Three decades ago, 28 lucky bastards snagged the greatest travel deal in history, courtesy of American Airlines.
For a one-time fee of $250k ($560k in 2018 dollars), the “lifetime AAirpass” gave a buyer unlimited first-class travel for life. A companion pass could be purchased for an additional $150k.
Mark Cuban, an early AAirpasser, tells us it was “one of the best purchases [he’s] ever made.”
But the lifetime AAirpass had a fatal flaw: it was too good of a deal — and when American Airlines finally realized that, they set out to revoke the contracts of its top customers by any means necessary.
It was 1981, and American Airlines was in deep sh*t…
American was hit hard by the Airline Deregulation Act of 1978, which left them grappling with new competition, reduced ticket prices, and an evolving industry that threatened to sink them into irrelevancy.
The airline’s newly-elected president, Robert Crandall, was on a mission to “cut American down to the bone” and lead a massive expansion from the ground up.
American needed cash, but interest rates were at a record-high. So, they came up with a different plan: they’d raise capital from their own customer base by selling its wealthiest customers the “ultimate travel perk” — an unlimited first-class ticket for life. The cost: $250k.
“The idea was that firms would buy this for their top performers,” Crandall tells us over the phone. “But as usual, the public is way smarter than any corporation. People immediately figured out we’d made a mistake pricing-wise.”
Life with unlimited travel
Steve Rothstein, a Chicago investment banker, bought his AAirpass (plus companion pass) for a discounted rate of $383k in 1987.
“American Airlines contacted me and said that, based on the amount I traveled, the AAirpass would be a great purchase,” Rothstein tells us. “It was like a bond — but they paid me dividends in air travel instead of cash.”
Over the next 25 years, he proceeded to book more than 10k flights.
He took hundreds of trips to NYC, LA, and SF. He went to London — sometimes a dozen times per month. On occasion, he’d fly up to Ontario just for a sandwich.
In Texas, a direct marketing catalog consultant by the name of Jacques Vroom had the same idea.“
I had never bought anything for $400k in my life,” he tells us. “But I took out a 5-year 12% loan, because I thought it would give me a competitive advantage for life.”Between 1987 and 2012, Vroom flew 40m miles on the airline — including impromptu “jaunts” to Paris or London to have lunch with friends.
But like Rothstein, Vroom placed too much trust in the sanctity of the contract he’d signed. “They used the word ‘unlimited,’ and ‘lifetime,’” he says. “And then, the motherf*ckers took it all away.”
Yeahhh, about that promise…
Decades later, in 2007, American once again found itself in financial straits.The company’s “revenue integrity team” found that the top AAirpass users — Steve Rothstein and Jacques Vroom — were costing the airline $1m per year in taxes, fees, and lost revenue.
It didn’t take long for the airline to find reasons to revoke the duo’s passes: turns out, Rothstein had made 3k reservations in a span of 4 years and canceled 2.5k of them; Vroom was booking flights for strangers and allegedly accepting payment for tickets.
Neither of these practices was barred in the original contract, but American Airlines categorized them as “fraudulent activity,” and formed an elaborate operation to void the contracts.
In 2008, both men were cornered while boarding flights, stripped of their passes, and told they’d never fly on the airline again.
Rothstein and Vroom both filed lawsuits against American Airlines for the wrongful termination of their contracts — but they were outmatched by the airline’s “bazillion lawyers.” Then, American filed for Chapter 11 bankruptcy, catapulting the case into an indefinite legal limbo.
The corporation versus the “little” millionaire
Today, neither Rothstein nor Vroom has recovered his AAirpass. A third customer also had his pass revoked in 2008; the other 25, including Mark Cuban’s, remain valid.
Now a substitute teacher in Dallas, Vroom has a theory. “American was hurting, and went after the most vulnerable AAirpass holders to free up cash — people they knew couldn’t fight back,” he says.
American Airlines declined to comment on this theory, or the program in general.Rothstein’s a bit more conclusive about the whole thing: “I wish I’d never bought the thing,” he says.
On the walls of his New York office sits a 1998 letter from Robert Crandall, the ex-President of American Airlines: “You can count on us to… honor the deal, far into the future.”
Crandall has a different outlook on the situation: “I assume they were cheaters,” he tells us. “If they were cheaters, they deserved it.”