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American Airlines bankruptcy disrupts efforts to ground frequent flyers who flew too much

Every frequent flyer’s fantasy, a gold plated life time unlimited first class travel pass, ceased to be offered by American Airlines in 1994, when the price had risen to $US 1.01 million, but until it was interrupted by its current bankruptcy, the carrier had been trying to ‘terminate’ those canny enough to have bought and used them for many millions of dollars worth of benefits ever since.

There is a cracker of a story on this in the Chicago Tribune. An American contact who sent us the link said that when the schemes were dreamed up by senior management, they were known as ‘the Neutron bomb’ by less senior managers.

I have a faint recollection of something not quite like this being on offer in Qantas way back, but haven’t asked the question since I gather the airline is too preoccupied with terminating itself than going after aging privileged individuals who may have gamed any such arrangement in the past.

As a teaser, the Chicago Tribune expose reveals that one current unlimited AA pass holder used it to fly 16 return trips to London worth $125,000 in a 25 day period recently.

Others who had also purchased companion passes were also selling free tickets to strangers and acquaintances as income, which incredibly, was not specifically prohibited in the terms and conditions of the scheme.

These passes incidentally generated full class of travel points on all unlimited travel made on them, so the metaphorical reference to them as the ‘Neutron Bomb’ might have more accurately described them as like plutonium fast breeder cycle reactors.

You could turn yourself into a one person boutique business selling companion fares, and accumulating reward flights from all free flights that could also be assigned, for a price, to anyone you declared to be a companion, a term that was also not defined in the fine print.

It’s doubtful that any airline today would do anything like mint gold passes.

But it must cut deep when people like those interviewed for this story take up semi-permanent residence in first class as jetrosexuals, on a constant roster of visiting family, attending sporting events anywhere, flying 1000 miles to try a hamburger in a quaint country town, or following operatic and theatrical or concert performances world wide, at whim.

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  • 1
    chpowell
    Posted May 7, 2012 at 3:05 pm | Permalink

    Read this on the w/e. Amazing:
    1) Product design: moral hazard inherent in any ‘all you can eat’ offer. Yet this was open ended! No ‘time boxing’ of offer.
    2) This product was hatched in the early days of ‘yield management’ as exemplified in AA’s SABRE system, yet..
    3) There was no policing of it for years?
    3a) The Robert Crandall ‘schmooze’ letter to one of the pass holders was dated 1998!
    4) The way the airline reacted and went after customers (whose conduct of their accounts COULD have been monitored, going back to the mid-’80′s, had AMR not been asleep at the switch) says it all about customer service in the 21stC. Caveat emptor!

  • 2
    Zarathrusta
    Posted May 7, 2012 at 3:06 pm | Permalink

    I’m surprised one of our Australian Airlines hasn’t come up with this idea and sold them only to their own board members for $1.

  • 3
    drsmithy
    Posted May 8, 2012 at 7:26 pm | Permalink

    As a teaser, the Chicago Tribune expose reveals that one current unlimited AA pass holder used it to fly 16 return trips to London worth $125,000 in a 25 day period recently.

    Numbers like this need to be taken with a serious grain of salt. Unless said person was displacing what would otherwise be full-fare paying passengers, then the travel isn’t worth anything close to that much.

    If a seat would otherwise be empty, a first class passenger costs the airline bugger all more to fly than an economy class passenger does.

    I’m not an expert, but the only remotely similar QANTAS deal I can think of is that one used to be able to buy lifetime QANTAS Club membership for something on the order of $5k. I’m still kicking myself for not taking that up, even though back when it was discontinued (early 2000s IIRC) it was a serious chunk of change for me.

  • 4
    ag0044
    Posted May 8, 2012 at 9:55 pm | Permalink

    News’ spin on this story is that the buyers are “bleeding the airline dry”: http://www.news.com.au/travel/news/living-it-up-with-first-class-flights-for-life/story-e6frfq80-1226349926441 (or: http://tinyurl.com/7wech2z)

    drsmithy, I’m one of those who bought lifetime Qantas Pub, oops sorry, CLUB membership. At the time – post-separation, and well into the nasty property carve-up – I reckoned that if I only got a year or two, I’d never renew. So I got Life. My father said I was crazy, my two best friends clearly indicated I was crazy. A decade later, my father now expects lounge access, and my two mates are members. Oh, $3500 still is, to me, a serious chunk of cash. I’ve never regretted it, and loved every second of it!

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