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

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Sep 19, 2019


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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Music by Epidemic Sound
Written by Adam Chase