Imagine paying $350k for unlimited flights forever, only for the airline to revoke it

[Locke]

Someone didnt do their homework on how long it would take to burn up that $350K. The price point by the Airline was stupid as was the leniency of the rules of the contract.

Either way though, in the case of this particular guy, he got his money's worth and more while the gravy train was still running.

[valo403]

Originally Posted by Locke

Someone didnt do their homework on how long it would take to burn up that $350K. The price point by the Airline was stupid as was the leniency of the rules of the contract.

Either way though, in the case of this particular guy, he got his money's worth and more while the gravy train was still running.

The funny thing is that the contract really wasn't lenient at all, American just seemed to not be bothered to actually police the use, and when they did catch it they didn't seem to care until 4 years ago. They basically had a clause that said they could terminate it for fraudulent use and that they got decide what fraudulent use meant, and yet the guy got away with booking seats for his bag for years.

[Table 5]

Originally Posted by fotze

That would be the part that would bother me as a shareholder of the company. That these massive losses were going unoticed for so long. what else are they no caring about?

You clearly don't fly American very often. The answer is everything.

[Locke]

Originally Posted by valo403

The funny thing is that the contract really wasn't lenient at all, American just seemed to not be bothered to actually police the use, and when they did catch it they didn't seem to care until 4 years ago. They basically had a clause that said they could terminate it for fraudulent use and that they got decide what fraudulent use meant, and yet the guy got away with booking seats for his bag for years.

Well, in that case they really only have themselves to blame. The whole thing is stupid to me. $350,000 sounds like a lot of money, but 'unlimited' airline use for someone who is retired and has the time could burn through that easily.

It seems to me that the airline was too busy chuckling to themselves over the sucker who bought their stupid 'lifetime pass' and counting their piles of gold coins to realize that he just turned around and started massively putting the screws to them.

[valo403]

Originally Posted by Locke

Well, in that case they really only have themselves to blame. The whole thing is stupid to me. $350,000 sounds like a lot of money, but 'unlimited' airline use for someone who is retired and has the time could burn through that easily.

It seems to me that the airline was too busy chuckling to themselves over the sucker who bought their stupid 'lifetime pass' and counting their piles of gold coins to realize that he just turned around and started massively putting the screws to them.

I think it's also a product of a different era. Flights were rarely packed full like they are now so AA probably felt like they weren't really giving anything away besides a seat that would have been empty anyways. Airlines in particular seemed to be run in an incredibly bizarre fashion until they were forced to attempt to be real businesses over the last few years.

[The Yen Man]

Originally Posted by valo403

I think it's also a product of a different era. Flights were rarely packed full like they are now so AA probably felt like they weren't really giving anything away besides a seat that would have been empty anyways. Airlines in particular seemed to be run in an incredibly bizarre fashion until they were forced to attempt to be real businesses over the last few years.

Yah, I can see them offering this at a time when they had excess capacity. The seat would have been empty anyways, so might as well try to sell it.

What they really screwed up on was lacking foresight in the cancelation issue. They should have put in the stipulation that any cancelled flight would mean the person has to pay the full price of the cancelled ticket.

[getbak]

The thing to keep in mind is the era in which these were introduced. The airline industry was heavily regulated by the US Government until 1978. Fares and routes were set by a federal regulator.

When the industry was deregulated, it allowed the airlines to rapidly expand their offerings. It also created a lot of competition that didn't really previously exist. One of things this led to was the creation of the airline frequent flyer programs to build loyalty, American and United introduced theirs within months of each other in 1981.

The best way to ensure customer loyalty was to provide the most flights and the most destinations, which required company expansion. The problem was that in the early 80s, the prime interest rate was nearly 20%. This made it very difficult to borrow the money they needed for expansion and hope to make it profitable.

By selling this pass, they were able to bring in some of the money they needed to fund their expansion plans, and all it cost was allowing the people who bought the passes to fly where they wanted, when they wanted.


If properly invested, the money they brought in from selling these passes should be able to generate enough revenue to more than pay for the extra cost of the passholders. As the story says, it's only a small percentage of the people who own these passes who have had them revoked due to abuse.

[Russic]

I would have booked an extra seat for every flight and cancel at the last minute just so I could have an empty seat next to me.

[Sliver]

Originally Posted by Russic

I would have booked an extra seat for every flight and cancel at the last minute just so I could have an empty seat next to me.

Apparently you didn't read the article. That's what one of the guys was doing. Booking a seat for Russic and another for Bag Russic, then cancelling the Bag Russic seat at the last minute.

[bizaro86]

Originally Posted by Russic

I would have booked an extra seat for every flight and cancel at the last minute just so I could have an empty seat next to me.

These are first class seats too, so the it's not like the guys not going to be able to get overhead bin space without an extra seat.