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April 8, 2020 14 mins

In the go-go 80s and 90s, American Airlines offered the AAirpass, a lifetime pass for unlimited first class travel. It was an amazing deal, but AA didn’t predict just how much some travelers would use it. They played with fire, they got burned.

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Episode Transcript

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Speaker 1 (00:04):
Hey, and welcome to the short stuff. I'm Josh, there's Chuck.
Jerry is absent, but we're still making do We're muddling
through with short stuff. Like I said, I said it twice,
which was redundant, and as everyone knows, that's a huge
waste of time and short stuff. So we're gonna have
to cut out a few facts. That's right. But the
first thing we need to do is decide on what

(00:24):
we call this thing. Do you know what they called it?
Who's they? American Airlines? Oh? Like, like, is do you
pronounce both a's? I don't know, and I don't think so.
I think that was more just for looks, So it's
a air pass. No, I think it's just air pass. Well,

(00:44):
just so people don't think we're crazy, what we're talking
about is a program where American Airlines wanted to uh
and did in fact sell people lifetime tickets unlimited first
class travel. And they called it a a r P,
A S S. And I just don't know whether to
call it double a air pass or a a air

(01:05):
baths or a air baths. I like the way I
said it the most. It's got a little mustard on it. Yeah. Well,
we'll call it air pass, Okay, cool? So so yeah,
like I think about this for a second, unlimited first
class travel for the rest of your life. Anytime you
want to fly anywhere, you just show up, flash your card,

(01:28):
get on the plane. I think you had to book
first or whatever. But in addition to that, you also
had you got frequent Flyer miles as if you needed them,
that you would rack up with each flight. You also
had a lifetime membership to the Admiral's Club, which was
Triple M or American Airlines UM said their lounge or whatever.
I guess sky club is what you call it. But yeah, yeah,

(01:49):
they're lounges there v I P Lounge at the airports. UM.
So you can have a pretty cushy experience, you know
with this thing. The thing is is not everybody could
afford it. Um. There was a very expensive thing to
buy at the time and remained such as long as
they were selling it for until I think yeah, so,
I guess we should point out the reason they did

(02:11):
this was because there was a time in the nineteen
seventies in the early eighties where air travel was not
doing so great. The airlines were suffering in a lot
of ways. Uh, their revenues were way down, and they
said there was a Deregulation Act of nineteen seventy eight
and American Airlines actually posted a seventy six million dollar

(02:31):
loss in nineteen eighty. So they're like, we gotta do
something here. Why don't we see if there are some
rich people out there that would buy into this deal?
And there were, Yeah, I mean, rather than go borrow
at the market, like, interest rates were really really high,
so they made a lot of sense to just go
turn to consumers and say, hey, you want to basically

(02:52):
prepay for a lifetime of first class travel. And they
figured that probably like they could go to you know,
um really well healed firms to say, hey, you've got
some top employees who fly a lot, this actually would
probably make sense. And I think they were successful in
that in that respect. But some famous people bought it too.
Willie Mays had one, Mark Mark Cuban still has his.

(03:15):
He said it was the one of the best purchases
he's ever made. Um. Michael Dell, founder of Dell Computers,
had one. Um or still may um And ultimately twenty
eight people bought into this thing, which cost at at
the beginning when they started offering two hundred and fifty
thousand dollars, and then you could add a companion pass

(03:37):
for another hundred and fifty thousand dollars. Yeah, so let's
let's talk about the money for a minute. Um to
fifty plus one fifty is four hundred thousand dollars. That's
a lot of money, to be sure. But if you've
got some dough and you like to travel or have
to travel, it's a great deal. Yeah, it really is.

(03:58):
It's a fantastic deal, be because if you travel enough,
this thing's going to pay for itself potentially within just
a few years, depending on how much you travel, and
if you travel a lot, like you're a super traveler,
you could conceivably make this thing pay for itself within
a single year. Yeah. So that's the first offerers they
laid out there, two and fifty grand plus one fifty

(04:19):
for the companion. They realized, wow, we didn't charge enough.
So eight o nine years later they said, all right,
how about six hundred thousand dollars including the companion, So
that's an extra two grand. Then a nine and ninety
three they bumped it to one point zero one million. Yeah,
that extras was super important at that point. I think

(04:43):
they were. They must have been doing some really specific
math to come to that though, right I would. I
would guess though, like no one in the history of
the world has ever charged one point zero one million
dollars for anything. It's weird. Uh. And then I think
at the very end, and two, I can't believe this
lasted this long. And two thousand four their final offering

(05:05):
was in a Nieman Marcus catalog at three million bucks
plus two mill for your companion. Yeah. And in between
two thousand four they just stopped offering it all together.
But they trotted it out back one more time in
two thousand four for that Christmas catalog, but nobody bought it.
As far as I know, no one bought it, So
I think the number that I ran across, so there's

(05:26):
some really good articles on this. There's one by Zachary
Crockett on The Hustle. Uh. There's another one by Ken
Benzinger from the Los Angeles Times. And the number that
I saw is twenty eight. There's twenty eight people who
ever bought a air pass, a double a air pass?
How many to eight or I'm surprised it wasn't more,

(05:50):
to be Frank, I'm a little surprised too. And the
thing is that some of these people bought it, and
I think really didn't get their money it's worth out
of it. But then there were a couple of people,
there were a few people, a small handful, who got
so much of their money out of it that American
Airlines said, uh, we can't take this. Remember how we
said that you had a lifetime pass were we we
were going back on that deal. And I think we

(06:13):
should take a break and then we'll talk about those
guys right after this. Okay, let's do it. M M

(06:36):
all right, Chuck, Let's talk about Jacques Room and Stephen Rothstein. Yeah.
So these were a couple of people who became pretty
prominent in this whole. Almost called it a scam because
somehow it seems like it it's got a flavor to it.
For sure it does. So Stephen Rothstein, he bought his pass. Uh.
He was an investment banker for bear Stearns. Uh. And

(06:58):
then there was Jacques Room, like you said, and he
was a direct marketing catalog consultant. He actually took out
a loan, four thousand dollar loan at twelve percent interest
over five years to get his AN eighty nine. And
these guys, boy did they travel. Yeah. Yeah. They both
made fun of something that that part in um Up

(07:20):
in the Air where George Clooney gets congratulated for hitting
the ten million mile mark. They just both kind of
scoffed at it. They're like, we don't even remember when
we hit that mark. Yeah, they hit that by like
July of the first year. Basically, I think one of them.
I think Room has an estimated thirty eight million miles
traveled to his name, and Rothstein has about thirty million. Yeah,

(07:42):
that's a lot of miles. And you would think, like,
even if you like to travel, you can't go on
that many trips and like vacations and things. So and
you're kind of right, But here's what some some of
the things these guys were doing. Like Room was like,
you know what, I need a babysitter here in Dallas.
Uh So I'm gonna fly to Washington, d C. And

(08:04):
pick up my father in law, bring him back here
so he can babysit tonight and I'll just fly him
back afterwards. That's exactly what he would do. Yeah, he
once he once flew to London to get two tires
for his motorcycle because it was cheaper than paying for
the freight shipping. Let me see here, July two thousand four.
In one month, Rosteen flew eighteen times to places like Nova, Scotia, Miami, London,

(08:28):
Los Angeles, Maine, Fort Lauderdale, New York. Yeah, and so
like this was like flying for these guys was a lifestyle,
like it was part of their life. It was actually
kind of like the center of their life. They both
have families, but they both had families that knew that
they were going to be probably in a different country
just about every day of the week. It was just
what they did. And so American had not planned for

(08:52):
guys like this to buy the air pass. This was
not part of the original plan. UM. So when they
started to realize that Room and Stein were each each
costing them about a million dollars a year in travel,
they decided that they needed to find a way to
basically cancel their air passes. And so they got an

(09:13):
elite task force on this, the UM the Revenue Integrity Team,
and said, go find a way to get rid of
these guys passes. Yeah, because there are obviously rules, but
not enough because they were doing things and it wasn't
just them. There were other people in the program doing
things like booking multiple trips in case like their one

(09:33):
vacation didn't work out, or they changed their plans last minute,
they could just jet on over to Paris instead of Hawaii,
or I don't really like flying with anybody, so I'm
just gonna book my companion seat to be empty on
every single trip, exactly. Yeah, and again basically what I
would do, yes, right, what what a lot of people
would do. And they were definitely not the only ones

(09:53):
doing this, and from from you know, the rules that
A had, it was not against the rules. A didn't
like it because they couldn't sell that seat and they
you know, UM had trouble filling a seat when it
was you know, their extra flights were canceled at the
last minute, UM because these people didn't pay cancelation fees.
So but there there wasn't anything they could get them on.

(10:14):
The one that they went after, these guys four was
selling their extra companion pass and it turns out like
they both did. They both gave away their companion passes
to total strangers pretty frequently. UM, Room had a habit
of finding people who suffered from AIDS, HIV AIDS, and
this is back in like the eighties and nineties, um,
when it was a totally different jam. And he said,

(10:37):
you know, hey, let me let me fly with you
and you can go see your family for free. But
they also they it really is. They also definitely sold
them to Room made a hundred grand alone from just
one couple or one couple alone paid him that much
UM to shuttle them back and forth to Europe. So
they were both definitely making money off of this on

(10:59):
the side too, And that's what American went after him for. Yeah,
I mean it sounds like for that one couple he
was just acting as their de facto travel agent at
one point. Yeah, and almost travel agent slash escort too. Yeah,
I'll fly well because he kind of had to fly
with him, right, that's my understanding of it. Yeah, So
if you read some of these articles, you can read

(11:20):
from Caroline Rothstein, who was I believe his daughter, and
she said, you know what, like my dad gets a
bad rap um. Sure he sold some, but it's not
like he was out there getting rich off this, and
it's not like there was anything in the policy at all,
saying they couldn't do it because they got the first version,
which did didn't say anything about selling him. I guess

(11:42):
they didn't think ahead. And then later and further subsequent
contracts they pointed out that you couldn't do it. But
she was like, they didn't break any rules even no,
they didn't, and UM, so American just basically said, well,
we still say you're you're you're abusing your passes and
they terminated both of them, and so some law stuits,
lawsuits started going back and forth. Um, and then Americans

(12:04):
parent company filed bankruptcy and so from everything I could find,
those lawsuits are now still sitting out there in like
legal limbo. But neither man has their air pass anymore.
And so you might say, you know, oh boo, who
these guys made their money back many times over with
all the travel they did, and you know, they kind
of almost seemed like they took advantage of a a

(12:25):
and played them for chumps. But Caroline Rothstein, Stephen Rothstein's daughter, says, like,
my dad lived to travel, or lives to travel. I
believe he's still alive. Um, and he he was basically
lost his life when American took away his his air
pass and much the same for Jacques room to Like,

(12:45):
all that guy loved to do was travel. That was
what he loved to do, and that's why one of
the reasons he would travel so much. Yeah. I got
a couple of feelings about that. One is, you, you
make this deal with American Airlines, they should have honored
it for life. Yeah. But the other also is like,
these guys can still travel, they just gotta pay for it, right. Well, yeah,

(13:06):
it's true. No, for sure, It's not like they're like
not like right, I bet I bet they didn't fly
American Airlines ever again, though I would guess not. But yeah,
I just have the impression that was a very bitter
pill for both of them, too small to swallow, and
they both I think, feel like they were targeted because
they were among the least wealthy air pass holders, so
they made easy targets. But they were also probably among

(13:28):
the two that were the um using it far and
away the most too. So who knows, But as far
as I know, it's not really resolved legally, but I'm
guessing as far as American Airlines is concerned, it's done.
You got anything else I got nothing else. I've never
heard of this. It's super interesting. I love it. Uh.
If you want to go learn more about this, go

(13:51):
check out Zachary Crockett stuff. He as a writer I
don't know if he still has or not, but a
long time writer for Priceonomics and others, and he just
really does a great job of finding really interesting stuff
and writing about it. So UM, hats off to him,
Hats off to the l A Times and to Caroline
Rothstein for publishing all these great articles, and hats off

(14:12):
to you for listening to short stuff Audios. Stuff you
Should Know is a production of I Heart Radios How
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