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The rise and fall of AAirpass
May 6, 2012 12:13 PM   Subscribe

The frequent fliers who flew too much. American Airlines said that for a single payment of $350,000, you could fly with them anywhere, first class, for the rest of your life. Why were they so surprised when a few people... well... did?
posted by Faint of Butt (103 comments total) 39 users marked this as a favorite

 
Jacques Vroom flies a helluva lot. Who could not see that coming?
posted by weapons-grade pandemonium at 12:25 PM on May 6, 2012 [22 favorites]


That promotion is bananas. I mean, for a very frequent first class flyer, that's what, one year's airfare?

It's pretty clear that they didn't put any thought into it at all. To wit:

Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs

Many years after??? Dude, next time, you might want to try doing the math before.
posted by Sys Rq at 12:26 PM on May 6, 2012 [26 favorites]


They exploited a vulnerability in the system that should have been patched years ago. Can't really hate them for it.
posted by Foci for Analysis at 12:27 PM on May 6, 2012 [1 favorite]


Well, I've pleased that they've decided to refund the purchase price to all those who bought the lifetime pass and then didn't fly enough to recoup the cost.

Oh they haven't? Well then f#ck 'em.
posted by leotrotsky at 12:28 PM on May 6, 2012 [43 favorites]


I had no idea you could buy lifetime passes. That's insane. All-you-can-eat deals only work because food is cheaper in bulk, the people that don't eat much are subsidizing the people that eat a lot, and there's a natural limit to how much a person can eat, period. It doesn't work if you're losing money on every single transaction! And you can't sell a seat that gets taken by someone else.

Holy shit, I hope they fired the MBA that thought this one up.
posted by Cool Papa Bell at 12:29 PM on May 6, 2012 [7 favorites]


Well done to Vroom and Rothstein — they loaned $350,000 to a struggling company in the 1980s and then extracted millions of dollars' worth of in-kind repayment over the next three decades. It's just predatory lending; nothing new here. The banks must have looked at these guys as examples when they started selling subprime loans.
posted by spitefulcrow at 12:31 PM on May 6, 2012 [37 favorites]


Really sounds like a case of a large corporation offering something and then changing the rules on those who took them up on the offer and then penalizing those customers after the fact, all because someone hadn't properly counted the beans before-hand.

Shitty behavior.
posted by hippybear at 12:32 PM on May 6, 2012 [26 favorites]


I like the creative names for the extra seats. Extra Lowe was evidently elbow room for frequent flier Peter Lowe, but the best was Bag Rothstein.
posted by TreeRooster at 12:34 PM on May 6, 2012 [3 favorites]


i love the bit about the guy who bought a pass after a cash settlement for a car crash. Makes me think just a regular guy who decided he'd want to be able to fly to Shanghai for a weekend on a whim. God, that would be so awesome. Even on a tight budget you could afford to visit all the great cities of the world for at least a day or two.
posted by skewed at 12:35 PM on May 6, 2012 [35 favorites]


Well done to Vroom and Rothstein — they loaned $350,000 to a struggling company in the 1980s and then extracted millions of dollars' worth of in-kind repayment over the next three decades. It's just predatory lending; nothing new here. The banks must have looked at these guys as examples when they started selling subprime loans.

It wasn't a loan. It was a payment for a promised service. They're hardly evil for expecting to receive what they paid for -- even if it is a loss for American Airlines.
posted by Sys Rq at 12:35 PM on May 6, 2012 [37 favorites]


I wanted to gush about how awesome the idea of one of these passes is, or discuss the overall topic of the article, but I am distracted by a detail: how can the representatives of a private company detain and interrogate someone in Britain? This is one of the documents the article links to describing it, saying that Mukharji was flagged as a "selectee passenger".
posted by XMLicious at 12:37 PM on May 6, 2012 [10 favorites]


Rothstein had loved flying since his years at Brown University in Rhode Island, where he would buy a $99 weekend pass on Mohawk Air and fly to Buffalo, N.Y., just for a sandwich.

He may have lived in RI, but he has a TX-sized carbon footprint!
posted by GenjiandProust at 12:37 PM on May 6, 2012 [1 favorite]


Well, the article does say they expected these passes to be used as corporate perks. They assumed the holders had a life - but apparently didn't consider that flying full-time was a life, of sorts. Before I read this article, I could not imagine people would fly that much, it's sort of crazy really. But yeah once it's established fact, yeah, obvious.
posted by stbalbach at 12:38 PM on May 6, 2012


leotrotsky: It doesn't sound like they are cancelling all AAir passes, just those of hte people who are obviously abusing the system, by booking twice as many flights as you actually take or by selling the tickets. Now, the fact that the rule against selling it wasn't brought in until after he bought his ticket is a bit sketchy, but provided he'd already gotten notice that you are not allowed to do that, fine by AAir for cancelling him.
posted by Canageek at 12:41 PM on May 6, 2012 [1 favorite]


The companion pass is the really stupid thing—evidently the initial version of the contracts didn't forbid selling the use of the companion pass at all.

Even if they'd assumed that people would have lives that didn't center around flying, they ought to have realized that the companion passes essentially enabled the pass-holders into resellers who don't have to pay for what they're selling, minus the initial investment.
posted by kenko at 12:41 PM on May 6, 2012 [5 favorites]


Now, the fact that the rule against selling it wasn't brought in until after he bought his ticket is a bit sketchy, but provided he'd already gotten notice that you are not allowed to do that

How could they give him notice that he's not allowed to do that? He has a contract that doesn't say he's not allowed to do that. IANAL but I'm pretty sure that one party to a contract can't just change its mind about what the other party's rights are.
posted by kenko at 12:42 PM on May 6, 2012 [16 favorites]


JetBlue ran a similar program (limited length, much cheaper) call 'All you can jet.' It, too, was discontinued.
posted by the man of twists and turns at 12:45 PM on May 6, 2012 [1 favorite]


How could they give him notice that he's not allowed to do that? He has a contract that doesn't say he's not allowed to do that. IANAL but I'm pretty sure that one party to a contract can't just change its mind about what the other party's rights are.

You obviously haven't read too many service contracts. There is always a paragraph stating that the company reserves the right to changes the terms and conditions of the contract at any time. I'd be shocked if there wasn't similar language in the AAirpass agreement.
posted by Thorzdad at 12:48 PM on May 6, 2012 [3 favorites]


This is now in the far distance past, but Metafilter Own's cortex took advantage of the JetBlue month of flight in 2009 to Meet Metafilter. And the announcement MetaTalk post.

In terms of AA, I've always wanted to be able to fly enough to justify even signing up for free frequent flier programs or the like. I kind of hope someone who has done this has the writing ability to document their experiences--all the better if it's someone who has had their program revoked as part of the AA price saving measure.

But more or less, it seems like AA didn't really approach it right. They should have, I guess, figured out how much they expected it would cost, and then approached an insurance company to insure each unlimited pass. Then it probably would have been priced at approximately the correct price (I'd guess more than most of them were sold for) and it wouldn't be AA out if a there were a few odd balls, it'd be the insurance company. Who I guess if they had miss judged, would go after AA...
posted by skynxnex at 12:57 PM on May 6, 2012 [2 favorites]


Just goes to show that big bureaucracies no matter how sophisticated will never beat the enterprising individual.
posted by quanti at 1:04 PM on May 6, 2012


The high road in this case is, of course, to discontinue the program and refund the money to all participants -regardless of how much of the service they used. The one time cost is well worth staunching the flow of money you're hemorrhaging due to the program. And also, of course, it's the price one pays for not thinking through one's own program, seeing as though these customers are only using the service that you promised and that they gladly paid for.

I'm glad to see that AACorp has instead decided a course of investigation, humiliation, and litigation. It further reinforces my worldview.
posted by jadayne at 1:14 PM on May 6, 2012 [6 favorites]


It's just predatory lending; nothing new here

Predatory lending requires a power and information imbalance; is it really your argument that American Airlines knows less about the economics of flying than your average first-class passenger knows about the subject? It would certainly explain recent events, but I'm not sure that outcome paints AA in as sympathetic a light as you intend.
posted by Inspector.Gadget at 1:15 PM on May 6, 2012 [9 favorites]


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.
Hah, short term profit, long term loss. Corporate thinking at it's best.
Well done to Vroom and Rothstein — they loaned $350,000 to a struggling company in the 1980s and then extracted millions of dollars' worth of in-kind repayment over the next three decades. It's just predatory lending; nothing new here.
That's ridiculous. $350,000 invested in Apple in 1980 would be worth $54 million today. Invested in a dow jones index fund and you'd have about $5 million, today, I think.

Like any investment, there's a risk. AA was struggling and they could have gone out of business - that would have rendered the tickets worthless in just a few years.
posted by delmoi at 1:21 PM on May 6, 2012 [17 favorites]


I had no idea you could buy lifetime passes. That's insane. All-you-can-eat deals only work because food is cheaper in bulk, the people that don't eat much are subsidizing the people that eat a lot, and there's a natural limit to how much a person can eat, period. It doesn't work if you're losing money on every single transaction! And you can't sell a seat that gets taken by someone else.
They don't lose money on every transaction. There are two reasons why this could be a pretty sweet deal for AA: 1) It costs money to fly the plane, regardless of whether or not anyone is in the seats. If the plane isn't full, these guys don't really add to the cost, except perhaps the cost of food, but don't you have to pay for that anyway in first class?

The second way they save money: People often buy services they don't use. There are probably lots of people who bought these things, don't use them too often, perhaps even less then the annual interest from those $350k sums had they been invested properly.
posted by delmoi at 1:26 PM on May 6, 2012 [2 favorites]


Vroom, a former mail-order catalog consultant, used his AAirpass to attend all his son's college football games in Maine. He built up so many frequent flier miles that he'd give them away, often to AIDS sufferers so they could visit family. Crew members knew him by name.
What a horrible person!
posted by delmoi at 1:28 PM on May 6, 2012 [10 favorites]


jadayne writes "The high road in this case is, of course, to discontinue the program and refund the money to all participants -regardless of how much of the service they used. The one time cost is well worth staunching the flow of money you're hemorrhaging due to the program."

That assumes the other purchasers aren't making AA a butt load of money. Even a 2% return on 600,000 is 12 grand a year and the tickets really only cost AA more than a nominal amount if all the 1st class seats on that flight are sold out. Your average lifetime ticket holder probably makes AA money.
posted by Mitheral at 1:30 PM on May 6, 2012


Let's not miss the element of charm and grace offered up by AA here. They didn't meet with these people and say "We think you are violating the contract, let's see if we can avoid any legal unpleasantness in fair manner." No, let's instead slam the door summarily in their face in an airport.
posted by tyllwin at 1:32 PM on May 6, 2012 [17 favorites]


Also at least some of the lifetime pass holders are going to drop dead before they even travel the nominal face value of the flights they've prepurchased. I'm fairly certain AA doesn't refund the lifetime pass purchase if the buyer gets hit by a bus on the way to the airport to board their first flight.
posted by Mitheral at 1:34 PM on May 6, 2012


I think some people are misreading this article. Very few people are losing their passes, and the only ones presented in the article do seem to have been abusing (legally or not) the system.

So... hooray for lawsuits and contract enforcement etc., but there doesn't seem to be a lot going on here.
posted by Tell Me No Lies at 1:39 PM on May 6, 2012


Actually, it seems like Vroom's "crime" is being too generous with his companion ticket. He gave lots of free flights to lots of random people he didn't know, but why wouldn't you?

They actually detained and interrogated people he was scheduled to fly with, demanding that they 'confess' to crimes:
Checking Vroom's bookings for first-timers, Cade came across Auyon Mukharji, a recent college graduate abroad on a music scholarship. He was scheduled to fly from London to Nashville with Vroom on July 30, 2008.

Working with airline security, Cade hatched a plan to confront Mukharji at London's Heathrow Airport, challenging him to admit he had paid Vroom.

"Mukharji appears to be naive, without financial wherewithal, and most probably very anxious to return 'home,'" American's head of global investigations wrote in an email.

At check-in, American agents detained Mukharji and escorted him to a private office. A former New York police detective working in American security offered a free ticket to Nashville if he'd confess to giving Vroom money.

But Mukharji insisted he hadn't, and American ultimately released him and gave him a coach ticket home. He could not be reached for comment. ...

Inside Heathrow, Vroom headed for the VIP lounge, where an American employee handed him a letter and said he could never again fly on the airline.
Even though they failed to get a confession, they still gave him the letter, basically daring him to sue them. Before the lawsuit they found another traveling companion, and froze their frequent flier account unless they 'confessed' to paying Vroom. That failed too.

Then they used the discovery process during the lawsuit to go through his financial records and see if he'd been paid by anyone he flew with. There had been some payments, but there's no proof that there was ever a tit for tat agreement. They could be gifts, they could be consulting services, who knows.

AA's "investigators" aren't so much looking for actual evidence of wrongdoing, but actually looking for excuses to screw these people over.
posted by delmoi at 1:40 PM on May 6, 2012 [44 favorites]


I know a guy who, through an airline employee family connection, could fly anywhere in the country for free, with no notice. It was amazing. We could be talking about Chicago pizza one day, and the next day he'd fly to Chicago, buy a pizza, and bring it back. Or just randomly visit a friend in Europe.

It was an interesting glimpse into how money could really, truly change your life. I don't particularly care for fancy houses or expensive cars or whatever; I have no real interest in working hard to get those things. But the ability to show up at the airport and hop on any plane? I would kill for that.
posted by miyabo at 1:45 PM on May 6, 2012 [13 favorites]


Wow. I was prepared to be an apologist for AA here, but the tactics they used are completely disgusting. I do believe I will be cashing my miles in for a $22,000 ticket before I stop flying AA entirely.

I do have to wonder what possesses people to be led by an airline's security team into a small room, though?
posted by wierdo at 1:48 PM on May 6, 2012 [1 favorite]


"Last summer, an Illinois federal judge ruled that Rothstein had violated the contract by booking empty seats under phony names, including Bag Rothstein."

Not to be an apologist for either party, but the whole scam of booking the extra seat for "Bag", "Extra", or whatever, could have easily been foiled and prevented by the airline.

How exactly does one use a phantom boarding pass, post-9/11?
posted by JoeZydeco at 1:51 PM on May 6, 2012 [2 favorites]


This is now in the far distance past, but Metafilter Own's cortex took advantage of the JetBlue month of flight in 2009 to Meet Metafilter.

And that was one month, and I didn't even come close to maximizing the amount of flying I did, and still that was a lot of flying. But it wasn't first class, which I'm sure would have made a pretty significant difference to the amount of flying fatigue I managed to rack up. But, yeah, based on that I think I can safely say there's a dispositional thing here for the folks who can really make a years-long habit of flying every few days for pleasure.
posted by cortex at 1:52 PM on May 6, 2012


Mike Joyce of Chicago bought his in 1994 after winning a $4.25-million settlement after a car accident.

In one 25-day span this year, Joyce flew round trip to London 16 times, flights that would retail for more than $125,000. He didn't pay a dime.


Why??? Just because he can?
posted by Bwithh at 1:53 PM on May 6, 2012


Why not? If I had a lifetime pass which let me fly (even coach) anytime I wanted without extra payment, do you think I'd spend many weekends at home doing housework and commenting on MetaFilter?
posted by hippybear at 1:55 PM on May 6, 2012 [25 favorites]


The high road in this case is, of course, to discontinue the program and refund the money to all participants -regardless of how much of the service they used.

One does not necessarily have the right to get out of one's contractual undertakings simply by giving the other fellow a refund.
posted by foursentences at 1:56 PM on May 6, 2012 [5 favorites]


Why not?

Well that's not every weekend, it's more than four times a week. Maybe he really likes airplane food?
posted by XMLicious at 1:59 PM on May 6, 2012


@hippybear
Yeah, but 16 Chicago-London round trips in just 25 days? I guess he likes sleeping on the plane?
posted by Bwithh at 2:00 PM on May 6, 2012


Why??? Just because he can?

I wondered about that too, but figured he was just using the flight as a place to sleep instead of a hotel. Not to mention, he was also getting frequent flier miles with each trip (that part boggles me--I would have assumed you wouldn't also get frequent flier miles when using the pass).
posted by carrienation at 2:01 PM on May 6, 2012 [5 favorites]


JoeZydeco writes "How exactly does one use a phantom boarding pass, post-9/11?"

You don't, but neither does anyone else. And unless AA manages to find a last minute 1st class fare for that seat the seat next to you is then empty.
posted by Mitheral at 2:02 PM on May 6, 2012 [1 favorite]


I know this is only a minor part of the article, but I've actually booked an extra 'empty' first class seat as "Bag MyLastName' before. It was for work and I was traveling with priceless hardware, and I suppose in that case I payed full price for both tickets. But my impression was that it was a rather common practice, so the ticket-holders, travel agents, and gate agents may not have been aware that it violated any contract.

Not that it's an excuse, but I think it points to the fact that AA was looking for technicalities to get out of an ultimately poorly-conceived funds-raising scheme.
posted by muddgirl at 2:03 PM on May 6, 2012 [9 favorites]


But my impression was that it was a rather common practice, so the ticket-holders, travel agents, and gate agents may not have been aware that it violated any contract.

A common practice that, according to the article, agents instructed the passholders in!
posted by kenko at 2:04 PM on May 6, 2012 [5 favorites]


chicago --> london is about 8 hours. 16, round trips is 256 hours, which is about 11 days.
posted by cupcake1337 at 2:04 PM on May 6, 2012 [1 favorite]


Bwithh writes "Yeah, but 16 Chicago-London round trips in just 25 days? I guess he likes sleeping on the plane?"

If one were unemployed I'd bet a person could live quite well in 1st class lounges and first class flights without ever leaving an airport for months at a time.
posted by Mitheral at 2:05 PM on May 6, 2012 [14 favorites]


And unless AA manages to find a last minute 1st class fare for that seat the seat next to you is then empty.

No, typically the airlines will upgrade a paying business class or coach class passenger for whatever reason to first class, and then give the now-empty seat to a standby passenger. They try to fill the plane with as many people as possible every time, and they'd rather upgrade a paying passenger to a higher class and then give away the other seat to someone who is doing standby so standby passengers don't get the impression that they are worth business or first class seats.
posted by hippybear at 2:06 PM on May 6, 2012 [1 favorite]


How exactly does one use a phantom boarding pass, post-9/11?

In my case, I presented both passes to the gate agent. I said, "This one is for me, this one is for my hardware case." Both were scanned, I went to my seat, and then showed both passes again to the concerned flight attendant who wanted me to gate-check the case.

VIP fliers with a smaller carry-on probably skip that second step.

Really, considering airlines are making fat passengers purchase second seats, phantom boarding passes are clearly not a big deal if they can get people to pay full price. They only call phantom tickets fraudulent if it's booked as a companion ticket.
posted by muddgirl at 2:09 PM on May 6, 2012 [6 favorites]


wierdo: "I do have to wonder what possesses people to be led by an airline's security team into a small room, though?"
The fact that people over the last ten years have become accustomed to the idea that if you don't do exactly as you're told while in an airport, you're probably facing jail time?
posted by brokkr at 2:10 PM on May 6, 2012 [13 favorites]


standby passengers don't get the impression that they are worth business or first class seats.

I've flown standby a lot, and I had a bad experience when my family was seated in first, and me in coach, because I wasn't following the dress code. Now I always list for first (because if first is full, you get pushed down the list into coach, but not the other way around), and I always dress the part.

I've also seen them offering $100+ vouchers to get off, and asking for a $75 fee to upgrade to first - on the same flight. The airline industry is strange, and the numbers don't seem to correlate to reality.
posted by the man of twists and turns at 2:15 PM on May 6, 2012 [2 favorites]


The high road in this case is, of course, to discontinue the program and refund the money to all participants -regardless of how much of the service they used.

One does not necessarily have the right to get out of one's contractual undertakings simply by giving the other fellow a refund.

The high road is to say "Look, we think you're being a barracks lawyer here to push the limits of this program. That's OK, we're not angry about it, but we have a business to run, and we can rules-lawyer too. With actual lawyers. Many of them. So, let's give you your cash back and call it even, or we can all lawyer up and let a judge decide it, cause that's how we resolve business disputes in a civilized society."

Note that AA did not do this.
posted by tyllwin at 2:15 PM on May 6, 2012 [7 favorites]


A article from 2004 on Mr Vroom
posted by pixie at 2:21 PM on May 6, 2012 [4 favorites]


I feel sorry for these folks getting their passes busted and revoked (ugh, disgusting tactics, indeed), but how much fun is it to fly nowadays compared to when they started? The fun has to have been fizzling in the last decade. I somehow doubt they were just breezing through the airport every time.
posted by jenfullmoon at 2:33 PM on May 6, 2012


Seven hours in the air gives you a dose of ionising radiation of around 0.03 mSv, or the same as a body X-ray.

Just saying.
posted by Devonian at 2:38 PM on May 6, 2012 [2 favorites]


It is actually substantially nicer to go through most airports with a first class ticket or even as a companion with someone who is gold elite. You get to skip the security line and in a lot of cases get your own security scan; while you do have to take your shoes off & etc. you still get special treatment. You get to board first even if you're the non-upgraded companion on row 32. Your luggage comes out of the carousel first (at least at most airports). It adds up.
posted by localroger at 2:42 PM on May 6, 2012 [1 favorite]


hippybear: "I'd spend many weekends at home doing housework and commenting on MetaFilter?"

I'd spend my weekends sitting on airplanes with the money to spare for GoGo since the ticket was "free" and commenting on MetaFilter.
posted by wierdo at 2:42 PM on May 6, 2012 [1 favorite]


I upgraded to MeFi first class. I'm not sure it's worth it, but the drinks are comped.
posted by found missing at 2:57 PM on May 6, 2012 [4 favorites]


Man, I think I'd pay $350K never to have to fly on American Airlines again.
posted by spitbull at 3:05 PM on May 6, 2012 [12 favorites]


I got a free return flight from London to New York with Hoover's 1992 promotion, which required you buy only £100 worth of the company's products to be given airline tickets worth much, much more. Enough other people took advantage of this ill-conceived offer to cost Hoover a fortune, and when they finally realised their mistake, they simply cheated all the later applicants.

"The court cases went on until 1998. After the fiasco had cost the company almost £50 million, the British division of Hoover was sold to the Italian manufacturer Candy. Urban Explorers at the company's abandoned and derelict factory in Wales, have unearthed several hundred boxes of complaints letters about the free flights, still in the basement and stamped with various legal marks." - Wikipedia.
posted by Paul Slade at 3:11 PM on May 6, 2012 [13 favorites]


You obviously haven't read too many service contracts. There is always a paragraph stating that the company reserves the right to changes the terms and conditions of the contract at any time. I'd be shocked if there wasn't similar language in the AAirpass agreement.

Actually, we don't need to speculate about this. The contract is linked in the LA Times article. Looks to me like AA reserved the right to terminate the agreement (paragraph 18, section d) and provide their customers a prorated refund, which looks like it would be zero dollars given the age of these passes. I don't know if this is unenforceable or if AA just decided not to unilaterally cancel the deals due to PR (which would appear to be an ill-advised decision after this article) or what.
posted by dixiecupdrinking at 3:20 PM on May 6, 2012 [3 favorites]


It is actually substantially nicer to go through most airports with a first class ticket or even as a companion with someone who is gold elite.

Eh, I've flown enough over the past two years to land in a mid-tier frequent flyer rewards category and have been bumped up to first a handful of times. (On a couple of occasions there has been an email notification up to two weeks before the flight, which I find surprisingly bold on their part--I guess first-class seats aren't often bought on short notice?) If the airport isn't especially busy, the priority security line can take as long as the regular one; boarding first means avoiding lines but also means spending more time in your seat before the flight. And perhaps this is because my experience is limited to domestic flights on Delta, but I feel like the greatest perk is really the food service--sure, placemats and hot towels are nice, but you're otherwise still going through the claustrophobic, plasticky experience of air travel.
posted by psoas at 3:32 PM on May 6, 2012


you're otherwise still going through the claustrophobic, plasticky experience of air travel

Well sure, there's not really a completely pleasant way to cram 200 people in an aluminum tube for 8 hours. But when you start the 8 hours in Atlanta and end it in Paris, it can be quite worthwhile.
posted by localroger at 3:37 PM on May 6, 2012 [3 favorites]


And perhaps this is because my experience is limited to domestic flights on Delta, but I feel like the greatest perk is really the food service--sure, placemats and hot towels are nice, but you're otherwise still going through the claustrophobic, plasticky experience of air travel.

"First Class" on domestic flights is basically economy class with bigger seats.

First Class on international (especially on foreign carriers) is a different beast entirely.
I have never flown AA First Class overseas, but international carrier First can include a separate (not priority but completely separate) security line, a lounge only for your section, pretty good food for a plane, a plane with a stand-up club section, a shower or massage when you get off the plane
Toss in towncar service and you essentially never have to interact with the hoi polloi at all.

To paraphrase, "If you have the means, I highly recommend it"
posted by madajb at 4:14 PM on May 6, 2012 [3 favorites]


"First Class" on domestic flights is basically economy class with bigger seats.
First Class on international (especially on foreign carriers) is a different beast entirely.


Indeed, indeed. First class domestic Delta is not even in the same ballpark as First on British Airways to London. Actually, the coach on BA looked better.
posted by bongo_x at 4:48 PM on May 6, 2012


The last time I flew to Europe, it was on the dutch airline, w/ a coach class ticket. The cabin was lovely compared to domestic planes. It wasn't long before I discovered that almost the entire plane was filled with oil rig workers from Norway on their way home. The crew upgraded me to first class, because they were concerned that I would be uncomfortable. I still spent most of the flight back there, drinking and learning to swear in new languages. Oh, Norwegians, how I adore you.
posted by dejah420 at 5:04 PM on May 6, 2012 [7 favorites]


you're otherwise still going through the claustrophobic, plasticky experience of air travel

In Up In the Air George Clooney's character notches up 10 million miles. The LA Times points out that Vroom had clocked up 37 million as of 2008 (he got his unlimited card in 1994 and has been adding to his total with AA since 1981). At 500 miles an hour that comes to nearly 10 continuous years of his life in an aircraft. A lot of plasticy air.

Since first class travel is normally 11 times the cost of economy. My spot check on the cost of a first class American Airlines ticket from LAX to JFK - at today's prices - comes to a fee of about $1 per mile. It is tricky to work out what Vroom's flights might have cost the company in terms of lost seat space - not least because American Airlines do not release information about their average first class occupancy rates - but his 1994 $350,000 pass would be worth about half a million today. Set against this Vroom must now have enjoyed flights with a retail value of several tens of millions - and that is before adding in the cost of his companions or his air miles. In an extreme case I guess the potential losses to the company could equal or exceed those faced by Hoover in in Paul Slades link above.
posted by rongorongo at 5:15 PM on May 6, 2012


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

obvious bullshit.

was there a single flight that was cancelled due to these passes? a single seat left unsold? The answer, if you spend even a second of consideration on it, is no. It did not cost a single dollar more to the airline than what was already spent. Did it affect revenue? Somewhat, sure. But missed revenue is not a "cost."
posted by mwhybark at 5:20 PM on May 6, 2012 [3 favorites]


Companies will cease to honor limitless service agreements once they notice that it's costing them more than the initial purchase price.

Reminds me of the unlimited ISP deals from the nineties, and the unlimited cell phone data plans from only a few years ago.
posted by ceribus peribus at 5:36 PM on May 6, 2012 [3 favorites]


Definite missed revenue is a cost -- if they didn't sell a seat because Vroom took it, then they lost thousands of dollars. But if there were any first class seats free, then all they lost was the additional fuel required to carry him.

Well, okay, they might have lost some first-class upgrade fares if: A) there were more economy passengers than there were first-class seats, and B) the passengers would upgrade only as a bloc, or not at all. (like, say, a family that wouldn't upgrade unless there were four first-class seats free.)

I do not think this amounts to millions, however. :-)
posted by Malor at 5:39 PM on May 6, 2012


Oops, also: any food/drinks they served him, and if there was private car service, that would probably also have been a cost. But this is unlikely to reach millions. :)
posted by Malor at 5:40 PM on May 6, 2012


obvious bullshit ... missed revenue is not a "cost."

Well, yes and no. For one thing, it's a cost according to GAAP because there's impact on depreciated assets and amortized assets.

But to be specific ... let's assume for the moment that a flier of this type never, ever takes a seat that could have been sold to someone else (which can't possibly be true). Among other things...

* Fuel costs are based on weight, and weight is partially calculated by the number of passengers on board a plane (you try to avoid fully loading the plane if you don't have to).
* Staffing is determined by the number of passengers.
* Insurance costs are based on passengers.
* Frequent-flyer miles granted to this passenger represent a separate outlay. Frequent-flyer miles are granted to encourage customer retention. Well, you're not retaining this customer because he's already not going anywhere.

More importantly, this is a loss in terms of opportunity costs. Our imaginary flier that uses this service conceivably would have flown fly anyway (e.g. For real business) at least some of the time). Granting these services mean you can't bill him for anything, ever. It's a loss of an entirely different kind.

Give you another analogy -- imagine a wireless carrier fighting the piracy of cloned cell phones. The marginal cost of each call is near zero. But it cost money to build the network in the first place, and it's an asset that depreciates over time. Failure to bill for services is actually a big deal.

This was just a poorly conceived business plan all around, and the passengers took 'em for all they were worth.
posted by Cool Papa Bell at 5:51 PM on May 6, 2012 [1 favorite]


From the 2004 article: Tears well up in Vroom’s eyes as he tells me about one guy, an American living in London, who simply wanted to come back to the US to die, but could not afford to. Vroom flew over to London and brought him back.
posted by ColdChef at 6:12 PM on May 6, 2012 [3 favorites]


And that was one month, and I didn't even come close to maximizing the amount of flying I did, and still that was a lot of flying. But it wasn't first class, which I'm sure would have made a pretty significant difference to the amount of flying fatigue I managed to rack up.

I also flew the jetBlue All You Can Jet deal and it was great. The best parts about it (besides visiting 9 cities across 3 countries in 4 weeks) was the ability to book one-way tickets without financial penalty and discovering the amazing jetBlue terminal at JFK. I would fly jetBlue more often if they added more direct routes from Chicago. They definitely earned my attention and the loyalty of a lot of new customers with the deal.
posted by Bunglegirl at 6:28 PM on May 6, 2012


Why not? If I had a lifetime pass which let me fly (even coach) anytime I wanted without extra payment, do you think I'd spend many weekends at home doing housework and commenting on MetaFilter?

To fly coach, they should be paying me. Coach has all the pleasure of a visit to a one-stop proctologist and dental surgeon. Unlimited first class, though? I'd be eating dinner in Europe at least once a month, and in South America even more often.
posted by Forktine at 6:36 PM on May 6, 2012 [4 favorites]


miyabo: But the ability to show up at the airport and hop on any plane? I would kill for that.

That was basically the deal with FedEx's jump seat program, in which you could ride in the spare (jump) seat of their cargo planes, wherever they were going, if they weren't needed for business purposes. (Tom Hanks' character is flying in one when the plane crashes in Cast Away.) There were all sorts of conditions, some of them weird (men couldn't have beards, supposedly because the oxygen masks wouldn't seal over them but the rumor was that Fred Smith, the founder of FedEx and a military veteran, just didn't like them) and of course you could get bumped literally at the last minute by someone on company business, but in theory a part-time cargo handler could fly to Paris or Tokyo for nothing. Amazingly, this still continued after the Auburn Calloway near-disaster, but I'd heard that it had been suspended after 9/11--no idea if it was ever reinstated, or at least for non-business traveling employees.
posted by Halloween Jack at 6:41 PM on May 6, 2012 [3 favorites]


More importantly, this is a loss in terms of opportunity costs. Our imaginary flier that uses this service conceivably would have flown fly anyway (e.g. For real business) at least some of the time). Granting these services mean you can't bill him for anything, ever. It's a loss of an entirely different kind.
That's like saying you can't sell someone a CD if they already bought the same CD through a discount club :P
posted by delmoi at 6:41 PM on May 6, 2012


Well, it is like that, actually, only in this case, you're both the record company AND the discount club.

Or, it's like you can't sell someone a hamburger because you surgically removed their sense of hunger. You know, they would have bought your hamburger, but you "fixed" them.
posted by Cool Papa Bell at 7:53 PM on May 6, 2012


AA could have taken the high road on this and dealt with it more tactfully, retaining them as clients who would have gone on to buy more flights from them in the future. However, they acted like idiots, garnered negative publicity and have alienated not just their targets but a bunch of other frequent fliers. Way to go AA/AMR.
posted by arcticseal at 8:18 PM on May 6, 2012


Ah, the good old find-a-quick-way-to-make-money-and-leave-with-a-bonus-before-the-other-shoe-drops trick.
posted by ckape at 10:01 PM on May 6, 2012


Failure to bill for services is actually a big deal.

CPB, thanks for the thoughtful and genreous response, allowing for the miscellanous actual incedental costs I was disregarding. I actually discarded a half-baked elaborate effort to compare these passes to a hypothetical lifetime season ticket to an MLB park in the original post.

I'm still not convinced that these passes cost the vendor anything in terms of lost revenue opportunities for first class travel. They just mispriced the sales unit, and I do grant that taken on a per-use basis, the revenue generated may have been less than the expense incurred. However, cancellation of the passes in no way decreases that expense, and in many of the trips the users incurred, the trips would not have been first class.

Therefore the only reason to cancel the passes is to maintain the artificially inflated pricing of the top-tier sales unit, which has a fixed one-time use inventory. Like Diamond Club seats.

;)
posted by mwhybark at 10:17 PM on May 6, 2012


Cool Papa Bell: "* Fuel costs are based on weight, and weight is partially calculated by the number of passengers on board a plane (you try to avoid fully loading the plane if you don't have to).
* Staffing is determined by the number of passengers.
"

No to both of these. The incremental cost of fuel for a passenger is in the pennies. There's a reason why the airlines are willing to let last minute weekend deals go for next to nothing. Staffing, at least on the aircraft, is fixed based on the number of seats in the plane. If it leaves, it leaves with the required number of cabin crew. (essentially one for each 50 seats or fraction thereof)

Most of the time, at least for domestic flights, I suspect the only real cost to AA is the lost opportunity to give another Executive Platinum on a paid coach fare a free upgrade to domestic First and a few bucks in passenger facilities charges they may have to pay the airport (I'm not sure if zero dollar fares incur PFCs or not). Internationally, the vast majority of the time, the only thing they'll be losing out on is the opportunity to allow someone to burn frequent flier miles. In that case they probably do pay landing taxes for each passenger to someone.

Airlines have very high fixed cost per flight, so the incremental cost of carrying a passenger is very low except to destinations with very high landing taxes. Even then we're talking one to two hundred dollars, not thousands of dollars.
posted by wierdo at 10:28 PM on May 6, 2012 [1 favorite]


And I should note that my bitter skepicism and corporate hate is due, specifically, to now-defunct car-sharing firm FlexCar unilaterally abrogating my lifetime membership agreement due to poor business accounting on their part prior to the ZipCar merger.

In essence, if you see a "lifetime" offer from business X, business X is lying, and I certainly do think business X should be punished for such actions.
posted by mwhybark at 10:29 PM on May 6, 2012 [3 favorites]


There's a reason why the airlines are willing to let last minute weekend deals go for next to nothing.

It's because those are unsold tickets, not because "flying the plane is free, so what the hell, why not?" More revenue is a good thing. And if the marginal cost is pennies, how come you never see a last-minute ticket go for five bucks?

And if you think weight doesn't impact fuel ... First of all, you've never flown a plane ... But why are they charging for bags? Because they just woke up one morning and decided to be evil? Why weren't they evil fifty years ago? Were execs less greedy back in the day? Or did fuel get more expensive?
posted by Cool Papa Bell at 10:42 PM on May 6, 2012


But why are they charging for bags? Because they just woke up one morning and decided to be evil?

Bags used to be factored in to ticket price. They probably still are, but the airlines have figured out they can charge a captive audience whatever they want for services they used to include in the price of the ticket. Same with snacks -- food used to be included, now you have to pay $8 for the airline equivalent of a Snackables crackers and cheese pack.

So yes, they woke up one morning and decided to be evil. Because they can, and travelers are hostage to paying the costs or taking much less rapid forms of travel.
posted by hippybear at 10:48 PM on May 6, 2012 [5 favorites]


CPB, last minute price floors are in order to protect the perceived value of the tickets. Really really. My dad helped set up airlines in the 1960s and we still family-argue airline economics all the time. He knows a shitload more than me, and one consistent point of post-price-cap airline design he has gotten through my head is that job one is FILL THE SEATS.

Additionally, overbooking is the result of this policy and biz goal, so that's where last-minute overbook flight deferral offers come from, and there, I think, is your last-minute five dollar ticket.

Finally, as late as the mid-1970s, airlines were both directly subsidized by governmental entities (BOAC, Air France, Swissair) in many cases and often price controlled. So the supply of seats was a lot lower and the consumer cost was defrayed. However, the last time I looked at this, the data seemed to show that a coach ticket to destination Z in 1970 cost considerably more as a percentage of average income than it has since, both domestically and internationally. Which my dad enjoys pointing out to my socialist ass.
posted by mwhybark at 10:55 PM on May 6, 2012 [1 favorite]


the data seemed to show that a coach ticket to destination Z in 1970 cost considerably more as a percentage of average income than it has since, both domestically and internationally. Which my dad enjoys pointing out to my socialist ass.

And in the mean time pilot pay has plummeted through the floor.

Remember kids: "Market inefficiencies" is just code for "well paying jobs", "retirement benefits", "job security" and "good working conditions".
posted by Talez at 11:52 PM on May 6, 2012 [9 favorites]


Interesting conversation about different ways of calculating the costs of the program to AA. It seems like the only real way of making these sound significant for the airline is to account in terms of the difference between the marketed cost of first class travel (a dollar per mile roughly) and the incremental cost to the passenger after,say, half a million miles:nothing. Given that first class seats seldom sell out, that they have such big margins as compared with economy and that the incremental costs of carrying a passenger in this way are modest - the actual number of lifetime pass miles a passenger would need to fly to give AA a concrete loss are probably a lot higher than were taken by the average lifetime pass passenger.
posted by rongorongo at 12:59 AM on May 7, 2012


It's because those are unsold tickets, not because "flying the plane is free, so what the hell, why not?" More revenue is a good thing. And if the marginal cost is pennies, how come you never see a last-minute ticket go for five bucks?
Right, but kicking these guys out of the program won't sell more tickets. In fact, they will sell less, as people are rightly disgusted by AA's actions here.
But why are they charging for bags? Because they just woke up one morning and decided to be evil? Why weren't they evil fifty years ago?
It's because -- IIRC -- years ago government regulation kept ticket prices high, so airlines had to compete on customer service. Now, customers buy the cheapest tickets possible, and airlines nickel and dime people to make up for it. Additionally, airlines can put packages and cargo in storage space and make money that way.

Did he cost them money? I suppose he must have. The cost of adding an additional passenger on most jet flights might not be that much. But in some cases we have to assume that they did sell out first class. If it happens in 5% of flights, and tickets are $8k, then that's $8,000*0.05 = $400 a trip. Which is I guess not that much. So I'm not sure where the million dollars a year rate comes from.

Talking about lost ticket sales makes no sense really, AA already sold the tickets. To Vroom. Now they just want to undo the deal. In the end, they'll probably sell even fewer tickets, as people who might commonly fly first class get pissed off about it and fly with someone else.

Anyway, the thing is: why didn't AA just go to these guys and just say "hey, look, we're having problems with money now, would you mind reducing your travel, or taking business class, taking fewer guests, fewer international flights, and so on? You're actually costing us about a million dollars a year"

Btw, fuel costs? Really? A 474's max takeoff weight is 975,000 pounds. That's 4,000 times as much as a 243.75 pound human. So adding one more would only increase the weight by 0.025%. I'm seeing different figures for how much the fuel costs are, and it probably doesn't scale linearly in reality – but the estimates I'm seeing are anywhere from $5k/h to $50k/hr in fuel costs fly the plane. Take the high end, and assume linear scaling, and you're looking at maybe $12.5 or so extra. Round it up to $15 maybe if the guy weighs more then 243.75. Hell, halve the weight and it's only $30 an hour. And if the lower end $5k is more realistic, he'd just be adding less then $3 an hour.

In fact, before 9/11 pilots were allowed to let other pilots or I think even just their friends fly for free in the cabin with them.
It's because those are unsold tickets, not because "flying the plane is free, so what the hell, why not?" More revenue is a good thing. And if the marginal cost is pennies, how come you never see a last-minute ticket go for five bucks?
I remember hearing about a UK company called Ryanair that would sell unsold seat inventory really cheaply. Right now they have £10-£20 pound tickets listed on their website. I seem to recall a story about them trying to branch out into the movie theater business and doing the same thing, but movie studios wouldn't let 'em.
posted by delmoi at 1:35 AM on May 7, 2012


Cool Papa Bell: "It's because those are unsold tickets, not because "flying the plane is free, so what the hell, why not?" More revenue is a good thing. And if the marginal cost is pennies, how come you never see a last-minute ticket go for five bucks?

And if you think weight doesn't impact fuel ... First of all, you've never flown a plane ... But why are they charging for bags?
"

I don't think anyone has said that flying the plane is free. I distinctly recall recently stating that it's actually quite expensive. Unfortunately, most of the cost does not vary with passenger load. This is why airlines that chronically fly their planes 75% full go belly up PDQ.

Bag charges are there just because they can. Airliners weigh a lot, especially the kind that actually have first class.

The only real error was allowing an unlimited lifetime AAirpass member to accumulate miles other than for figuring elite status. Miles can be redeemed for things that actually cost the airline significant money.
posted by wierdo at 2:21 AM on May 7, 2012 [1 favorite]


In fact, before 9/11 pilots were allowed to let other pilots or I think even just their friends fly for free in the cabin with them.

I can confirm this is possible even now in Indian airlines, both in the flag-carrier, Air India and its subsidiaries, and in private airlines such as Jet Airways and SpiceJet. I've flown myself.
posted by the cydonian at 2:26 AM on May 7, 2012 [1 favorite]


That they - and their companions - got frequent flier miles is the icing on the cake. How many first class tickets would 20 million frequent flier miles buy? Maybe that's why the Chicago guy flew round trip to London so many times. You eat and drink for free then come home with 15000 additional miles (when you count the 100% multiplier for status).

You could gift your family and friends tickets with your miles, to wherever they wanted to go, and never run out. If you ever got low, just fly first class to Paris for the weekend a few times and top it up.
posted by AgentRocket at 9:18 AM on May 7, 2012


Which is I guess not that much. So I'm not sure where the million dollars a year rate comes from.

Hollywood accounting. For each flight Vroom booked they probably took the most expensive ticket they offered for that seat on that flight. So if the last minute price on that seat was $20K and the 6 month ahead price was $3500 they went with the 20K irregardless of when the seat was booked.
posted by Mitheral at 9:45 AM on May 7, 2012 [2 favorites]


I'm pretty sure those lifetime LiveJournal accounts are still good!
posted by frecklefaerie at 10:05 AM on May 7, 2012 [2 favorites]


Once upon a time, one could buy an around-the-world ticket, with a one-year expiry date, from some airlines - Delta included, IIRC. Once the trip was started, you could fly anywhere on as many flights as you wanted, as long as each flight ended further around the globe than the take-off (all-East-bound or all-West-bound).

It was always my dream to do that for my honeymoon. "Where shall we go today, sweetie? Cairo or Nairobi?"

9/11 shit all over that one, too.
posted by IAmBroom at 10:17 AM on May 7, 2012 [1 favorite]


Ultimately, AA screwed up, it's true - both in not thinking through the long-term implications of their program, and in the inept, foolish attempt to shut it down re: Vroom, etc.

But after reading the article, I am a bit peeved at Vroom and Co. It seems that they clearly did violate some of the rules.

If I had purchased one of those lifer passes, I would have understood that it was for ME. Not to gift to other folks for money or even goodwill or charity.

In spirit, if not legal fact.
posted by davidmsc at 10:37 AM on May 7, 2012


In spirit, if not legal fact.

davidmsc, contract law does not concern itself with "spirit, if not legal fact". AA is free to make frowny faces at those-who-break-the-spirit-of-the-contract-as-AA-meant-it, but that's about it.
posted by IAmBroom at 11:01 AM on May 7, 2012


got frequent flier miles is the icing on the cake
AA could legally fix this part of the deal by simply inflating frequent flier miles by a factor of 1000, except for AAirpass holders. So normal people get 1 million miles for taking a 1,000 mile flight, but AAirpass holders only get the contractually-agreed 1,000. And you need 40 million miles for a free ticket. This would be amusing.
posted by miyabo at 11:06 AM on May 7, 2012 [1 favorite]


9/11 shit all over that one, too.

No, they still exist. A close friend of mine is saving up his airline miles for two RTW tickets in a couple of years.

In spirit, if not legal fact.

Clearly some did break the guidelines in legal fact, but I really do dispute the idea that they broke the spirit of the lifetime pass. The "spirit" of the lifetime pass was for the AA CEO to raise a bunch of money right away to artificially prop up their balance sheet at the cost of future earnings. Unsurprisingly, that's exactly what happened.
posted by muddgirl at 12:30 PM on May 7, 2012 [3 favorites]


I suppose that RTW legs have to be booked in advance, but I was under the impression that it was always like that. Changing day-of-travel is free but changing the route takes a fee nowadays.
posted by muddgirl at 12:48 PM on May 7, 2012


THANK YOU, muddgirl! Looks like they now cost between $3-10k, and when I first heard about them in the 90s I was expecting to pay $3k, so - not bad! Except that they're severely more limited now... but still workable! (A 72-hr advance reservation is required for Star Alliance now, but that's not too bad. Changing a stopover is only $125.)
posted by IAmBroom at 2:15 PM on May 7, 2012


Yes, I'm not sure whether I'm going to end up spending my miles on a round trip to the Maldives or an RTW. I suppose the RTW would be an overall better experience compared to sitting in a tiki hut over a blue lagoon for a week.
posted by wierdo at 2:45 PM on May 7, 2012


I wouldn't bother with a RTW unless I had a minimum of a month to spend. Even that is really too short.
posted by Tell Me No Lies at 3:44 PM on May 7, 2012


There's no way I'm going to sit in a tiki hut for more than a week. That doesn't mean I'm limited to a week of travel, thankfully.
posted by wierdo at 11:24 PM on May 7, 2012


In my experience, it's worked out cheaper to buy one-way tickets when I'm travel RTW. I always check the One World and Star Alliance RTW tickets, but they have a lot of rules and require flying through a lot of hubs. Anyone looking into those tickets should do a lot of research before they buy an expensive, inflexible ticket that limits a route.
posted by Bunglegirl at 8:20 PM on May 8, 2012


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