AAirpass

The AAirpass was a membership-based discount program offered by American Airlines to frequent flyers.

Introduction and conditions

It was launched in 1981 and initially comprised conditions which would allow passholders unlimited first class travel on any of the airline's flights worldwide. Lifetime membership was priced at $250,000, with the option to purchase a companion pass for an additional $150,000. The membership fee was raised subsequently, up to a point of $3 million for life in 2004, but no passes were sold at this price. A total of 66 AAirpasses are reported to have been sold under the unlimited travel conditions. Consequently, the AAirpass can be said essentially to have imported the concept of a flat rate or a free travel pass, which is most frequently found in public mass transport systems, into passenger air traffic.

Current status

The program has since been discontinued; American Airlines still sells memberships under the AAirpass brand, but rather than unrestricted free flights, this product gives passholders the option to purchase tickets at fixed (and discounted, when compared to typical airfare), pre-set rates rather than the variable pricing that has become widespread practice in the industry. Extant unlimited travel AAirpasses issued in the past remain valid, however.

Profitability for American Airlines and termination of passes

The original lifetime AAirpass program has turned out to cause substantial losses to American Airlines due to unexpectedly heavy usage of the privileges by some members; an internal study reportedly concluded that each passholder caused losses of about $1 million per year to the company, although it remains unclear whether this is an overall average across all passholders or only a figure for particularly frequent flyers. One of the reasons for these figures is the fact that members can collect air miles for flights which they received for free under the AAirpass, allowing some passengers to accumulate tens of millions of miles. Another major cost factor are taxes and airport fees on these flights, which are paid for by the airline. The program has been called "a huge disaster" for the company. American Airlines has since revoked some passes, invoking evidence produced by a special investigative unit of allegedly fraudulent use of the pass by members. Some affected passengers have initiated legal proceedings against the termination of their membership, but the actions are suspended as long as the airline remains under Chapter 11 protection.