Nowadays, the American Airlines Airpass is known as an all-inclusive membership program that offers elite status, flight discounts, and other perks, for an annual fee. However, in the early 1980s, American Airlines unveiled a special unlimited version of its AAirpass (two As back then). In an attempt to raise some badly needed funds quickly, the airline sold this unlimited first-class product as either a five-year or lifetime pass. The decision to offer this type of AAirpass is now known as one of the worst marketing disasters in human history. Here’s why it failed.
The decision for an unlimited AAirpass came about after the airline posted a US$76 million loss in 1980. This was due to the 1978 Airline Deregulation Act, which had the effect of bringing about new competition and reduced ticket prices.
What did the unlimited AAirpass offer its owners?
While the price of the five-year unlimited AAirpass has been hard to come by, it has been well-documented that the lifetime version was a one-time purchase of US$250,000 in 1981. Today, that’s equivalent to US$710,000.
Through this one-time purchase, travelers were entitled to unlimited first-class travel for life. What’s more, a companion pass could be purchased for an additional $150,000 ($426,000), allowing the pass holder to bring along anyone (even total strangers) along for the flight.
According to The Hustle, billionaire entrepreneur Mark Cuban said that it was “one of the best purchases [he’s] ever made.” Texas Monthly reports that over the life of the program, the airline sold 65 unlimited AAirpasses. Notable customers included Michael Dell and Willie Mays.
Speaking with The Hustle, airline president at the time Robert Crandall commented on the pass, saying, “The idea was that firms would buy this for their top performers…But as usual, the public is way smarter than any corporation. People immediately figured out we’d made a mistake pricing-wise.”
Why the unlimited AAirpass was terrific (for flyers)
This was indeed the case as some AAirpass holders took full advantage of their access to unlimited first-class travel. The three examples below are among the most notable in the history of the unlimited AAirpass:
Steven Rothstein: An investment banker, Rothstein purchased the AAirpass in 1987, flying over 10,000 flights in 25 years. Living in Chicago, Rothstein was known to fly to London to have lunch with a friend, among other incredible itineraries.
“Steven got on a plane like most people get on a bus,” said his wife. “The thought of him going to LA from Chicago for the day, or Tokyo from Chicago overnight, or London overnight, for one night … was not unheard of.”
Rothstein’s story with the AAirpass was documented by his daughter Caroline via Narratively.
Jacques Vroom: A former mail-order catalog consultant living in Dallas, Vroom used his AAirpass to attend all his son’s college football games in Maine. Crew members even knew him by name. As AAirpass flights also accumulated frequent flier miles, he would give the miles away, often to people living with AIDS so they could visit family.
“There was one flight attendant, Pierre, who knew exactly what I wanted,” Vroom told the LA Times. “He’d bring me three salmon appetizers, no dessert and a glass of champagne, right after takeoff. I didn’t even have to ask.”
Mike Joyce: Also from Chicago, Joyce bought his unlimited AAirpass in 1994 after winning a $4.25 million settlement from a car accident. The LA Times reports that within 25 days in 2012, Joyce flew round-trip to London 16 times. The flights in total would have generally sold for more than $125,000 at the time.
Why it was a blunder (for American Airlines)
If it hasn’t become abundantly clear from the examples above, the airline was losing vast sums of money due to the habits of a few “super travelers”. Here’s why:
- Pass holders could make last-minute cancelations without consequence
- Bookings by pass holders took up seats that other travelers would have paid for
- The airline still had to pay for per-passenger taxes and fees imposed by airports and other countries
In fact, Bridget Cade, an American Airlines employee tasked with abuse and fraud investigation, calculated that Rothstein and Vroom (and other travelers like them) were costing the airline more than $1 million a year.
Realizing the blunder, in 1990, the airline raised the price of an unlimited AAirpass (with a companion) to $600,000. Not wanting to cancel the program outright, they further increased the cost to $1.01 million in 1993. Finally, in 1994, the airline stopped selling unlimited passes altogether. As a one-off, the company revived it as a one-time sale in the pages of the 2004 Neiman Marcus Christmas catalog for $3 million ($4.1 million in 2020). However, this time around, there were no takers.
The airline terminated some passes due to what it says equated to fraud. This includes Vroom, who had received money from several of his companion-flyers. His lawyer said that no offense was committed as Vroom’s contract didn’t prohibit the practice at the time.
In 2011, an Illinois federal judge ruled that Rothstein had violated his AAirpass contract by booking empty seats under phony names, including Bag Rothstein.
In the end, it’s quite shocking that the unlimited AAirpass sold for as long as it did – until 1994. But despite having ever sold only 65, it’s clear that the program’s termination signified a financial failure for the airline.
This AAirpass may continue to be a financial liability for the airline. We asked American if they could tell us how many valid unlimited lifetime AAirpasses were still out there in circulation. “We are going to decline to provide that information,” the airline responded.
There is certainly a lot to unpack from the saga of the unlimited lifetime AAirpass. What do you think of the whole mess? Could it have worked if the airline had put more restrictions on passes in the first place? Let us know your thoughts in the comments.