American Airlines Air Pass:

Here is the story of one of the worst business decisions in American history. In the 1980s, American Airlines was nearly bankrupt. The company was desperate for a quick injection of cash.

In response, company executives decided to take the approach of a buffet: an all-you-can-fly-pass-for-life. Yes, you read that right. For life. This was the American Airlines Airpass. To the average consumer they might say “wow, that must be really expensive!” And they would be right. In 1981, the air passed cost over a quarter of a million dollars. Adjusted for inflation this would nearly cost $750,000! In return, American Airlines gave free unlimited first-class travel to anywhere in the world for life. To the airlines, they thought that the air pass would normally be bought by business Travelers. What they didn’t expect was that ordinary people would spend a big chunk of their life savings to buy the pass. Soon American Airlines realized that people were getting far too much value for their pass. They were using what they had bought to the extreme. The company had no idea that people would be willing to travel so much.

One person named Steven Rothstein used the pass more than 10,000 times over the next 25 years. That’s more than 1 flight a day! From Chicago, he would sometimes fly to Rhode Island just to buy a sandwich. Another person named Mike Joyce flew to London 16 times in just a month. To American Airlines this overuse of the pass was simply too much. Travellers like Steven Rothstein were costing the company more than a million dollars every year. Eventually, American airlines accused some pass holders of violation of terms, meaning they broke their contract. The airline revoked their pass. Lawsuits were filed, and some cases were settled out of court. To this day, however, 25 people still hold the pass giving them free travel for the rest of their lives.

Göke, N. (2020, July 10). The curse of American Airlines. Medium. Retrieved from https://bettermarketing.pub/the-1981-campaign-that-haunted-american-airlines-for-3-decades-177ff92b6d10.