From the Los Angeles Times:
Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers.
There are frequent fliers, and then there are people like Steven Rothstein and Jacques Vroom.
Both men bought tickets that gave them unlimited first-class travel for life on American Airlines. It was almost like owning a fleet of private jets.
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.
In the 2009 film "Up in the Air," the loyal American business traveler played by George Clooney was showered with attention after attaining 10 million frequent flier miles.
Rothstein and Vroom were not impressed.
"I can't even remember when I cracked 10 million," said Vroom, 67, a big, amiable Texan, who at last count had logged nearly four times as many. Rothstein, 61, has notched more than 30 million miles.
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.
The AAirpass system had rules. A special "revenue integrity unit" was assigned to find out whether any of these rules had been broken, and whether the passes that were now such a drag on profits could be revoked.HT: Yglesias at Slate
Rothstein, Vroom and other AAirpass holders had long been treated like royalty. Now they were targets of an investigation.
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When American introduced the AAirpass in 1981, it saw a chance to raise millions of dollars for expansion at a time of record-high interest rates.
It was, and still is, offered in a variety of formats, including prepaid blocks of miles. But the marquee item was the lifetime unlimited AAirpass, which started at $250,000. Pass holders earned frequent flier miles on every trip and got lifetime memberships to the Admirals Club, American's VIP lounges. For an extra $150,000, they could buy a companion pass. Older fliers got discounts based on their age.
"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."
The unlimited passes were bought mostly by wealthy individuals, including baseball Hall-of-Famer Willie Mays, America's Cup skipper Dennis Conner and computer magnate Michael Dell....MUCH MORE
