American Pulls Lifetime AAirpasses

[WhoozOn1st]

American's lifetime unlimited AAirpass backfires, with some users costing the airline far more than anticipated...

The frequent fliers who flew too much

"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.'"

 

[PRR 60]

Correcting the title, AA is not "pulling" the lifetime passes. They are cracking down on what they consider invalid use, including selling companion tickets, using dummy companion reservations to keep a seat open, and making duplicate bookings. Pass holders who have not, by AA's definition, abused the use of the passes are not being threatened with loss of the pass.

 

[WhoozOn1st]

They are cracking down on what they consider invalid use, including selling companion tickets, using dummy companion reservations to keep a seat open, and making duplicate bookings.

And those peoples' passes are indeed being pulled.

 

[PRR 60]

They are cracking down on what they consider invalid use, including selling companion tickets, using dummy companion reservations to keep a seat open, and making duplicate bookings.

And those peoples' passes are indeed being pulled.

At least AA is trying to pull the passes of the "abusers." At least one passholder is challenging that in court claiming that the actions now considered as "abuse" were not excluded by the original terms and conditions. I smell some sort of settlement that would allow passholders to continue to use the passes subject to some conditions of use.

I have to say that being able to travel first class anywhere, anytime, and as many times as one would like is a travel junkie's dream. I'd never be home.

 

[Old MM]

I don't know how to say this in a nice way. But the amount of scams that customers will try to pull, FAR FAR outweigh whatever real or perceived transgressionsk occur on the part of airline employees.

 

[Ryan]

How exactly is participating in a program within the rules a "scam"?

 

[Anderson]

Natural caveats apply: I'm not a lawyer and I don't have access to all the facts of the cases.

On the one hand, if there are documented abuses (such as selling companion tickets) that are (and were) clearly prohibited, I can see implementing restrictions. However, from the language in article it sounds like at the very least AA's employees were complicit in some of the "abuses" (mainly in telling the flyers how to carry them out). In particular, the "backup itinerary" issue shows up here. Also, it seems that AA tolerated this practice for years without a word after it was suggested by employees of the airline, and there was no attempt made to crack down on it (something that could have been done with some simple computer code), so I find myself rather lacking in sympathy for AA's complaints. If anything, on that particular front it would seem that AA had a de facto practice of tolerating or encouraging the bookings as a matter of customer service regardless of what the contract said...so if anything I would think there's an argument that AA in practice waived enforcement of some of the terms of the contract and is trying to take that back.

As it is, they even conceded that they had failed to maintain standards on their end (at the very least). Obviously, I don't have access to the contracts that were/may have been initially agreed to (or any amendments), but it looks to me like the initial contracts were written up by lazy lawyers and only tightened up after the fact. So in general, it looks like AA almost set themselves up for trouble with how they handled the program.

Banning it going forward is one thing, but revoking passes based on those behaviors when the company both seems to have tolerated and encouraged it and never indicated a change in policy to those passholders strikes me as acting in bad faith. If nothing else, I'd think that AA could have solved most of the problems by simply blocking out "impossible reservations" like Amtrak states is their policy to do (i.e. simply making it impossible for a passholder to book being on two different flights simultaneously).

Looking at the fact patterns presented, it also seems like AA may have offered sufficient inducement (a several-thousand-dollar first class airfare would qualify IMHO) to convince people to lie about paying for the tickets...something that probably ought to void any testimony they might give. Even if they had gotten testimony from those passengers, given what they did to try and get it if I were a judge/on a jury, I'd simply give it roughly zero credibility.

If American REALLY wants to pull the passes, I'd argue that at the very least they should have to refund a substantial share of the initial buy-in cost (if not all); with that said, if they're losing millions of dollars per year on these guys, forking over a lump sum of $500,000 or more to "buy out" the passes at most or all their initial value (or even their initial value plus interest) shouldn't be an issue to remove the continuing liability. Basically, handle it as a decision to breach the contract on their end. With some of these guys, AA would still come out ahead within a year or two even if they had to fork over multiples of the original pass cost. Would AA like that? No, and there would probably be haggling over what to pay for the passes that would get expensive on the lawyer-y side. But it would make sense, and it might even be doable under bankruptcy without nearly as much hassle.

 

[Anthony]

This was a very interesting article -- thanks for sharing!

 

[Braniff747SP]

I'm interested to see how the lawsuit will turn out, as it seems that re-sale was not explicitly banned at the time of purchase. The fate of the whole system, too, remains to be seen- with AA's Chapter 11 filing, they may try to cancel or limit the use of the AAirpass.

Now, what I'd give to have one of these... I'd be happy for the rest of my life. Unlimited F travel worldwide? I'd be on a plane every weekend.

 

[Anderson]

I'm interested to see how the lawsuit will turn out, as it seems that re-sale was not explicitly banned at the time of purchase. The fate of the whole system, too, remains to be seen- with AA's Chapter 11 filing, they may try to cancel or limit the use of the AAirpass.

Now, what I'd give to have one of these... I'd be happy for the rest of my life. Unlimited F travel worldwide? I'd be on a plane every weekend.

It just occurred to me that, with judicious planning and so forth, one could actually reduce one's living expenses by taking advantage of the pass enough.

By the way...your username stands out because Braniff is the only one of the Legacy carriers that I've never heard much about/never been familiar with.

 

[trainman74]

By the way...your username stands out because Braniff is the only one of the Legacy carriers that I've never heard much about/never been familiar with.

I remember flying through Dallas-Fort Worth in 1982 a couple months after the original Braniff had ceased operations -- a bunch of their planes were still parked in various places around the field. Quite a unique look, since their planes were painted in a rainbow of different colors.

 

[Devil's Advocate]

This was a very interesting article -- thanks for sharing!

Agreed.

I honestly had no idea these ever existed. My early fondness for the American Airlines of the late 1970's and early 1980's has long since been beaten into submission after years of once loyal service, but it's still an interesting concept to consider.

Braniff is the only one of the Legacy carriers that I've never heard much about/never been familiar with.

I'd beg to differ.

 

[WhoozOn1st]

This was a very interesting article -- thanks for sharing!

Agreed.

YVW, and obviously I thought so too.

A little L.A. Times reader feedback today (copy/pasted, names excised):

Re "The too-frequent fliers," May 6

Great article: Executives at American Airlines, too incompetent to walk and chew gum at the same time, made a boneheaded decision that ended up costing them big bucks. They decided to sell expensive, lifetime first-class passes, and people actually used them.

Solution? Simply renege on the deal; let the courts, in the fullness of time, sort it out.

It makes me wish we could volunteer to serve on juries if we could pick the case.

Pacific Palisades

 

[Anderson]

This was a very interesting article -- thanks for sharing!

Agreed.

YVW, and obviously I thought so too.

A little L.A. Times reader feedback today (copy/pasted, names excised):

Re "The too-frequent fliers," May 6

Great article: Executives at American Airlines, too incompetent to walk and chew gum at the same time, made a boneheaded decision that ended up costing them big bucks. They decided to sell expensive, lifetime first-class passes, and people actually used them.

Solution? Simply renege on the deal; let the courts, in the fullness of time, sort it out.

It makes me wish we could volunteer to serve on juries if we could pick the case.

Pacific Palisades

It's not so much the reneging that strikes me poorly (killing the deal and refunding the cash would have made sense), it's reneging without compensation. If AA wants out of the contract, then by all means they can get out with a refund (full, partial, with interest, or otherwise). They can breach with compensation...and if the case were to run long enough, it might just be cheaper to try and settle. However, I think AA just got too clever by half here.

Texas: Hey, we've been arguing about LCCs, not Legacy carriers. At least at one time, there was a big difference.

 

[Braniff747SP]

By the way...your username stands out because Braniff is the only one of the Legacy carriers that I've never heard much about/never been familiar with.

Heh... I'm only familiar with the legacy carriers of today (and the recent mergers, of course)... Most of the famous legacies -PA, BN, etc- were way before my time. The only one that I had a chance to fly on was TW, but I don't remember much about flying with them... They went out of business when I was five or so. I missed the great days of flying. (Along, naturally, with the great days of train travel.)