaton in Cumbria became a national hero overnight by kidnapping a Hoover van. To add insult to injury, the washing machine he'd bought to get the flights had broken down.

"There comes a time when you've got to make a stand, when you've got to say enough is enough, he said.

When a Hoover engineer came to fix the machine, a careless comment got him more than he'd bargained for.

"He said 'If you think buying a washing machine's going to get you two tickets to America, you must be an idiot'," Mr Dixon recalled.

"Huh! That was like a red rag to a bull. I thought to myself; 'an idiot am I?'

"I said; 'I'm not as stupid as you are. I'm not going to have to walk home'."

Ian Osborne · 8th May 2012, 03:04 PM

Originally Posted by sarge

Try that "spirit of the program' argument with an insurance company. There can be no fault associated with strictly following the published rules of such a program. I can see no room for siding with the airline in this case.

Did the small print really neglect to say the tickets were not transferrable? If so, the airline's lawyers need sacking.

WildCat · 8th May 2012, 03:45 PM

Originally Posted by crimresearch

So how high up did they promote the dolts who failed to do the math in the first place?

'Let's see. if someone buys this pass for $350K, and they and a friend fly 100 times a year, at an average fare of 400 dollars each...and they live for 20 years... and the cost of gas, and planes, and salaries, keeps dropping... Wooo-hoo!! We'll be rich!!'

Even worse, they put no restrictions on them whatsoever - including restrictions against selling a seat. So one of the guys made a living flying around the world selling his companion seat at a discount to the regular full-class fare.

Orphia Nay · 8th May 2012, 05:44 PM

Originally Posted by Ian Osborne

Reminds me of Hoover's free flights fiasco.

Thanks for that story!

Horatius · 8th May 2012, 09:06 PM

Originally Posted by superfreddy

Then one of them was clearly wrong about it. I suppose the rule was not made retroactively, so it did not affect the older account. So, because it was legal then and not legal now but you got grandfathered it makes it right... I know know.

You do realize there's a difference between "legal" and "within the bounds of the contract we signed", right?

Contracts have nothing to do with "right" or "wrong", they're entirely about "What we are obligated to do due to our agreement to the contract". If his contract didn't say anything about re-selling his seat, then that's just too bad for the airline.

NewtonTrino · 8th May 2012, 09:18 PM

I don't see the problem with selling the second seat. My understanding is it was a companion pass and he had to go with them. If an airline is dumb enough to sell that to someone for a fixed cost... well they screwed up. But if the rules say you can take a companion and you can fly as much as you want I don't see how they can stop you from reselling unless it's in the fine print.

Either way, where the heck do I get one of these passes? That sounds better than owning your own jet.

tomwaits · 8th May 2012, 09:40 PM

Originally Posted by Horatius

You do realize there's a difference between "legal" and "within the bounds of the contract we signed", right?

Contracts have nothing to do with "right" or "wrong", they're entirely about "What we are obligated to do due to our agreement to the contract". If his contract didn't say anything about re-selling his seat, then that's just too bad for the airline.

Not necessarily. There may be implied terms to the contract that aren't included in the writing. For example, there is an obligation of good faith on both parties, regardless of what they say in the writing. It's not always so clear cut. It's an interesting legal question.

Orphia Nay · 8th May 2012, 10:58 PM

Originally Posted by NewtonTrino

Either way, where the heck do I get one of these passes? That sounds better than owning your own jet.

Yes! Faced with the prospect of cattle class or nothing for the rest of my impecunious life, I'm close to choosing nothing. Flying anywhere from here (SE Australia) is a killer.

But if I could fly first class...

Damien Evans · 8th May 2012, 11:39 PM

Originally Posted by Orphia Nay

Yes! Faced with the prospect of cattle class or nothing for the rest of my impecunious life, I'm close to choosing nothing. Flying anywhere from here (SE Australia) is a killer.

But if I could fly first class...

Maybe so, but If it was a choice between driving or flying from Sydney to Adelaide, I'd rather kill myself than drive. The Hay Plains are just that boring and depressing.

It's basically 350 km of this:

Orphia Nay · 9th May 2012, 12:07 AM

Indeed, Damien.

(I'm not opposed to flying within Australia.)

Andrew Wiggin · 9th May 2012, 01:04 AM

Originally Posted by Damien Evans

Maybe so, but If it was a choice between driving or flying from Sydney to Adelaide, I'd rather kill myself than drive. The Hay Plains are just that boring and depressing. It's basically 350 km of this: http://www.andydrudy.com/photos/aust...Hay_Plains.jpg

Is there a speed limit? Is there any sort of enforcement? Depending on that, it could be anything from mind numbing to thrilling. At least for me, it'd be easier to keep a tight focus at high speed for a little while than to stay slightly alert while puttering along for hours on end.

The Don · 9th May 2012, 01:56 AM

Originally Posted by Andrew Wiggin

Is there a speed limit? Is there any sort of enforcement? Depending on that, it could be anything from mind numbing to thrilling. At least for me, it'd be easier to keep a tight focus at high speed for a little while than to stay slightly alert while puttering along for hours on end.

I think the limit would be 110km/h

http://en.wikipedia.org/wiki/Speed_limits_in_Australia

So a slow boring journey.

blobru · 9th May 2012, 02:23 AM

Originally Posted by Damien Evans

Maybe so, but If it was a choice between driving or flying from Sydney to Adelaide, I'd rather kill myself than drive. The Hay Plains are just that boring and depressing.

It's basically 350 km of this:
http://www.andydrudy.com/photos/aust...Hay_Plains.jpg

Looks like a drive through Saskatchewan (where you discover what cruise control is for, once your accelerator foot goes to sleep a half hour in from inactivity).

Andrew Wiggin · 9th May 2012, 02:50 AM

Originally Posted by The Don

I think the limit would be 110km/h

http://en.wikipedia.org/wiki/Speed_limits_in_Australia

So a slow boring journey.

It would pass faster at 210 kph. I think that's what my speedo goes up to. Getting away with that is another matter. How picky are they about speeding?

(I once crossed a distance close to this in an hour (on the clock anyway), but that was a combination of crossing a time zone, plus daylight savings time ending while I was on the road.) One day a year it's possible, in places that do the time change.

superfreddy · 9th May 2012, 11:40 AM

Originally Posted by tomwaits

Not necessarily. There may be implied terms to the contract that aren't included in the writing. For example, there is an obligation of good faith on both parties, regardless of what they say in the writing. It's not always so clear cut. It's an interesting legal question.

Interesting point. It's just like going to the all you can eat buffet. You just don't take a bunch of dogie bags to resale them. It may not be specified but it's part of the "all you can eat" contract.

Horatius · 9th May 2012, 11:53 AM

Originally Posted by superfreddy

Interesting point. It's just like going to the all you can eat buffet. You just don't take a bunch of dogie bags to resale them. It may not be specified but it's part of the "all you can eat" contract.

Actually, a lot of all you can eat places around here do specifically mention that, along with being charged extra if you waste food by taking it from the buffet but not eating it.

7th May 2012, 07:14 PM	#1
Orphia Nay Penguilicious Spodmaster. Tagger Join Date: May 2005 Location: Ponylandistan Presidential Palace (above the Spods' stables). Posts: 28,371	"The frequent fliers who flew too much" "Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers." http://www.chicagotribune.com/busine...819,full.story I found this to be an amusing and interesting story. Quote: There are frequent fliers, and then there are people like Steven Rothstein and Jacques Vroom. [...] Passes in hand, Rothstein and Vroom flew for business. They flew for pleasure. They flew just because they liked being on planes. They bypassed long lines, booked backup itineraries in case the weather turned, and never worried about cancellation fees. Flight crews memorized their names and favorite meals. Each had paid American more than $350,000 for an unlimited AAirpass and a companion ticket that allowed them to take someone along on their adventures. Both agree it was the best purchase they ever made, one that completely redefined their lives. [...] But all the miles they and 64 other unlimited AAirpass holders racked up went far beyond what American had expected. As its finances began deteriorating a few years ago, the carrier took a hard look at the AAirpass program. Heavy users, including Vroom and Rothstein, were costing it millions of dollars in revenue, the airline concluded. [...] "We thought originally it would be something that firms would buy for top employees," said Bob Crandall, American's chairman and chief executive from 1985 to 1998. "It soon became apparent that the public was smarter than we were." [...] American Airlines lodged court cases against Rothstein and Vroom for violating their contracts (and Vroom countersued), but those cases "were thrown into limbo when American's parent company, AMR Corp., filed for Chapter 11 bankruptcy protection in November." Did the men make an incredibly canny investment then spoil it by exploiting it? "In 1990, the airline raised the price of an unlimited AAirpass with companion to $600,000. In 1993, it was bumped to $1.01 million. In 1994, American stopped selling unlimited passes altogether. [...] In 2004, American offered the unlimited AAirpass one last time, in the Neiman-Marcus Christmas catalog. At $3 million, plus a companion pass for $2 million more, none sold." Did American Airlines have the wrong idea about the unlimited pass? Doesn't it make the airline look better if there is at least one person in the first class section?
	__________________ Are you an ex-Truther? Please share your story. ~ The Australasian Skeptics Forum.

7th May 2012, 07:37 PM	#2
Cleon King of the Pod People Moderator Join Date: Aug 2001 Location: Atlanta, GA Posts: 20,532	They sold a pass for unlimited travel, and now they're complaining because people are using it? **** 'em.
	__________________ "People like me are what stand between us and Auschwitz." - Newt Gingrich

7th May 2012, 07:47 PM	#3
TragicMonkey Poisoned Waffles Pither Join Date: Jun 2004 Location: Monkey Posts: 30,084	The airline actually attempted to bribe, and extort, false accusations from passengers in return for perjury against their own customers? WTF? And they dare to complain about "fraud" from other people? If American Airlines remains in existence, I'm never flying them again.
	__________________ One cannot expect wisdom to flow from a pumpkin.

7th May 2012, 07:47 PM	#4
Babbylonian Illuminator Join Date: Feb 2007 Location: Lake Oswego, OR Posts: 4,471	Well, it's hard to feel too bad for individuals who have $350,000-1,000,000+ to blow on a single [non-primary-home] purchase (however many flights that ends up paying for). Still, I'm skeptical that they were actually costing American millions per year. Unless the flight is fully booked, at most they were costing them the prices of meals and the fuel required to transport their bodies and luggage. I'd further be interested in knowing what the money they paid up front - which in a way is akin to investing in the company - bought American. $350,000 invested wisely can generate a nice return over time, $1,000,000 obviously even more. Just comparing their flights versus the money paid up front doesn't generate an honest cost analysis. Finally, if offering these unlimited passes really did end up costing them a ton of money, why wasn't that foreseeable? They could have limited the passes to, say, one round-trip a month and that probably still would have been worth it to someone with the means and desire to trot the globe. The bottom line is that it should have been easy for them to figure out whether this was a good deal for them or not. Seller beware...
	__________________ Where am I going to find a piece of metal? Here...in space...at this hour? Last edited by Babbylonian; 7th May 2012 at 07:49 PM.

7th May 2012, 07:48 PM	#5
crimresearch Alumbrado Join Date: Jan 2004 Posts: 10,618	So how high up did they promote the dolts who failed to do the math in the first place? 'Let's see. if someone buys this pass for $350K, and they and a friend fly 100 times a year, at an average fare of 400 dollars each...and they live for 20 years... and the cost of gas, and planes, and salaries, keeps dropping... Wooo-hoo!! We'll be rich!!'
crimresearch Alumbrado Join Date: Jan 2004 Posts: 10,618

7th May 2012, 08:22 PM	#7
JeanFromBNA Critical Thinker Join Date: Nov 2009 Posts: 399	Jacques Vroom is a great name for a character in a novel.

7th May 2012, 08:40 PM	#8
Mercurial Artism Scholar Join Date: Jan 2011 Posts: 108	Whoever failed to put a limit to it (which would defeat the point of calling it Unlimited, but they could've called it something else), so that whoever used it would still get their money's worth, but that after X amount of times it would no longer be useful. Those kinds of disclaimers are all over the place on coupons (e.g. limit one per purchase), free passes, etc. Even for stuff that's pretty cheap, there's almost always some kind of way they limit it to prevent someone from using it to an extreme and getting a much better bargain than the company intended. Trying to make a lawsuit is just a silly desperate measure, it seems.
Mercurial Artism Scholar Join Date: Jan 2011 Posts: 108

7th May 2012, 08:50 PM	#9
lionking In the Peanut Gallery Join Date: Jan 2007 Location: Melbourne Posts: 29,654	Originally Posted by Babbylonian Unless the flight is fully booked, at most they were costing them the prices of meals and the fuel required to transport their bodies and luggage. That was my thought too. I'm a frequent flier, and it's only the commuter flights which are regularly booked out. Perhaps AA should have said "Unlimited on non- peak flights". This wouldn't have inconvenienced the card holders too much. I cost my company $20 - 30,000 a year in flights. A card like that, where I could have gone with a colleague often, would have been good value.
	__________________ A fanatic is one who can't change his mind and won't change the subject. Sir Winston Churchill

8th May 2012, 05:25 AM	#10
Beerina Sarcastic Conqueror of Notions Join Date: Mar 2004 Location: A floating island above the clouds Posts: 23,835	Originally Posted by Orphia Nay "Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers."\ The state of Michigan offered to gladly pay your baby's college Tuesday in about 17 years if you gave them a couple of thousand dollars today. They took it and spent it and left it to future politicians to find the money.
	__________________ "Great innovations should not be forced [by way of] slender majorities." - Thomas Jefferson The government should nationalize it! Socialized, single-payer video game development and sales *now!* More, cheaper, better games, right? Right?

8th May 2012, 05:29 AM	#11
Beerina Sarcastic Conqueror of Notions Join Date: Mar 2004 Location: A floating island above the clouds Posts: 23,835	Originally Posted by Orphia Nay "Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers." http://www.chicagotribune.com/busine...819,full.story I found this to be an amusing and interesting story. American Airlines lodged court cases against Rothstein and Vroom for violating their contracts (and Vroom countersued), but those cases "were thrown into limbo when American's parent company, AMR Corp., filed for Chapter 11 bankruptcy protection in November." Did the men make an incredibly canny investment then spoil it by exploiting it? "In 1990, the airline raised the price of an unlimited AAirpass with companion to $600,000. In 1993, it was bumped to $1.01 million. In 1994, American stopped selling unlimited passes altogether. [...] In 2004, American offered the unlimited AAirpass one last time, in the Neiman-Marcus Christmas catalog. At $3 million, plus a companion pass for $2 million more, none sold." Did American Airlines have the wrong idea about the unlimited pass? Doesn't it make the airline look better if there is at least one person in the first class section? I'm not understanding where they think they're losing money. Aside from the drinks and food, which the money easily covers many times over, the fuel cost is no different, they carry a body on the plane, doesn't matter where it sits. If they're pushing out others in first class who would have paid, then that is a sort of loss, but their calculus earlier was to get the profit out of it early on. In crappy times, with empty first class seats, it worked for them. In good times when first class is full, well, that's an issue, but 64 seats spread over thousands of flights a day? Please.
	__________________ "Great innovations should not be forced [by way of] slender majorities." - Thomas Jefferson The government should nationalize it! Socialized, single-payer video game development and sales *now!* More, cheaper, better games, right? Right? Last edited by Beerina; 8th May 2012 at 05:30 AM.

8th May 2012, 06:20 AM	#12
MG1962 Guest Join Date: Sep 2006 Location: Kansas (Australia) Posts: 14,750	Originally Posted by Beerina I'm not understanding where they think they're losing money. Aside from the drinks and food, which the money easily covers many times over, the fuel cost is no different, they carry a body on the plane, doesn't matter where it sits.. The fuel cost is actually a major component in these calculations - with luggage easy run to 250 pounds. But I would agree the food and facilities would be a major factor. Another thought - I know some airlines maintain a passenger to crew ratio in first class. Adding one extra passenger may see the airline having to pay for an extra staff member on the flight

8th May 2012, 06:30 AM	#13
Careyp74 Illuminator Join Date: Feb 2008 Location: Trevose, PA Posts: 3,407	Originally Posted by Babbylonian Well, it's hard to feel too bad for individuals who have $350,000-1,000,000+ to blow on a single [non-primary-home] purchase (however many flights that ends up paying for). Still, I'm skeptical that they were actually costing American millions per year. Unless the flight is fully booked, at most they were costing them the prices of meals and the fuel required to transport their bodies and luggage. I'd further be interested in knowing what the money they paid up front - which in a way is akin to investing in the company - bought American. $350,000 invested wisely can generate a nice return over time, $1,000,000 obviously even more. Just comparing their flights versus the money paid up front doesn't generate an honest cost analysis. Finally, if offering these unlimited passes really did end up costing them a ton of money, why wasn't that foreseeable? They could have limited the passes to, say, one round-trip a month and that probably still would have been worth it to someone with the means and desire to trot the globe. The bottom line is that it should have been easy for them to figure out whether this was a good deal for them or not. Seller beware... I was wondering that too, the real cost versus the worth of the money back then compared to the worth today. Also, they were racking up frequent flyer miles with this deal? Come on now, this airline is much stupider than I thought.

8th May 2012, 07:14 AM	#14
rustypouch Philosopher Join Date: Mar 2003 Location: Belfort Posts: 5,135	Originally Posted by Cleon They sold a pass for unlimited travel, and now they're complaining because people are using it? **** 'em. This.

8th May 2012, 07:44 AM	#15
tyr_13 Philosopher Join Date: Aug 2008 Location: Falconer, NY Posts: 9,662	They are also probably assuming that the people would have still flown paying full price for all the flights they did without the program. This is almost certainly untrue.
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8th May 2012, 08:40 AM	#16
ZirconBlue Sole Survivor of L-Town Join Date: Dec 2005 Location: Wilson, North Carolina, USA, Earth Posts: 11,320	Pretty douchey behavior on the part of the airline, IMO.
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8th May 2012, 08:57 AM	#17
Ian Osborne JREF Kid Tagger Join Date: Aug 2001 Location: Wiltshire Posts: 6,383	Reminds me of Hoover's free flights fiasco.
	__________________ "Faith without doubt leads to moral arrogance, the eternal pratfall of the religiously convinced" - Joe Klein, Time magazine "The fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown." - Carl Sagan

8th May 2012, 09:13 AM	#18
Mycroft High Priest of Ed Join Date: Sep 2003 Posts: 16,105	Originally Posted by Cleon They sold a pass for unlimited travel, and now they're complaining because people are using it? **** 'em. Yeah, it's hard to understand the airlines thinking on this. Of course people buying into a deal like this will expect to get more value over time. Also, isn't it likely they also sold some of these super-tickets to people who didn't use them that much?
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8th May 2012, 01:50 PM	#19
luchog Neo-Post-Retro-Revivalist Join Date: Aug 2005 Location: The Emerald City Posts: 7,958	The companies that offer these sorts of "unlimited" deals do so knowing that the average punter will rarely use up the market price value of the service, let alone achieve any significant discount. That's why you see so many places, from the corner gym, to museums, to airlines offering "unlimited" passes for a large up-front cost. There will be an initial spike in use, then it will taper off and only see occasional use, if at all, from that point. Take the "lifetime membership" at your local gym as an example. "Lifetime" members are going to start out going a few times a week, but will taper off, and be lucky if they show up once a week, or once a month. Between the time they get the membership, and the time they stop using it, it would have cost them less to get a monthly pay-as-you-go membership, than they paid for the "lifetime" card; which means a big profit for the gym. On top of that, those with monthly memberships are more likely to go regularly, or to simply cancel when they realize that they're not actually using what they're paying for. That's why so many companies offer loss-leader rebates. They know that most of the punters are too lazy to go through the effort of filling out the forms and mailing in the paperwork to claim the rebate; so they're able to clear out last year's model quickly, while not actually losing much, if anything. This time, it blew up on them.
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8th May 2012, 01:57 PM	#20
superfreddy Thinker Join Date: Jun 2009 Posts: 232	The two guys featured in the article were unjustly making money from the program. They were charging people to fly with them, clearly going against the way the program was designed. AA had the right to be upset about the loss of income
superfreddy Thinker Join Date: Jun 2009 Posts: 232

8th May 2012, 02:04 PM	#21
Mycroft High Priest of Ed Join Date: Sep 2003 Posts: 16,105	Originally Posted by superfreddy The two guys featured in the article were unjustly making money from the program. They were charging people to fly with them, clearly going against the way the program was designed. AA had the right to be upset about the loss of income Is it against the rules?
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8th May 2012, 02:09 PM	#22
superfreddy Thinker Join Date: Jun 2009 Posts: 232	Originally Posted by Mycroft Is it against the rules? It is now. It was for one guy, not for the other, since they put the rule in place after he bought it. Regardless, it goes against the spirit of the program - you buy unlimited flights so you and your companion can enjoy, not for you to make money of it.
superfreddy Thinker Join Date: Jun 2009 Posts: 232

8th May 2012, 02:15 PM	#23
sarge Master Poster Join Date: Oct 2009 Location: Fayetteville, NC Posts: 2,341	Originally Posted by superfreddy It is now. It was for one guy, not for the other, since they put the rule in place after he bought it. Regardless, it goes against the spirit of the program - you buy unlimited flights so you and your companion can enjoy, not for you to make money of it. Try that "spirit of the program' argument with an insurance company. There can be no fault associated with strictly following the published rules of such a program. I can see no room for siding with the airline in this case.
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8th May 2012, 02:53 PM	#24
superfreddy Thinker Join Date: Jun 2009 Posts: 232	Originally Posted by sarge Try that "spirit of the program' argument with an insurance company. There can be no fault associated with strictly following the published rules of such a program. I can see no room for siding with the airline in this case. Then one of them was clearly wrong about it. I suppose the rule was not made retroactively, so it did not affect the older account. So, because it was legal then and not legal now but you got grandfathered it makes it right... I know know. On the other hand, the way the airline went about the investigation was very unethical.
superfreddy Thinker Join Date: Jun 2009 Posts: 232

8th May 2012, 02:59 PM	#25
tomwaits Master Poster Join Date: Nov 2007 Location: Chicago, IL, USA Posts: 2,288	Originally Posted by Ian Osborne Reminds me of Hoover's free flights fiasco. Wow, hahaha. That is something. I'd never heard of this before. Quote: David Dixon, a horse trainer from High Seaton in Cumbria became a national hero overnight by kidnapping a Hoover van. To add insult to injury, the washing machine he'd bought to get the flights had broken down. "There comes a time when you've got to make a stand, when you've got to say enough is enough, he said. When a Hoover engineer came to fix the machine, a careless comment got him more than he'd bargained for. "He said 'If you think buying a washing machine's going to get you two tickets to America, you must be an idiot'," Mr Dixon recalled. "Huh! That was like a red rag to a bull. I thought to myself; 'an idiot am I?' "I said; 'I'm not as stupid as you are. I'm not going to have to walk home'."

8th May 2012, 03:04 PM	#26
Ian Osborne JREF Kid Tagger Join Date: Aug 2001 Location: Wiltshire Posts: 6,383	Originally Posted by sarge Try that "spirit of the program' argument with an insurance company. There can be no fault associated with strictly following the published rules of such a program. I can see no room for siding with the airline in this case. Did the small print really neglect to say the tickets were not transferrable? If so, the airline's lawyers need sacking.
	__________________ "Faith without doubt leads to moral arrogance, the eternal pratfall of the religiously convinced" - Joe Klein, Time magazine "The fact that some geniuses were laughed at does not imply that all who are laughed at are geniuses. They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown." - Carl Sagan

8th May 2012, 03:45 PM	#27
WildCat NWO Master Conspirator Join Date: Mar 2003 Location: Albany Park, Chicago Posts: 49,053	Originally Posted by crimresearch So how high up did they promote the dolts who failed to do the math in the first place? 'Let's see. if someone buys this pass for $350K, and they and a friend fly 100 times a year, at an average fare of 400 dollars each...and they live for 20 years... and the cost of gas, and planes, and salaries, keeps dropping... Wooo-hoo!! We'll be rich!!' Even worse, they put no restrictions on them whatsoever - including restrictions against selling a seat. So one of the guys made a living flying around the world selling his companion seat at a discount to the regular full-class fare.

8th May 2012, 05:44 PM	#28
Orphia Nay Penguilicious Spodmaster. Tagger Join Date: May 2005 Location: Ponylandistan Presidential Palace (above the Spods' stables). Posts: 28,371	Originally Posted by Ian Osborne Reminds me of Hoover's free flights fiasco. Thanks for that story!
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8th May 2012, 09:06 PM	#29
Horatius NWO Kitty Wrangler Join Date: May 2006 Location: Ottawa, ON, Canada Posts: 21,890	Originally Posted by superfreddy Then one of them was clearly wrong about it. I suppose the rule was not made retroactively, so it did not affect the older account. So, because it was legal then and not legal now but you got grandfathered it makes it right... I know know. You do realize there's a difference between "legal" and "within the bounds of the contract we signed", right? Contracts have nothing to do with "right" or "wrong", they're entirely about "What we are obligated to do due to our agreement to the contract". If his contract didn't say anything about re-selling his seat, then that's just too bad for the airline.
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8th May 2012, 09:18 PM	#30
NewtonTrino Illuminator Join Date: Jul 2007 Location: Bothell, WA Posts: 3,782	I don't see the problem with selling the second seat. My understanding is it was a companion pass and he had to go with them. If an airline is dumb enough to sell that to someone for a fixed cost... well they screwed up. But if the rules say you can take a companion and you can fly as much as you want I don't see how they can stop you from reselling unless it's in the fine print. Either way, where the heck do I get one of these passes? That sounds better than owning your own jet.

8th May 2012, 09:40 PM	#31
tomwaits Master Poster Join Date: Nov 2007 Location: Chicago, IL, USA Posts: 2,288	Originally Posted by Horatius You do realize there's a difference between "legal" and "within the bounds of the contract we signed", right? Contracts have nothing to do with "right" or "wrong", they're entirely about "What we are obligated to do due to our agreement to the contract". If his contract didn't say anything about re-selling his seat, then that's just too bad for the airline. Not necessarily. There may be implied terms to the contract that aren't included in the writing. For example, there is an obligation of good faith on both parties, regardless of what they say in the writing. It's not always so clear cut. It's an interesting legal question.

8th May 2012, 10:58 PM	#32
Orphia Nay Penguilicious Spodmaster. Tagger Join Date: May 2005 Location: Ponylandistan Presidential Palace (above the Spods' stables). Posts: 28,371	Originally Posted by NewtonTrino Either way, where the heck do I get one of these passes? That sounds better than owning your own jet. Yes! Faced with the prospect of cattle class or nothing for the rest of my impecunious life, I'm close to choosing nothing. Flying anywhere from here (SE Australia) is a killer. But if I could fly first class...
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8th May 2012, 11:39 PM	#33
Damien Evans Up The Irons Tagger Join Date: May 2007 Location: Melbourne, Australia Posts: 25,295	Originally Posted by Orphia Nay Yes! Faced with the prospect of cattle class or nothing for the rest of my impecunious life, I'm close to choosing nothing. Flying anywhere from here (SE Australia) is a killer. But if I could fly first class... Maybe so, but If it was a choice between driving or flying from Sydney to Adelaide, I'd rather kill myself than drive. The Hay Plains are just that boring and depressing. It's basically 350 km of this:
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9th May 2012, 12:07 AM	#34
Orphia Nay Penguilicious Spodmaster. Tagger Join Date: May 2005 Location: Ponylandistan Presidential Palace (above the Spods' stables). Posts: 28,371	Indeed, Damien. (I'm not opposed to flying within Australia.)
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9th May 2012, 01:04 AM	#35
Andrew Wiggin Master Poster Join Date: Aug 2009 Location: A small planet named for its dirt. You'll find it filed under 'mostly harmless' Posts: 2,914	Originally Posted by Damien Evans Maybe so, but If it was a choice between driving or flying from Sydney to Adelaide, I'd rather kill myself than drive. The Hay Plains are just that boring and depressing. It's basically 350 km of this: http://www.andydrudy.com/photos/aust...Hay_Plains.jpg Is there a speed limit? Is there any sort of enforcement? Depending on that, it could be anything from mind numbing to thrilling. At least for me, it'd be easier to keep a tight focus at high speed for a little while than to stay slightly alert while puttering along for hours on end.
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9th May 2012, 01:56 AM	#36
The Don Philosopher Join Date: Nov 2002 Location: Cymru Posts: 8,239	Originally Posted by Andrew Wiggin Is there a speed limit? Is there any sort of enforcement? Depending on that, it could be anything from mind numbing to thrilling. At least for me, it'd be easier to keep a tight focus at high speed for a little while than to stay slightly alert while puttering along for hours on end. I think the limit would be 110km/h http://en.wikipedia.org/wiki/Speed_limits_in_Australia So a slow boring journey.