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Squawks & HeadlinesThe "unlimited" frequent fliers who flew too much

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The "unlimited" frequent fliers who flew too much

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Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers. (www.latimes.com) More...

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dbaker
Daniel Baker 7
Interesting story, not surprising that AA would want to get out of this, particularly since there seems to be some (spirit, not letter of law) abuse here. However, the claims that it's costing them $1M/yr are ridiculous. In particular, if the AAirpass holders are upgrading already-ticketed passengers at the gate, that first class seat would've likely gone out empty (or at best case, a mileage/swu) upgrade.

Had this investigation not taken place, I wonder how the bankruptcy and possible acquisition would affect the AAirpass.
mk882004
Matt Kladder 0
How can you abuse an unlimited pass to fly??
bovineone
Jeff Lawson 5
They were also alleged to be selling use of their free companion seat by arranging to transport people for a fee, which AA explicitly prohibited in the later years of this program.
MimosaDrive
MimosaDrive 4
Hilarious story. It highlights how the short-term, quick-buck mentality in some companies comes back to bite them. I wonder how much they spent investigating their blunder.
WALLACE24
WALLACE24 4
Today I wouldn't buy an unlimited anything from any corporation. If they don't go back on their word first, they will probably go bankrupt.
trickshotdonna
Donna Knight 3
That story has given me a good giggle! Typical big business, wanting to make a fast buck without thinking of the consequences! What I don't get though, is how they think it's cost them so much money? Surely those 'planes would have been going out whether the unlimited passengers were on them or not? And if they end the contract don't they have to compenstae the people who bought unlimited for life tickets in good faith?
WALLACE24
WALLACE24 1
They make it look like it is costing them big money by having the accounting dept twist the numbers. Same as on the financial statement.
mpradel
Marcus Pradel 5
I can't even start to feel sorry for the Airline that found it reasonable to cash out a few easy Million from it's wealthy clients. Probably went directly to Bonus for the excecutive team that pulled it off..

I don't feel sorry for these people if those life-benefits would go away in the BK process.

But to turn this into a Airline witch-hunt on the few people that took what is now perceived as 'excessive' advantage of the system, is going back on your word. A contract is a contract!
WALLACE24
WALLACE24 2
Since none of us actually have seen the different contracts involved it's hard to say where the fault is in each circumstance. It is clear that AA made some bad deals and now they want out. If the contract says they are not allowed to sell companion seats it will also contain the remedy if they are actually "caught" doing so. Caught to me means they can prove money exchanged hands.If the early contracts didn't contain that language then then the holders are in the airline business!!!!lol
we0209
I love it. These guys were brilliant!
PacAero
As a former airline employee (fare construction for tickets), I remember when AA started all this nonsense. It has done nothing but cost airlines money since its inception in the early 80's. If all of these airlines had kept pace with increasing costs, instead of keeping ticket prices at an obscenely low level, they might not all be so broke. Today's airfare from LAX to JFK on Delta is $368 - in 1980 it was $198.
rjpaiz
Rodolfo Paiz 2
I ready the story differently. It does not say that the AAirpass tickets are being canceled or not honored... it says that those passengers who abused their privileges, broke the rules, and committed fraud by selling tickets, are being shown the door.

Yes, the article is somewhat sensationalist in tone. But if I were American and I fully intended to honor -- or even continue offering -- those unlimited AAirpasses, I'd still want to make sure that the people who bought them were using them ethically and not as a source of income. The airline's behavior, as described in the article, does not seem unreasonable to me.
devsfan
ken young 1
Here's the deal. If fares were adjusted for inflation There are several ways to calculate adjusted for inflation..
Here they are $2.52 using the Consumer Price Index
$2.22 using the GDP deflator
$3.07 using the value of consumer bundle
$2.43 using the unskilled wage
$3.74 using the nominal GDP per capita
$4.95 using the relative share of GDP
So let's first use the mean...Which would be $1 in 1980 is $2.57 today.
$198 X 2.57 = $508..
If we avg out all the indexes, we get 3.26 times 198 =$645.48
Normally the consumer price index or the market basket of approx 85 items is used to adjust for inflation in comparative pricing.
I find the market basket to be inaccurate. The CPI seems to work best.
It is really not low fares that have hurt the carriers. it is high labor and high fuel costs. Labor cost can be controlled by eliminating unions and their above market rates. Labor is the single highest cost of doing business.
we0209
I would agree - if those folks are caught "abusing" them (i.e., selling the companion ticket), then they should lose their privlidges.
dyertribe2000
Stephen Dyer 1
You make an excellent point Donna Knight. I suppose it would depend on how many of the seats that these frequent fliers took up that AA could have sold to other passengers, though I very much doubt that all the trips that these guys made were all full. As you say "Typical big business, wanting to make a fast buck without thinking of the consequences" If I were in these guys shoes, I wouldn't be very amused if my ticket were revoked.
sparkie624
sparkie624 1
LOL, with USAir taking over... Alot more tht that will be scrutinized.....
ltcjra
ltcjra 1
A very interesting read. Thanks for posting.
FedExCargoPilot
why don't they just become airline pilots? Do they log their flights in a logbook?
AccessAir
AccessAir 1
Funny, isnt American Airlines responsible for creating the first frequent flyer programs in the first place???
yattwood
Yaca Attwood 1
I am not all that sympathetic to American Airlines, though it seems that some holders of these passes acted unethically...if an average group of airline passengers is surveyed, there are significant variations in the prices paid for tickets, variations that the airlines have profited from in the past....
devsfan
ken young 1
All of the Legacy carriers are looking under every desk,in every wastebasket, in every closet to slash costs. Not one of them has a management team that I would trust with the remote control to my TV.
AccessAir
AccessAir 1
I log all my passenger flights in my log books...

frumpy16
Jason Shaw -1
(Duplicate Squawk Submitted)

The frequent fliers who flew too much

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

http://www.chicagotribune.com/business/la-fi-0506-golden-ticket-20120506,0,7893020.story