Stuff You Should Know - Short Stuff: AAirpass

Episode Date: April 8, 2020

In the go-go 80s and 90s, American Airlines offered the AAirpass, a lifetime pass for unlimited first class travel. It was an amazing deal, but AA didn’t predict just how much some travelers would use it. They played with fire, they got burned. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

On the podcast, Hey Dude, the 90s called, David Lasher and Christine Taylor, stars of the cult classic show, Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're gonna use Hey Dude as our jumping off point, but we are going to unpack and dive back into the decade of the 90s.

We lived it, and now we're calling on all of our friends to come back and relive it. Listen to Hey Dude, the 90s called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts. Hey, and welcome to the short stuff. I'm Josh, there's Chuck, Jerry is absent, but we're still making do.

We're muddling through with short stuff. Like I said, I said it twice, which was redundant. And as everyone knows, that's a huge waste of time in short stuff. So we're gonna have to cut out a few facts. That's right, but the first thing we need to do is decide on what we call this thing. Do you know what they called it?

Who's they? American Airlines. Oh, like, like, is, do you pronounce both A's? I don't know. I don't think so. I think that was more just for looks. So it's A air pass? No, I think it's just air pass.

Oh, well, just so people don't think we're crazy. What we're talking about is a program where American Airlines wanted to, and did in fact, sell people lifetime tickets, unlimited first class travel. And they called it A-A-I-R-P-A-S-S. And I just don't know whether to call it double A air pass or A-A air pass or A air pass.

I like the way I said it the most. It's got a little mustard on it, yeah. But we'll call it air pass. Okay, cool. So yeah, like, think about this for a second. Unlimited first class travel for the rest of your life. Anytime you wanna fly anywhere, you just show up, flash your card, get on the plane.

I think you had to book first or whatever. But in addition to that, you also had, you got frequent flyer miles as if you needed them, that you would rack up with each flight. You also had a lifetime membership to the Admiral's Club, which was American Airlines. So they're lounge or whatever? I guess Sky Club is what you call it, but yeah.

Yeah, they're lounge. They're VIP lounge at the airports. So you can have a pretty cushy experience, you know, with this thing. The thing is, is not everybody could afford it. There was a very expensive thing to buy at the time and remain such as long as they were selling it for until I think 1994.

Yeah, so I guess we should point out the reason they did this was because there was a time in the 1970s and the early 80s where air travel was not doing so great. The airlines were suffering in a lot of ways. Yep. Their revenues were way down. And they said there was a deregulation act of 1978

and American Airlines actually posted a $76 million loss in 1980. So they're like, we got to do something here. Why don't we see if there are some rich people out there that would buy into this deal? And there were. Yeah, and I mean, rather than go borrow at the market, like interest rates were really, really high.

So they made a lot of sense to just go turn to consumers and say, hey, you want to basically prepay for a lifetime of first-class travel. And they figured that probably they could go to really well-heeled firms to say, hey, you got some top employees who fly a lot. This actually would probably make sense. And I think they were successful in that respect.

But some famous people bought it too. Willie Mays had one. Sure. Mark Cuban still has his. He said it was one of the best purchases he's ever made. Oh, I bet. Michael Dell, founder of Dell Computers, had one. Or still may.

And ultimately, 28 people bought into this thing, which cost at the beginning when they started offering it in 1981, $250,000. And then you could add a companion pass for another $150,000. Yeah, so let's talk about the money for a minute. $250,000 plus $150,000 is $400,000. That's a lot of money to be sure.

But if you've got some dough and you like to travel or have to travel, it's a great deal. Yeah, it really is. It's a fantastic deal because if you travel enough, this thing's going to pay for itself potentially within just a few years, depending on how much you travel. And if you travel a lot, like you're a super traveler,

you could conceivably make this thing pay for itself within a single year. Yeah, so that's the first offers they laid out there. $250,000 plus $150,000 for the companion. They realized, wow, we didn't charge enough. So eight, oh, let's see, nine years later, they said, all right, how about $600,000? Including the companion, so that's an extra $200,000.

Then in 93, they bumped it to $1.01 million. Yeah, that extra $10,000 was super important at that point. I think they must have been doing some really specific math to come to that though, right? I would guess so, like no one in the history of the world has ever charged $1.01 million for anything, it's weird. And then I think at the very end,

I can't believe this lasted this long, in 2004, their final offering was an Anima and Marcus catalog at three million bucks plus two mil for your companion. Yeah, and in between 1994 and 2004, they just stopped offering it all together, but they trotted it out back one more time in 2004 for that Christmas catalog.

But nobody bought it. As far as I know, no one bought it. So I think the number that I ran across, so there's some really good articles on this. There's one by Zachary Crockett on the hustle. There's another one by Ken Benzinger from the Los Angeles Times. And the number that I saw is 28,

there's 28 people who ever bought a air pass, a double A air pass. How many? 28, two Ater. I'm surprised it wasn't more to be frank. I'm a little surprised too. And the thing is that some of these people bought it and I think really didn't get their money's worth out of it.

But then there were a couple of people, there were a few people, a small handful, who got so much of their money out of it that American Airlines said, we can't take this. Remember how we said that you had a lifetime pass? We're going back on that deal. And I think we should take a break and then we'll talk about those guys right after this, okay?

Let's do it. ["Hey Dude the 90s"] On the podcast, Hey Dude the 90s called David Lasher and Christine Taylor, stars of the cult classic show, Hey Dude, bring you back to the days of slip dresses and choker necklaces. We're gonna use Hey Dude as our jumping off point,

but we are going to unpack and dive back into the decade of the 90s. We lived it and now we're calling on all of our friends to come back and relive it. It's a podcast packed with interviews, co-stars, friends, and non-stop references to the best decade ever. Do you remember going to Blockbuster?

Do you remember Nintendo 64? Do you remember getting Frosted Tips? Was that a cereal? No, it was hair. Do you remember AOL Instant Messenger and the dial-up sound like poltergeist? So leave a code on your best friend's vapor because you'll want to be there

when the nostalgia starts flowing. Each episode will rival the feeling of taking out the cartridge from your Game Boy, blowing on it and popping it back in as we take you back to the 90s. Listen to Hey Dude the 90s called on the iHeart radio app, Apple Podcasts, or wherever you get your podcasts.

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All right, Chuck, let's talk about Jacques Froome and Stephen Rothstein. Yeah, so these were a couple of people who became pretty prominent in this whole, I almost called it a scam because somehow it seems like it. It's got a flavor to it for sure. It does.

So Stephen Rothstein, he bought his pass in 1987. He was an investment banker for Bear Stearns. And then there was Jacques Froome, like you said, and he was a direct marketing catalog consultant. He actually took out a loan, $400,000 loan at 12% interest over five years to get his in 89. And these guys, boy, did they travel. Yeah, yeah, they both made fun of something

that part in Up in the Air where George Clooney gets congratulated for hitting the 10 million mile mark. They just both kind of scoffed at it. They're like, we don't even remember when we hit that mark. Yeah, they hit that by like July of the first year. Basically, I think one of them,

I think Froome has an estimated 38 million miles traveled to his name and Rothstein has about 30 million. Yeah, that's a lot of miles. And you would think like, even if you like to travel, you can't go on that many trips and like vacations and things. So, and you're kind of right. But here's what some of the things these guys were doing.

Like Froome was like, you know what, I need a babysitter here in Dallas. So I'm gonna fly to Washington DC and pick up my father-in-law, bring him back here so he can babysit tonight. And I'll just fly him back afterward. That's exactly what he would do. Yeah, he once flew to London to get two tires

for his motorcycle because it was cheaper than paying for the freight shipping. Let me see here, July 2004 in one month, Rothstein flew 18 times to places like Nova Scotia, Miami, London, Los Angeles, Maine, Fort Lauderdale, New York. Yeah, and so like this was like flying for these guys was a lifestyle, like it was part of their life. It was actually kind of like the center of their life.

They both had families, but they both had families that knew that they were gonna be probably in a different country just about every day of the week. It was just what they did. And so American had not planned for guys like this to buy the air pass. This was not part of the original plan. So when they started to realize that Vroom and Rothstein

were each costing them about a million dollars a year in travel, they decided that they needed to find a way to basically cancel their air passes. And so they got an elite task force on this. The revenue integrity team and said, go find a way to get rid of these guys' passes. Yeah, because there were obviously rules, but not enough because they were doing things and it wasn't just them.

There were other people in the program doing things like booking multiple trips in case like their one vacation didn't work out or they changed their plans last minute. They could just jet on over to Paris instead of Hawaii or I don't really like flying with anybody. So I'm just gonna book my companion seat to be empty on every single trip. Exactly, yeah.

Basically what I would do. Yes, right. What a lot of people would do. And they were definitely not the only ones doing this. And from the rules that AA had, it was not against the rules. AA didn't like it because they couldn't sell that seat and they had trouble filling a seat when it was,

their extra flights were canceled at the last minute because these people didn't pay cancellation fees. So, but there wasn't anything they could get them on. The one that they went after these guys for was selling their extra companion pass. Right. And it turns out like they both did. They both gave away their companion passes

to total strangers pretty frequently. Vroom had a habit of finding people who suffered from AIDS, HIV AIDS, and this is back in like the 80s and 90s when it was a totally different jam. And he said, you know, hey, let me fly with you and you can go see your family for free. That's amazing. But they also, it really is.

They also definitely sold them too. Vroom made a hundred grand alone from just one couple or one couple alone paid him that much to shuttle them back and forth to Europe. So they were both definitely making money off of this on the side too. And that's what American went after him for. Yeah. I mean, it sounds like for that one couple,

he was just acting as their de facto travel agent at one point. Yeah. And almost travel agent slash escort too. Yeah. I'll fly. Well, because he kind of had to fly with them, right? That's my understanding of it. Yeah. So if you read some of these articles, you can read from Caroline Rothstein

who was, I believe, his daughter. And she said, you know what, like my dad gets a bad rap. Sure, he sold some, but it's not like he was out there getting rich off this. And it's not like there was anything in the policy at all saying they couldn't do it because they got the first version which didn't say anything about selling him. I guess they didn't think ahead.

Right. And then later in further subsequent contracts, they pointed out that you couldn't do it. But she was like, they didn't break any rules even. No, they didn't. And so American just basically said, well, we still say you're abusing your passes and they terminated both of them.

And so some lawsuits started going back and forth. And then Americans parent company filed bankruptcy. And so from everything I could find, those lawsuits are now still sitting out there in like legal limbo, but neither man has their air pass anymore. And so you might say, you know, Oh, boo-hoo, these guys made their money back

many times over with all the travel they did. And, you know, they kind of almost seemed like they took advantage of AA and played them for chumps. But Carolyn Rothstein, Stephen Rothstein's daughter says, like my dad lived to travel or lives to travel. I believe he's still alive. And he was basically lost his life when American took away his air pass.

And much the same for Jacques Vroom too. Like all that guy loved to do was travel. That was what he loved to do. And that's why one of the reasons he would travel so much. Yeah, I got a couple of feelings about that. One is you make this deal with American Airlines. They should have honored it for life. But the other also is like, these guys could still travel.

They just got to pay for it. Right. Well, yeah, it's true. No, for sure. It's not like they're not allowed. Like they barred them. Right. I bet they didn't fly American Airlines ever again, though. I would guess not.

But yeah, I just have the impression that it was a very bitter pill for both of them to swallow. And they both, I think, feel like they were targeted because they were among the least wealthy air pass holders. So they made easy targets. But they were also probably among the two that were using it far and away the most too. So who knows?

But as far as I know, it's not really resolved legally, but I'm guessing as far as American Airlines is concerned, it's done. Totally. You got anything else? I got nothing else. I never heard of this. It's super interesting.

I love it. If you want to go learn more about this, go check out Zachary Crockett's stuff. He is a writer, I don't know if he still is or not, but a long time writer for Priceonomics and others. And he just really does a great job of finding really interesting stuff and writing about it. So hats off to him, hats off to the LA Times

and to Carolyn Rothstein for publishing all these great articles. And hats off to you for listening to short stuff. Adios. MUSIC Stuff you should know is a production of iHeartRadio's How Stuff Works. For more podcasts from iHeartRadio,

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