Topic: How American Airlines Screwed Themselves: The AAirpass Fiasco

[trapeze]

I had never heard of this. But then, I don't fly much.

Imagine, though, being able to fly first-class on American Airlines (with a companion) anytime you want, anywhere you want, as frequently as you want. For as long as you live.

That, in a nutshell, was the American Airlines AAirpass program and it was one reason among many that American Airlines (AMR Corp) filed for Chapter 11 bankruptcy protection recently.

Well, anyway...this is one of the more interesting stories that you will read about a company making a mistake in crafting an agreement and an even bigger one regarding normal human behavior.

It's a long article but very well written and interesting from start to finish.

There are frequent fliers, and then there are people like Steven Rothstein and Jacques Vroom.

Both men bought tickets that gave them unlimited first-class travel for life on American Airlines. It was almost like owning a fleet of private jets.

Passes in hand, Rothstein and Vroom flew for business. They flew for pleasure. They flew just because they liked being on planes. They bypassed long lines, booked backup itineraries in case the weather turned, and never worried about cancellation fees. Flight crews memorized their names and favorite meals.

Each had paid American more than $350,000 for an unlimited AAirpass and a companion ticket that allowed them to take someone along on their adventures. Both agree it was the best purchase they ever made, one that completely redefined their lives.

In the 2009 film "Up in the Air," the loyal American business traveler played by George Clooney was showered with attention after attaining 10 million frequent flier miles.

Rothstein and Vroom were not impressed.

"I can't even remember when I cracked 10 million," said Vroom, 67, a big, amiable Texan, who at last count had logged nearly four times as many. Rothstein, 61, has notched more than 30 million miles.

Think American Airlines did the right thing, bit the bullet and just decided to live with their stupid ass mistake? Think again.

[Glock32]

That's exactly how I view all manner of "extended warranties" every place tries to sell you, for every item under the sun. The minute you try to make good on it, they find some excuse to not honor it.  I never buy them. Statistically the cost of replacement is far less than the cost of a warranty, particularly considering the sort of items in question are exactly the sort you replace frequently anyway.

[trapeze]

Well that's just it, though. American Airlines made good on this deal for years. Many years. They kept raising the price until it was so expensive that no one bought it. But a lot of people did buy it and AA was contractually obligated to stand behind their blunder.

So that left them with the unenviable task of spending A LOT of money trying to shed as many AAirpass members as possible. They had to pay investigators and lawyers and who knows how many other people, who knows how much money? And how many members were they able to kick out of the program? Don't know. But it couldn't be many. If it had been a lot then the article would have mentioned it but it didn't. I have to believe that they might have gotten rid of the two mentioned and maybe that's it.

There are other horror stories out there about getting into deals with unintended consequences. This one immediately came to my mind when I read the AAirpass story. But as disastrous as that example is/was it's nothing even close to the scale of the AA screwup.

[Glock32]

Yes, and let's keep this sort of thing in mind when we hear the "too big to fail" argument for taxpayer money. There's a very good reason businesses fail, and it seems we are seeing just one example of it here.  Figure they were losing a few million per year on these passengers. They could suspend all future sales, eat the annual loss on the existing customers, and eventually the loss would dry up.

Or, they could spend who knows how much investigating and litigating, which may have cost just as much in the end, and with the additional PR black eye. Yeah. Maybe GSA can source their new leadership from American Airlines? They sound qualified.

[Conservative RWNJ]

other reasons why American Airlines failed:

• Call Centers (reservations) get in trouble if they are on a call too long
• Reservations will accidentally hang up on you to shorten call times so they don't get fired
  (and this is sourced from a person who works with frequent fliers - not the periodic customer)

When Mr. Crandall stepped down as CEO - the mess boiled up worse.

This is another example of Customer No Service to save a buck and
they still can't see that it takes money to make money - corporate morons!

... they need to spend a little more to get a lot in return ... but NO!

[IronDioPriest]

other reasons why American Airlines failed:

• Call Centers (reservations) get in trouble if they are on a call too long
• Reservations will accidentally hang up on you to shorten call times so they don't get fired
  (and this is sourced from a person who works with frequent fliers - not the periodic customer)

When Mr. Crandall stepped down as CEO - the mess boiled up worse.

This is another example of Customer No Service to save a buck and
they still can't see that it takes money to make money - corporate morons!

... they need to spend a little more to get a lot in return ... but NO!

Looks to me after reading the article that AA's insolvency problems run a lot deeper than simply failing to invest in the costs of doing business. When you're pissing money away on lifetime programs to garner short-term insta-capital, fielding a competent call-center will hardly save your business.

Welcome to the forum, BTW.

[LadyVirginia]

This is another example of Customer No Service to save a buck and
they still can't see that it takes money to make money - corporate morons!

... they need to spend a little more to get a lot in return ... but NO!

Good service works.

There's a locally owned grocery near where I live.  They have the highest prices of any in the area.  Yet they're going strong.  Their employees stay for decades.  They believe in service.  My mom went in one day and couldn't find the chips she wanted and she asked for help.  The employee discovered they were out of stock and recommended a different one.  When she said she didn't know if she liked those he opened the bag and told her to try it. 

Their customers are loyal.

[Pandora]

This is another example of Customer No Service to save a buck and
they still can't see that it takes money to make money - corporate morons!

... they need to spend a little more to get a lot in return ... but NO!

Good service works.

There's a locally owned grocery near where I live.  They have the highest prices of any in the area.  Yet they're going strong.  Their employees stay for decades.  They believe in service.  My mom went in one day and couldn't find the chips she wanted and she asked for help.  The employee discovered they were out of stock and recommended a different one.  When she said she didn't know if she liked those he opened the bag and told her to try it. 

Their customers are loyal.

I know a lot of people hate Whole Foods (many call it Whole Paycheck), but they are some serious service-oriented folks.  There isn't a thing in the store that an employee won't open for a prospective buyer.  They regularly cut any produce for anybody wanting a taste and the Deli will shave a slice of anything one wants to try.

They sell a cut of beef called a trip-tip; marinate for five minutes, slap on the barbie, tenderer than any London broil I've ever had and nobody else around here sells it.

[LadyVirginia]

This store I described is higher priced than Whole Foods.

I do go to Whole Foods a lot-- it's closer than the other.  I do spend a lot on groceries but I really dislike the other cheapie grocery stores with their over processed crap.

Not to hijack the thread but...I will any way.  Recently a  guy in line in front of me was complimenting the cashier on WF's policy of buying carbon credits. I was so hoping he turned to me and include me in the conversation because I had a few choice things to say.  But he didn't. 


Back to the topic at hand--
My FIL got some kind of pass when he retired about 10 years ago but it was good only for a few years after he got it.  When it expired that was the end of the frequent visits to see the grand kids.

Most of the time I don't keep up with all the bonuses and points etc I supposedly get for stores, cards, etc.  Most of the time the restrictions make it too much trouble to keep up with. My husband watches the airline miles but we rarely ever go anywhere so I don't see them as a big deal.

[Pandora]

This store I described is higher priced than Whole Foods.

I do go to Whole Foods a lot-- it's closer than the other.  I do spend a lot on groceries but I really dislike the other cheapie grocery stores with their over processed crap.

Not to hijack the thread but...I will any way.  Recently a  guy in line in front of me was complimenting the cashier on WF's policy of buying carbon credits. I was so hoping he turned to me and include me in the conversation because I had a few choice things to say.  But he didn't.

Oh, I have a few choice things to say about the "green" BS as well.  Fortunately for the people who don't extend their scope in my direction, as the guy in your line didn't to you, it mostly goes unsaid. 

Back to the topic at hand--
My FIL got some kind of pass when he retired about 10 years ago but it was good only for a few years after he got it.  When it expired that was the end of the frequent visits to see the grand kids.

Most of the time I don't keep up with all the bonuses and points etc I supposedly get for stores, cards, etc.  Most of the time the restrictions make it too much trouble to keep up with. My husband watches the airline miles but we rarely ever go anywhere so I don't see them as a big deal.

We don't go anywhere that we don't drive; so much for airline miles.

After the 10-day relocation roadtrip from HELL in 1993, I lost my desire to travel, and having to deal with the TSA just cemented that in place.  Plus, the older I get (and Gunsmith's feeling it now, too), the more of my house's comforts I need to have with me while traveling.  Seven pillows between us.  Really?  I need a master-list of lists of things to bring -- and to make sure I bring back home -- and then there's arranging for the cat's care and feeding and who's going to water the garden, andandand .....

I ... I .... I think I'm what is referred to, as a pejorative by the Left, as *gasp* provincial .....

I do miss the beach though .......

[IronDioPriest]

Gosh I LOVE travel. Going someplace new - or someplace old that we love - is the thing Mrs. IDP and I love to do more than just about anything else. And we HATE going without our kids. Just about everybody talks about how they love to travel to get a vacation from the kids, just the two of us, yadda-yadda-yadda... Yeah, we've tried that a couple times and it always seems like a good idea until we're at our destination for about a half-a-day, and then we're, "I wish the kids were with us", and "Oh, I bet the kids would really love this...."

We do try to get away here and there as a couple, but mostly for a date night or maybe an overnight, or if we're feeling really adventurous, a weekender at the lake. But when we go on vacation these days, we always take the kids.

I hate the TSA but I love traveling more. Nothing beats hopping on a jet and stepping off somewhere besides Minnesota in a few short hours.

[charlesoakwood]

Gosh I LOVE travel. Going someplace new - or someplace old that we love - is the thing Mrs. IDP and I love to do more than just about anything else. And we HATE going without our kids. Just about everybody talks about how they love to travel to get a vacation from the kids, just the two of us, yadda-yadda-yadda... Yeah, we've tried that a couple times and it always seems like a good idea until we're at our destination for about a half-a-day, and then we're, "I wish the kids were with us", and "Oh, I bet the kids would really love this...."

We do try to get away here and there as a couple, but mostly for a date night or maybe an overnight, or if we're feeling really adventurous, a weekender at the lake. But when we go on vacation these days, we always take the kids.

I hate the TSA but I love traveling more. Nothing beats hopping on a jet and stepping off somewhere besides Minnesota in a few short hours.

 
                         

[Pandora]

Gosh I LOVE travel. Going someplace new - or someplace old that we love - is the thing Mrs. IDP and I love to do more than just about anything else. And we HATE going without our kids. Just about everybody talks about how they love to travel to get a vacation from the kids, just the two of us, yadda-yadda-yadda... Yeah, we've tried that a couple times and it always seems like a good idea until we're at our destination for about a half-a-day, and then we're, "I wish the kids were with us", and "Oh, I bet the kids would really love this...."

We do try to get away here and there as a couple, but mostly for a date night or maybe an overnight, or if we're feeling really adventurous, a weekender at the lake. But when we go on vacation these days, we always take the kids.

I hate the TSA but I love traveling more. Nothing beats hopping on a jet and stepping off somewhere besides Minnesota in a few short hours.

Well, good for you.  I understand missing having the kids with you; it's a family thing, something to share with other points of view and excitement.  I'd feel the same about taking my family (and my pillows) with me.

I hope your enthusiasm for it is never dampened.

[LadyVirginia]

Gosh I LOVE travel. Going someplace new - or someplace old that we love - is the thing Mrs. IDP and I love to do more than just about anything else. And we HATE going without our kids. Just about everybody talks about how they love to travel to get a vacation from the kids, just the two of us, yadda-yadda-yadda... Yeah, we've tried that a couple times and it always seems like a good idea until we're at our destination for about a half-a-day, and then we're, "I wish the kids were with us", and "Oh, I bet the kids would really love this...."

We do try to get away here and there as a couple, but mostly for a date night or maybe an overnight, or if we're feeling really adventurous, a weekender at the lake. But when we go on vacation these days, we always take the kids.

I hate the TSA but I love traveling more. Nothing beats hopping on a jet and stepping off somewhere besides Minnesota in a few short hours.

We're the same way too.  Almost always take the kids.  I dunno--we like 'em and have fun with them.     Though the last few years we've gone to Florida and Hawaii with out them since the younger ones are big enough not to miss mom and dad too much and they have their older sisters around.  But when we went to Hawaii we kept saying to each other we want to bring the kids next time--there's so much we want them to see! lol

Other than going to Hawaii I plan on avoiding the TSA at airports.  I grew up in a family that drove all over kingdom come for a vacation and that's what we've mostly done with our kids over the years anyway. I love the rush when a plane takes off and it's great to get some where fast but there is something about being on the road...

On the other hand, traveling with the kids and their sports teams to out of state competitions on a coach bus is tight and borders on a nightmare.  I could use the comforts of home there and there's no room for them!

So far I don't require much to travel.  I can pack in 15 minutes or less.  The kids take more than I do I think. (My youngest needs her dolls like you need your pillows I guess Pan.  I wouldn't dream of telling her no). My husband takes the least not counting his golf clubs.

My cousin drove from South Carolina to visit us once.  Her car looked like a hoarder had packed it.  She even brought 8 pairs of shoes.  She wasn't even staying 8 days.