"Among those who benefit from the generous travel arrangements are AMR's outside directors, their spouses and dependent children. According to its proxy filing, AMR provides travel to directors and their families and pays the taxes that the perks generate. The company accounts for these perks at cost. Last year, these costs were over a quarter-million dollars. In the last five years, the costs totaled $1.4 billion."

--I don't understand this figure at all- it cost $250,000 last year, but $1.4 billion over the past 5 years? Does that mean it cost $1,399,750,000 over 4 years, but then just $250,000 last year?

--I'm fairly certain these programs are a profit center for the airlines, and that is before you consider the following:

1. Airlines purchase their labor in labor markets
2. Cash is the primary form of compensation
3. If you cut cash compensation below a certain amount, some of your labor will leave.
4. If you can supply your employees with a benefit that allows you to cut wages (or forestall wage increase) more than the cost to you of the benefit, you increase your profitibility by offering the benefit
5. Buddy pass programs have a minimal, if any, cost to the airline
6. Buddy pass programs are valued by the employess, and allow the airlines to cut wages by far more than the cost of the benefit

One might respond that airline workers' wages are already above-market due to unions, etc., but that ignores how many airline jobs are nonunion at this point (including management--they are also paid less due to this benefit), and also ignores the fact that even union jobs are subject to the labor market-- note the difficulties the airlines are having attracting entry level mechanics.