The $250,000 American Airlines Pass That Led to a $21 Million Loss.
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American Airlines terminated Steven Rothstein's 1987 unlimited AAirpass in 2008 after he took over 10,000 flights, costing the airline an estimated $21 million.
Key Takeaways
- •American Airlines sold the original unlimited AAirpass for $250,000 in 1981, discontinuing sales in 1994 due to financial losses.
- •Steven Rothstein's pass, purchased in 1987, resulted in an estimated $21 million loss for the airline over two decades of use.
- •The pass was terminated in 2008 after American Airlines alleged contract violations, specifically fraudulent booking practices like using fake names.
The unlimited first-class travel pass was a unique concept. American Airlines (https://www.aa.com) launched the AAirpass program in 1981. The goal was to inject quick cash into the financially struggling airline. A lifetime pass cost $250,000 at the time. An optional AAirpass companion ticket cost an extra $150,000.
Only about 66 unlimited passes were sold before sales ended in 1994. This exclusive group included several prominent business figures. The program quickly became a significant airline financial liability.
The Steven Rothstein Case
Steven Rothstein, a Chicago investment banker, purchased his unlimited first-class travel pass in 1987. He paid approximately $250,000 for the lifetime membership. Rothstein later added the companion pass for $150,000.
Over two decades, Rothstein became one of the world's most prolific flyers. He reportedly took over 10,000 flights using the Steven Rothstein AAirpass. His travel included hundreds of trips to London and dozens to Australia. He often flew multiple times a day.
This high volume of travel proved extremely costly to the carrier. Rothstein's flights and associated costs, including companion seats, cost the airline an estimated $21 million. This figure represents the revenue American Airlines lost by filling seats with a free pass holder.
Termination for Alleged Misuse
By 2007, American Airlines was investigating high-usage pass holders. The airline established a "revenue integrity unit" to review their activity. This unit targeted pass holders costing the company over $1 million annually.
Rothstein's lifetime unlimited flight pass was terminated on December 13, 2008. He was handed a letter at Chicago O'Hare International Airport (ORD). The airline cited fraudulent booking practices as the reason.
The specific allegations centered on speculative booking. Rothstein was accused of booking empty seats under fake names. This practice allegedly secured extra space or accumulated frequent flyer miles. Rothstein denied the allegations but a federal judge later ruled he had violated his contract.
Industry Impact and Lessons
The American Airlines AAirpass remains a cautionary tale in commercial aviation loyalty programs. The program's failure highlighted a critical flaw in open-ended contracts. The airline underestimated the potential for extreme passenger usage.
- Contract Risk: The case demonstrates the financial risks of poorly defined lifetime contracts.
- Revenue Integrity: It spurred airlines to invest heavily in airline revenue integrity teams. These teams now monitor booking patterns to prevent fraud and misuse.
- Program Evolution: The original unlimited AAirpass was replaced by a different, pre-paid fixed-fare product. This new model strictly limits airline financial liability. The Federal Aviation Administration (https://www.faa.gov) oversees general airline operations. The AAirpass saga, however, was a business decision.
American Airlines CEO Robert Crandall, who once praised Rothstein's investment, later admitted the program was flawed. He stated, "It soon became apparent that the public was smarter than we were." The incident serves as a historical benchmark. It shows the extreme lengths some passengers will go to maximize a deal. It also shows the lengths airlines will go to protect revenue.
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Written by Ujjwal Sukhwani
Aviation News Editor & Industry Analyst delivering clear coverage for a worldwide audience. Covers flight operations, safety regulations, and market trends with expert analysis.
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