The $250,000 Unlimited Flight Pass: A Terrible Mistake

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This video was made possible by Audible Sign up for a 30-day free trial at audible.com/HAI and get a free audiobook plus two free audible originals. Everybody makes mistakes, and remember, corporations
are people too, therefore they too make mistakes—Blockbuster turned down the chance to buy Netflix, KFC
opened in China and mistranslated, “it’s finger-licking good,” to, “eat your fingers
off,” and American Airlines, well, American Airlines sold the infamous unlimited lifetime… Ahye-airpass? Ah-Airpass? Ay-yerpass? You know what, let’s just call it the airpass. See, in the 1980s, American Airlines had a
problem—they didn’t have any money. At the time, the airline crucially needed
money as years of research, trial, and error had concluded that the Pratt & Whitney JT3D,
JT8D, and JT9D turbofan engines used in their aircraft would not function without fuel…
which costs money. Now, people respond to not having money in
all kinds of different ways. Some file for bankruptcy, some steal a loaf
of bread, some start a semi-satirical educational YouTube channel—but American Airlines decided
to respond with something truly drastic: offering this unlimited lifetime AAirpass. The idea was simple. When the pass was first offered in 1981, it
cost $250,000, and you could spend an additional $150,000 for a companion pass. So, if you bought both, you were looking at
a total of $400,000—with inflation, today that would be around $1.2 million. In exchange, you got unlimited, free first-class
travel to anywhere in the world, on any American Airlines flight, for life and with the companion
pass, you could take anyone you wanted with you: it could be your friend, your spouse,
your friend’s spouse, a stranger, a stranger’s spouse, a stranger’s friend’s spouse,
or Bill Clinton. 28 people took American Airlines up on the
offer. Now $400,000 may sound like a lot of money—especially
for 1981—and to be fair, it was. With inflation, it’s enough to buy 138,771
Chipotle burritos with guac, or 32,875 years of CuriosityStream, or to buy just under 0.9%
of this weird drippy, swirly painting of nothing. But even though $400,000 is a lot of money,
soon American Airlines discovered that they had made a terrible mistake in their pricing:
they had offered people far too good of a deal. See, the unlimited passes were like an all-you-can-eat
buffet. All-you-can-eat buffets make money because
even though people could eat 50 lamb chops in one sitting, eating up all the buffet’s
money, the buffet assumes that nobody will actually do that, because it would be… you
know… gross. American Airlines did the same thing—they
assumed people wouldn’t use the pass too much, but they failed to consider the supertravelers:
supertravelers like this guy, Steven Rothstein, who did the flying equivalent of going to
an all-you-can-eat buffet and eating fifty lamb chops, eighty steaks, and an entire trashcan
full of mashed potatoes. Steven Rothstein, a Chicago investment banker,
bought the unlimited Airpass in 1987. Over the next 25 years, he would use his pass
to book more than 10,000 flights. That’s an average of more than a flight
a day. He would fly to London to get lunch with a
friend or to Boston for a baseball game, then back home for dinner. Sometimes he would fly to Providence, Rhode
Island, just to get his favorite sandwich—a bologna-and-swiss melt from a restaurant called
Geoff’s. This meant that whenever Steven Rothstein
got hungry, American Airlines had to pay hundreds or thousands of dollars in fuel, taxes, and
other costs—not to mention lost ticket sales—to fly him to his bologna-and-Swiss melt—which
is a lot of money, especially for a sandwich with bologna, a meat so bad that its name
literally means nonsense. I mean come on, if you’re gonna fly across
the country, at least get salami? And it wasn’t just Rothstein—a lot of
people used their passes much more than expected. One pass-holder, Mike Joyce, once used his
pass to fly round-trip to London 16 times—in 25 days. Keep in mind, too, that back in the 80s, when
the pass was first offered, flying cost a lot more than it does now. When you adjust for an inflation, the cost
of flying is now about 50% less than it was in 1980. Soon, American Airlines realized they had
made a terrible mistake. They estimated that supertravelers like Rothstein
were costing them over $1 million a year, each, which made sense. By 2008, Rothstein had traveled over 10 million
miles or 16 million kilometers, enough to go to the moon and back 20 times. Now, of course, Rothstein didn’t actually
fly to the moon; but it turns out he had flown too close to the sun—and he was about to
get burned. It turned out that Rothstein and others would
often use their passes to help out complete strangers, giving them unexpected first-class
upgrades, or helping them get home when their flights were cancelled. That wouldn’t normally be a problem—except
that in order to have the option to do it, the pass-holders would regularly book their
companion pass seat under a fake name, as they didn’t yet know who might be traveling
with them—silly, made-up names like Bag Rothstein, or Benedict Cumberbatch, you know,
names that no real human being would ever have. In 2008, American Airlines accused Rothstein
and two others of fraud, and said by booking under false names, they had broken their contract. Security agents cornered them at airports,
revoked their passes, and told them that they would never fly on American Airlines again. Just like any red-blooded American would,
they all sued, but for Rothstein’s case, at least, the outcome wasn’t clear as it
was settled privately out-of-court. American Airlines stopped regularly offering
the unlimited lifetime pass in 1994, though they did offer it once in 2004, for $3 million,
plus $2 million for a companion pass—for a total of $5 million, or $6.8 million today
with inflation. That time, though, there were no takers. After all, with $5 million, you might as well
just buy your own plane—or you could buy 7% of this other painting of this drippy swirly
painting of nothing. 25 people, though, still have lifetime unlimited
passes including Michael Dell, who you might know from Dell computers, and Mark Cuban,
who you might know from Shark Tank and yelling at referees at Dallas Mavericks games. They can still fly anywhere, anytime, first-class
on any American Airlines flight and so long as they don’t break the rules, they can
do it for the rest of their lives, but let’s hope they don’t start craving too many bologna-and-swiss
sandwiches, lest they meet Steven Rothstein’s same sad fate. Who will never sell you a lifetime subscription,
panic, and then take it away from you is Audible. Don’t tell them this, though, but Audible’s,
like, a really good deal. They should probably panic. You see, with a free trial, you can get an
audiobook for $0.00. That audiobook can be anything—even a 56
hour-long odyssey like Infinite Jest which might not be the best choice. I genuinely don’t know because neither I
not anyone has ever finished it —so I’ll actually recommend The Hitchhikers Guide to
the Galaxy. It’s read by Stephen Fry and its one of
these things where there’s a reason you keep hearing about it—because it’s fantastic. Audible is the place to get Audiobooks which,
since you can listen whenever, can make anything more entertaining, and,
once again, by signing up at audible.com/hai or texting hai to 500-500, you will get one
audiobook plus two audible originals for free.

 

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