“We thought originally it would be something that firms would buy for top employees…it soon became apparent the public was smarter than we were.”Bob Crandall, American Airlines CEO & Chairman 1985-1998
The early 1980’s were a time of difficulty for American Airlines. The Airline Deregulation Act of 1978, a law that was arguably quite beneficial to the consumer, was not quite as beneficial for American Airlines’ bottom line. The company posted a $76 million loss in the year 1980. In need of quick cash, the company established a program that allowed a passenger to buy a lifetime of unlimited first class flights via the AAirpass for a one time fee of $250,000 with a companion ticket available for $150,000. Adjusted for inflation, the 2019 price of these tickets would be $570,000.
Benefits of the AAirpass and notable buyers
The benefits of the pass not only included the unlimited first class flights but also earned the holders frequent flyer miles on every flight and lifetime entry to Admirals’ clubs and American VIP lounges. Early buyers included baseball hall of famer Willie Mays and businessman Michael Dell.
Mark Cuban has noted the AAirpass as his first big six figure splurge after he sold his first business MicroSolutions to Compuserve for an estimated $6 million. Cuban, of course, flies by private jet these days but has stated that purchasing the pass was one of the “…most fun, best business decisions I’ve ever made.” He lost count of how many trips he’d taken but stated he went “everywhere”.
Abuses and the phase out of the program
The vision of how the pass would be used by American Airlines did not end up matching with reality. Bob Crandall, AA’s CEO and Chairman from 1985 – 1998 has stated: “we thought originally it would be something that firms would buy for top employees…it soon became apparent the public was smarter than we were.”
In 1994, a Chicago man Mike Joyce won a $4.25 million settlement after a car accident. In one 25-day span, Joyce flew to London 16 times, a retail value of $125,000.
The Guardian recently profiled another notorious AAirpass holder Steve Rothstein, in a piece written by Rothstein’s own daughter, Caroline. Rothstein had both his own AAirpass and the guest pass that one could purchase for $150,000. Not only did he use the guest passes for friends and family, but also at times, Rothstein would give away the pass to strangers at random to join him on flights.
In 2007, American Airlines began reviewing the activity of AAirpass flyers. They found that Rothstein made 3,009 reservations within 4 years but cancelled up to 2,523 of them. In December 2008, as Rothstein prepared to board a flight, he was given a letter stating that his pass was terminated. Rothstein took AA to court but the court ruled that he did, in fact, violate the contract by booking guest flights under phony names such as “Bag Rothstein”.
Rothstein has justified his actions stating, according to Forbes, he: “often gave miles to people with good stories about why they needed to fly someplace. For example, I gave a man in Seattle a ticket to go to his father’s funeral. I gave many people tickets to visit ill family members. I don’t view that as philanthropy, I view that as good deeds.” Today, Mr. Rothstein has stated since having the passed revoked, he flies United.
The sales of unlimited AAirpass were discontinued for sale in 1994. The pass was briefly revived in the 2004 Neiman Marcus holiday catalog for a cost of $3 million but no passes were sold. It is estimated that 28 of the passes were sold in total and barring the cases of abuse, it can be assumed that some of those elite 28 are still enjoying the perks today.
The AAirpass, now known simply as just “Airpass”, still exists as an elite American Airlines program today that includes upgrade perks and VIP privileges but certainly not unlimited first class flights. It just goes to show that some deals truly are once in a lifetime.