LA Times: The frequent fliers who flew too much [lifetime AAirpass withdrawn]
May 7, 2012, 1:22 pm
#76
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Six percent of a million is $60,000. Using IFC it's easily possible to spend that much on air fares; this is only about a half dozen TPAC/TATL in full J. Indeed, some domestic coach business travelers who purchase last minute tickets would spend more per year.
However, in addition to the loss of interest or other earnings on the million, one should account for the million being gone or spent down to zero at the end of the lifetime. Tax implications should also be considered in these calculations.
(response to post #73 above)
However, in addition to the loss of interest or other earnings on the million, one should account for the million being gone or spent down to zero at the end of the lifetime. Tax implications should also be considered in these calculations.
(response to post #73 above)
On the other hand, changing route networks and bankruptcy are certainly risk factors. Yet, having it would be an incentive to use it more.
It's hard to put a solid economic price on something like this.
May 7, 2012, 1:30 pm
#77
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It probably would not make sense for most of us FlyerTalkers, even if we had that kind of coin to spare. We're pretty good at gaming the system and ending up in F at a small fraction of the cost of a full F fare. Plus, for many of us, we get a kick out of winning at this game.
May 7, 2012, 1:38 pm
#78
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This sounds like an agreement that was not particularly wise on AA's part and now AA wants to wiggle out of it. On the flyers part, it sounds like these gentlemen are using this to their full AAdvantage and maybe then some.
AA would think a companion is a spouse, SO, family member or close friend not someone that you just met in the AC ten minutes ago or sat next to on a previous flight. However, there is the "spirit" of the contract and then the absolute terms. The "spirit" part of course is what people will argue about.
In an ordinary Court of law the judge would likely look solely at the terms of the contract. If the contract did not specify for example what a companion was then someone that you met 10 minutes ago in the check in line qualifies.
Of course, a bankruptcy court is a totally different animal. If AA can convince the Judge that the contracts are proving significant financial harm out the door the contracts could go.
Still, it would make me nervous about doing anything with AA that would be long term in nature.
AA would think a companion is a spouse, SO, family member or close friend not someone that you just met in the AC ten minutes ago or sat next to on a previous flight. However, there is the "spirit" of the contract and then the absolute terms. The "spirit" part of course is what people will argue about.
In an ordinary Court of law the judge would likely look solely at the terms of the contract. If the contract did not specify for example what a companion was then someone that you met 10 minutes ago in the check in line qualifies.
Of course, a bankruptcy court is a totally different animal. If AA can convince the Judge that the contracts are proving significant financial harm out the door the contracts could go.
Still, it would make me nervous about doing anything with AA that would be long term in nature.
May 7, 2012, 2:42 pm
#79
Join Date: Aug 2001
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I remember I was ticked off at the time and wrote the (then) head of customer operations (Tory Bruckheimer?---no relation to Hollywood Bruckheimers) and complained. The spirit of the AAirpass, particularly on AA's promotional brochure, was that the pax would be insulated against price increases---regardless of whether the airline's fuel costs, etc, went up. I've still got the brochures (vintage collectables now).
I didn't get anywhere at the time with Tory and AA and just sucked it up and moved on. Believe me, if they (AA) could charge more (like the BA fuel surcharges) these guys would. I went back and read my contract. Even the Texas lawyers (and they're tough) couldn't mess on that one (price of fuel).
Right now, I'm happy they're still honoring it.
May 7, 2012, 3:10 pm
#80
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Wow, has it already been three years since that lawsuit was filed? http://www.flyertalk.com/forum/ameri...ss-merged.html
That $250k in 1981 adjusted for inflation is $630k now, according to the U.S. Bureau of Labor Statistics's CPI Inflation Calculator.
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.
If they were going to offer something like this, they should have done a better job writing the contract for it.
And even when it became an issue for them, they should have just confronted the passengers and reached some kind of agreement with them to limit their activities.
And even when it became an issue for them, they should have just confronted the passengers and reached some kind of agreement with them to limit their activities.
The lengths AA went including trying to bribe witnesses is simply unethical and no one can try to spin it so it sounds like AA had any right to do this.
While I do think that some of these guys took AAdvantage of the situation, it doesn't sound like there was anything legally preventing them from doing it and AA probably knew that and is the reason why they never confronted them about this issue.
They shelled out major bucks at a time when the company desperately needed it. True they never thought anyone would do this amount of travel but that is their fault for not thinking this through better.
While I do think that some of these guys took AAdvantage of the situation, it doesn't sound like there was anything legally preventing them from doing it and AA probably knew that and is the reason why they never confronted them about this issue.
They shelled out major bucks at a time when the company desperately needed it. True they never thought anyone would do this amount of travel but that is their fault for not thinking this through better.
It probably would not make sense for most of us FlyerTalkers, even if we had that kind of coin to spare. We're pretty good at gaming the system and ending up in F at a small fraction of the cost of a full F fare. Plus, for many of us, we get a kick out of winning at this game.
May 7, 2012, 3:37 pm
#82
Join Date: Jul 2011
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Reminds me of Air Canada v CEO of Porter:
http://www.flyertalk.com/forum/air-c...e-sues-ac.html
Cheers
http://www.flyertalk.com/forum/air-c...e-sues-ac.html
Cheers
May 7, 2012, 5:07 pm
#83
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Consumerist ran a story about it : http://consumerist.com/2012/05/ameri......-thing.html
May 7, 2012, 5:07 pm
#84
Join Date: Sep 2011
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It sounds like AA's decision to offer these things on their original terms in retrospect was a big mistake. It's odd that they were offered on a lifetime basis because there would have been no data on their likely use patterns.
What I suspect AA did to exacerbate their mistake is failing to take account of the fact that when they raise the price, fewer such contracts will be sold, but they will still be purchased by some customers that differ somewhat from those who purchased the earlier and heaper version. For instance, if 100 people (to make up a number) purchase the lifetime FC contract at $300K and fly $35,000 on average, but in the following year AA raises the price to $500K and only sells 20 contracts, those 20 people are likely to fly MUCH more than the $35,000 average flown per year by the original larger group. It can be the case that there is no price for the contract which makes it viable for AA. People self select, just the same as those who know they are very sick try to purchase unlimited coverag health insurance policies.
What I suspect AA did to exacerbate their mistake is failing to take account of the fact that when they raise the price, fewer such contracts will be sold, but they will still be purchased by some customers that differ somewhat from those who purchased the earlier and heaper version. For instance, if 100 people (to make up a number) purchase the lifetime FC contract at $300K and fly $35,000 on average, but in the following year AA raises the price to $500K and only sells 20 contracts, those 20 people are likely to fly MUCH more than the $35,000 average flown per year by the original larger group. It can be the case that there is no price for the contract which makes it viable for AA. People self select, just the same as those who know they are very sick try to purchase unlimited coverag health insurance policies.
May 7, 2012, 5:36 pm
#85
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I agree on both counts. Given the language of even a few random EULAs I've bothered to look at, it's surprising that AA was so sloppy. Offering pass holders some incentive to sign a new, tighter agreement sounds like a reasonable initial attempt. It would have made AA look better if the pass holder had refused and AA now gone after them (and AA could have worded their approach along the lines of "Our interpretation of the AAirpass is that your conduct in x, y, and z is prohibited, and we'd like to offer you xxx if you agree to abide by this set of more clear rules," to avoid having the offer be used as evidence that the conduct is permitted).
Lifetime AC membership?
Lifetime EXP for a companion?
$$$
Some AA miles?
May 7, 2012, 5:50 pm
#86
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Yes, it seems this product made sense for a very small group of travellers who were not ridiculously stinkin' rich, but who were very wealthy and who looked at their travel plans and could see good value in the unlimited F deal.
No matter how much money I ever had, I think it'd pass on the Pass. I have too much fun collecting miles galore via credit card bonus offers and the like, and then using those miles for long-haul F seats, or in my recent Emirates flights, a private suite. There's something fantastic about gaming the system, and I'm not the only weirdo here who has that fetish.
May 7, 2012, 6:18 pm
#87
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Not to mention those who were fairly wealthy (even a shade short of "very") but who could claim the pass as a business expense. A partner at an investment banking firm, for example, could buy it and expense it, amortizing it over a certain number of years based on expected business travel but still utilizing it for personal travel as well. That's a good deal even for some whose companies would spring for private jet travel (on the company plane or via a service) since any personal travel would still be out of pocket.
May 7, 2012, 6:32 pm
#88
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Not to mention those who were fairly wealthy (even a shade short of "very") but who could claim the pass as a business expense. A partner at an investment banking firm, for example, could buy it and expense it, amortizing it over a certain number of years based on expected business travel but still utilizing it for personal travel as well. That's a good deal even for some whose companies would spring for private jet travel (on the company plane or via a service) since any personal travel would still be out of pocket.
May 7, 2012, 6:36 pm
#89
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Perhaps at lest some of those who owned their own businesses/were not in a position which could be terminated could simply purchase it in the company name (with them as the flyer), making it an asset of the business. It would be an asset they could use personally as well, but amortized based on likely business travel (similar to what I imagine business owners do with company-owned/leased cars).
May 7, 2012, 6:40 pm
#90
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There's another element that I don't think your (very apt) analysis accounts for: dates/AA corporate events. Remember that AA was largely a domestic airline up until around 1990 when it bought TWA's LHR hub and Eastern's MIA hub and Latin American routes. When many of these passes were sold in the mid-80s, AA was probably still thought of as mostly a domestic airline and the thought of all this big dollar int'l flying on the pass wasn't even on the horizon.