best

Apparently the plan was changed several times--so likely that several different rules applied.

SFO777

Now that they are in BK, there is no reason that, just like union contracts, they shouldn't be able to void them.

EsquireFlyer

I'm not sure if all contracts are the same in this regard, such that if union contracts can be invalidated than all contracts can be voided.

Otherwise, AA could also just void all tickets of any kind issued pre-BK and make everyone pay again, since those are also contracts, whose performance would cost AA money.

IMO the accountants cited in the article saying that the customers "cost" the company $1 million / yr failed to mention one not-so-minor fact, which is that these customers gave AA $300K-$500K in a lump sum, no questions asked (back in the '80s, when money was still worth something!) and that the supposed $1 million "cost" (which is estimated, whereas the prices they paid back in the 80s are indisputable fact) is in exchange for this payment the customers made.

People shouldn't be violating the program rules, but aside from the people (if any) who are doing that, viewing these passengers as an annoying "liability" once AA has grabbed their money and run is inappropriate. And I expect that kind of short-sighted behavior from UACO these days, but for AA it seems odd.

If someone paid $5 for a state lottery ticket, happened to pick all the right numbers, and won a $30 million jackpot, to be paid out over 30 years, do you think it would be reasonable, fair, or appropriate for the state government to say in year 3, "Yikes, this $5 customer is costing us $1 million every year! Let's try and find some kind of loophole or clause that we can use to cut off future payments and save ourselves the expense." And imagine if they started withholding tax refunds from the lottery winner's neighbors and friends, offering to release the refunds in exchange for a signed statement that the lottery winner was engaging in money laundering or some other kind of financial crime, to give the state an excuse to cut off the payments--that really would be insane.

nrr

In the tread http://www.flyertalk.com/forum/ameri...ight=rothstein the case re: Rothstein was discussed.

FullFare

And, indeed, the mind truly does boggle. Although I insist I didn't do mileage runs, I had many trips during Jan '2012 SFO-ORD---taking my spouse with me in every case. Do the math. They had a double EQM promo after the BK filing and the promo that was fighting off Virgin added another doubling. That, with my companion miles adding on made for a lot of miles.

And my mind does continue to boggle, although not terminally. I did hit EXP before Feb 27 after taking spouse to EYW to spoil the grandkids. I'd rather not thing about much of this stuff anymore, except to say that I hope AA continues to keep honoring it.

As much as anything, AAirpass really helped to game the system during full fare promos, because all AAirpass flying was booked as full fare flights. Hence, why I couldn't resist the handle for FT that I chose.

FWAAA

You're not a Creditors Rights lawyer, are you?

Labor agreements are actually tougher to reject than other contracts, as section 1113 adds some conditions to rejection of labor agreements not present under section 365 for every other executory contract.

AA could have rejected all executory contracts, including all lifetime AAirpasses and lifetime Admirals Club memberships.

Whether such action would have been wise or advisable is another matter - but section 365 gives debtors wide latitude to reject nearly every contract.

Actually, AA could have rejected each and every executory contract, such as tickets purchased in advance. Again, probably not a prudent thing to do if AA wanted to survive as a going concern. That's why AA sought and received permission on the first day to honor existing tickets, gift cards, vouchers, Admirals Club memberships and the like - doing so greatly enhanced the likelihood of surviving Ch 11 as a viable airline.

bbkenney

WHAT??? Exactly what did they do to earn the "shyster" term?
They paid their money, they earned the right to benefit in any way the deal allowed.

johnru36

I don't mind AA "policing" the program but some of their enforcement efforts really bother me:

"At check-in, American agents detained Mukharji and escorted him to a private office. A former New York police detective working in American security offered a free ticket to Nashville if he'd confess to giving Vroom money.
But Mukharji insisted he hadn't, and American ultimately released him and gave him a coach ticket home.... an American security agent called Sam Mulroy, a Dallas personal trainer who had been set to fly with Vroom to Europe, and told him his trip had been canceled. The agent promised a first-class ticket if he admitted to paying Vroom, according to company emails and correspondence.

When Mulroy refused, American froze his frequent flier account, offering to release it in exchange for details of payments,

more than a little heavy handed - to put it mildly....

elitetraveler

this bothered me a lot. i wonder how it would hold up in court

janetdoe

Or maybe they won't and I will get to take AAdvantage of it.

elitetraveler

Also, AA's claim that the passholders cost them over $ 1 million annually in lost revenue seems high - that would mean every week each pass holder was displacing $20,000 in First Class revenue for seats that would have been sold. With AA's inventory management tools it seems hard to believe.



"She pulled years of flight records for Rothstein and Vroom and calculated that each was costing American more than $1 million a year.

FWAAA

Doesn't seem too hard to believe:

Those 2,523 canceled first class seats no doubt cost AA some revenue, as well as cost some frequent fliers their upgrades. Additionally, consider this quote:

AA didn't say that Joyce was using a million dollars worth of flights per year like Rothstein and Vroom, but Joyce showed that it's certainly doable if you fly 16 round trips to LHR in one 25 day span.

What's an F fare to Sydney go for?

I'm confused by your reference to "AA's inventory management tools." What's the relevance? These are unlimited lifetime F AAirpasses, not capacity controlled award seats. Vroom, Rothstein, Joyce and the others enjoy last-seat availability (two seats if they book a companion).

Upgraded!

Plus you have to remember that these guys did pay something for each flight, since they had to pay for the initial pass. Not only that, but AA collected interest on at least some of that money over the years since presumably the price of the pass would have bought you a lot of first class tickets back when first issued.

Fly2Where

Airpass users qualify status by "POINTs", TEQM was calculate in MILES. Two different equations.

elitetraveler

If these fliers were many times booking the last two revenue F seats available AA was doing a lousy job with managing their inventory. They simply should have been holding back more inventory to sell. They knew they had these passes out there and they knew how they were being used.

Crandall says in the article the airline miscalculated when it sold the passes. It looks like a couple of the Pass holders broke the rules, and had their passes withdrawn. Beyond that, the airline gained capital when they needed it instead of borrowing at high interest rates. They are paying now. That was a choice they made.

The disingenuous part of the entire thing is they as recently as 2004 put the product on the market again, in the NM holiday catalogue. It was priced at $3 million for a single or $5 million with the companion pass. So AA management can '.....' all they want about how much these pass holders are costing out of one side of their mouths, and on the other, they are trying to sell them at a higher price. Seems a bit strange to me?