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Short Stuff: AAirpass · Stuff You Should Know

• 0:04
  Speaker 1: Hey, and welcome to the short stuff. I'm Josh, there's Chuck.
• 0:07
  Speaker 1: Jerry is absent, but we're still making do We're muddling
• 0:11
  Speaker 1: through with short stuff. Like I said, I said it twice,
• 0:14
  Speaker 1: which was redundant, and as everyone knows, that's a huge
• 0:17
  Speaker 1: waste of time and short stuff. So we're gonna have
• 0:19
  Speaker 1: to cut out a few facts. That's right. But the
• 0:22
  Speaker 1: first thing we need to do is decide on what
• 0:24
  Speaker 1: we call this thing. Do you know what they called it?
• 0:27
  Speaker 1: Who's they? American Airlines? Oh? Like, like, is do you
• 0:31
  Speaker 1: pronounce both a's? I don't know, and I don't think so.
• 0:35
  Speaker 1: I think that was more just for looks, So it's
• 0:38
  Speaker 1: a air pass. No, I think it's just air pass. Well,
• 0:44
  Speaker 1: just so people don't think we're crazy, what we're talking
• 0:46
  Speaker 1: about is a program where American Airlines wanted to uh
• 0:51
  Speaker 1: and did in fact sell people lifetime tickets unlimited first
• 0:55
  Speaker 1: class travel. And they called it a a r P,
• 1:01
  Speaker 1: A S S. And I just don't know whether to
• 1:03
  Speaker 1: call it double a air pass or a a air
• 1:05
  Speaker 1: baths or a air baths. I like the way I
• 1:07
  Speaker 1: said it the most. It's got a little mustard on it. Yeah. Well,
• 1:14
  Speaker 1: we'll call it air pass, Okay, cool? So so yeah,
• 1:18
  Speaker 1: like I think about this for a second, unlimited first
• 1:21
  Speaker 1: class travel for the rest of your life. Anytime you
• 1:24
  Speaker 1: want to fly anywhere, you just show up, flash your card,
• 1:28
  Speaker 1: get on the plane. I think you had to book
• 1:29
  Speaker 1: first or whatever. But in addition to that, you also
• 1:33
  Speaker 1: had you got frequent Flyer miles as if you needed them,
• 1:36
  Speaker 1: that you would rack up with each flight. You also
• 1:38
  Speaker 1: had a lifetime membership to the Admiral's Club, which was
• 1:41
  Speaker 1: Triple M or American Airlines UM said their lounge or whatever.
• 1:46
  Speaker 1: I guess sky club is what you call it. But yeah, yeah,
• 1:49
  Speaker 1: they're lounges there v I P Lounge at the airports. UM.
• 1:53
  Speaker 1: So you can have a pretty cushy experience, you know
• 1:55
  Speaker 1: with this thing. The thing is is not everybody could
• 1:58
  Speaker 1: afford it. Um. There was a very expensive thing to
• 2:02
  Speaker 1: buy at the time and remained such as long as
• 2:05
  Speaker 1: they were selling it for until I think yeah, so,
• 2:09
  Speaker 1: I guess we should point out the reason they did
• 2:11
  Speaker 1: this was because there was a time in the nineteen
• 2:13
  Speaker 1: seventies in the early eighties where air travel was not
• 2:17
  Speaker 1: doing so great. The airlines were suffering in a lot
• 2:19
  Speaker 1: of ways. Uh, their revenues were way down, and they
• 2:24
  Speaker 1: said there was a Deregulation Act of nineteen seventy eight
• 2:28
  Speaker 1: and American Airlines actually posted a seventy six million dollar
• 2:31
  Speaker 1: loss in nineteen eighty. So they're like, we gotta do
• 2:35
  Speaker 1: something here. Why don't we see if there are some
• 2:37
  Speaker 1: rich people out there that would buy into this deal?
• 2:41
  Speaker 1: And there were, Yeah, I mean, rather than go borrow
• 2:45
  Speaker 1: at the market, like, interest rates were really really high,
• 2:48
  Speaker 1: so they made a lot of sense to just go
• 2:50
  Speaker 1: turn to consumers and say, hey, you want to basically
• 2:52
  Speaker 1: prepay for a lifetime of first class travel. And they
• 2:56
  Speaker 1: figured that probably like they could go to you know,
• 2:59
  Speaker 1: um really well healed firms to say, hey, you've got
• 3:02
  Speaker 1: some top employees who fly a lot, this actually would
• 3:04
  Speaker 1: probably make sense. And I think they were successful in
• 3:07
  Speaker 1: that in that respect. But some famous people bought it too.
• 3:11
  Speaker 1: Willie Mays had one, Mark Mark Cuban still has his.
• 3:15
  Speaker 1: He said it was the one of the best purchases
• 3:18
  Speaker 1: he's ever made. Um. Michael Dell, founder of Dell Computers,
• 3:22
  Speaker 1: had one. Um or still may um And ultimately twenty
• 3:26
  Speaker 1: eight people bought into this thing, which cost at at
• 3:30
  Speaker 1: the beginning when they started offering two hundred and fifty
• 3:33
  Speaker 1: thousand dollars, and then you could add a companion pass
• 3:37
  Speaker 1: for another hundred and fifty thousand dollars. Yeah, so let's
• 3:40
  Speaker 1: let's talk about the money for a minute. Um to
• 3:43
  Speaker 1: fifty plus one fifty is four hundred thousand dollars. That's
• 3:48
  Speaker 1: a lot of money, to be sure. But if you've
• 3:52
  Speaker 1: got some dough and you like to travel or have
• 3:55
  Speaker 1: to travel, it's a great deal. Yeah, it really is.
• 3:58
  Speaker 1: It's a fantastic deal, be because if you travel enough,
• 4:01
  Speaker 1: this thing's going to pay for itself potentially within just
• 4:04
  Speaker 1: a few years, depending on how much you travel, and
• 4:07
  Speaker 1: if you travel a lot, like you're a super traveler,
• 4:11
  Speaker 1: you could conceivably make this thing pay for itself within
• 4:13
  Speaker 1: a single year. Yeah. So that's the first offerers they
• 4:17
  Speaker 1: laid out there, two and fifty grand plus one fifty
• 4:19
  Speaker 1: for the companion. They realized, wow, we didn't charge enough.
• 4:24
  Speaker 1: So eight o nine years later they said, all right,
• 4:28
  Speaker 1: how about six hundred thousand dollars including the companion, So
• 4:33
  Speaker 1: that's an extra two grand. Then a nine and ninety
• 4:36
  Speaker 1: three they bumped it to one point zero one million. Yeah,
• 4:39
  Speaker 1: that extras was super important at that point. I think
• 4:43
  Speaker 1: they were. They must have been doing some really specific
• 4:45
  Speaker 1: math to come to that though, right I would. I
• 4:47
  Speaker 1: would guess though, like no one in the history of
• 4:49
  Speaker 1: the world has ever charged one point zero one million
• 4:52
  Speaker 1: dollars for anything. It's weird. Uh. And then I think
• 4:57
  Speaker 1: at the very end, and two, I can't believe this
• 5:00
  Speaker 1: lasted this long. And two thousand four their final offering
• 5:05
  Speaker 1: was in a Nieman Marcus catalog at three million bucks
• 5:09
  Speaker 1: plus two mill for your companion. Yeah. And in between
• 5:13
  Speaker 1: two thousand four they just stopped offering it all together.
• 5:15
  Speaker 1: But they trotted it out back one more time in
• 5:17
  Speaker 1: two thousand four for that Christmas catalog, but nobody bought it.
• 5:21
  Speaker 1: As far as I know, no one bought it, So
• 5:23
  Speaker 1: I think the number that I ran across, so there's
• 5:26
  Speaker 1: some really good articles on this. There's one by Zachary
• 5:28
  Speaker 1: Crockett on The Hustle. Uh. There's another one by Ken
• 5:34
  Speaker 1: Benzinger from the Los Angeles Times. And the number that
• 5:38
  Speaker 1: I saw is twenty eight. There's twenty eight people who
• 5:41
  Speaker 1: ever bought a air pass, a double a air pass?
• 5:45
  Speaker 1: How many to eight or I'm surprised it wasn't more,
• 5:50
  Speaker 1: to be Frank, I'm a little surprised too. And the
• 5:52
  Speaker 1: thing is that some of these people bought it, and
• 5:54
  Speaker 1: I think really didn't get their money it's worth out
• 5:57
  Speaker 1: of it. But then there were a couple of people,
• 5:59
  Speaker 1: there were a few people, a small handful, who got
• 6:01
  Speaker 1: so much of their money out of it that American
• 6:04
  Speaker 1: Airlines said, uh, we can't take this. Remember how we
• 6:07
  Speaker 1: said that you had a lifetime pass were we we
• 6:10
  Speaker 1: were going back on that deal. And I think we
• 6:13
  Speaker 1: should take a break and then we'll talk about those
• 6:15
  Speaker 1: guys right after this. Okay, let's do it. M M
• 6:36
  Speaker 1: all right, Chuck, Let's talk about Jacques Room and Stephen Rothstein. Yeah.
• 6:41
  Speaker 1: So these were a couple of people who became pretty
• 6:44
  Speaker 1: prominent in this whole. Almost called it a scam because
• 6:46
  Speaker 1: somehow it seems like it it's got a flavor to it.
• 6:49
  Speaker 1: For sure it does. So Stephen Rothstein, he bought his pass. Uh.
• 6:55
  Speaker 1: He was an investment banker for bear Stearns. Uh. And
• 6:58
  Speaker 1: then there was Jacques Room, like you said, and he
• 7:00
  Speaker 1: was a direct marketing catalog consultant. He actually took out
• 7:04
  Speaker 1: a loan, four thousand dollar loan at twelve percent interest
• 7:07
  Speaker 1: over five years to get his AN eighty nine. And
• 7:11
  Speaker 1: these guys, boy did they travel. Yeah. Yeah. They both
• 7:16
  Speaker 1: made fun of something that that part in um Up
• 7:20
  Speaker 1: in the Air where George Clooney gets congratulated for hitting
• 7:22
  Speaker 1: the ten million mile mark. They just both kind of
• 7:25
  Speaker 1: scoffed at it. They're like, we don't even remember when
• 7:27
  Speaker 1: we hit that mark. Yeah, they hit that by like
• 7:30
  Speaker 1: July of the first year. Basically, I think one of them.
• 7:33
  Speaker 1: I think Room has an estimated thirty eight million miles
• 7:38
  Speaker 1: traveled to his name, and Rothstein has about thirty million. Yeah,
• 7:42
  Speaker 1: that's a lot of miles. And you would think, like,
• 7:45
  Speaker 1: even if you like to travel, you can't go on
• 7:47
  Speaker 1: that many trips and like vacations and things. So and
• 7:52
  Speaker 1: you're kind of right, But here's what some some of
• 7:54
  Speaker 1: the things these guys were doing. Like Room was like,
• 7:58
  Speaker 1: you know what, I need a babysitter here in Dallas.
• 8:01
  Speaker 1: Uh So I'm gonna fly to Washington, d C. And
• 8:04
  Speaker 1: pick up my father in law, bring him back here
• 8:06
  Speaker 1: so he can babysit tonight and I'll just fly him
• 8:08
  Speaker 1: back afterwards. That's exactly what he would do. Yeah, he
• 8:11
  Speaker 1: once he once flew to London to get two tires
• 8:14
  Speaker 1: for his motorcycle because it was cheaper than paying for
• 8:17
  Speaker 1: the freight shipping. Let me see here, July two thousand four.
• 8:21
  Speaker 1: In one month, Rosteen flew eighteen times to places like Nova, Scotia, Miami, London,
• 8:28
  Speaker 1: Los Angeles, Maine, Fort Lauderdale, New York. Yeah, and so
• 8:32
  Speaker 1: like this was like flying for these guys was a lifestyle,
• 8:36
  Speaker 1: like it was part of their life. It was actually
• 8:38
  Speaker 1: kind of like the center of their life. They both
• 8:40
  Speaker 1: have families, but they both had families that knew that
• 8:44
  Speaker 1: they were going to be probably in a different country
• 8:46
  Speaker 1: just about every day of the week. It was just
• 8:48
  Speaker 1: what they did. And so American had not planned for
• 8:52
  Speaker 1: guys like this to buy the air pass. This was
• 8:54
  Speaker 1: not part of the original plan. UM. So when they
• 8:57
  Speaker 1: started to realize that Room and Stein were each each
• 9:02
  Speaker 1: costing them about a million dollars a year in travel,
• 9:07
  Speaker 1: they decided that they needed to find a way to
• 9:09
  Speaker 1: basically cancel their air passes. And so they got an
• 9:13
  Speaker 1: elite task force on this, the UM the Revenue Integrity Team,
• 9:19
  Speaker 1: and said, go find a way to get rid of
• 9:21
  Speaker 1: these guys passes. Yeah, because there are obviously rules, but
• 9:24
  Speaker 1: not enough because they were doing things and it wasn't
• 9:27
  Speaker 1: just them. There were other people in the program doing
• 9:29
  Speaker 1: things like booking multiple trips in case like their one
• 9:33
  Speaker 1: vacation didn't work out, or they changed their plans last minute,
• 9:37
  Speaker 1: they could just jet on over to Paris instead of Hawaii,
• 9:40
  Speaker 1: or I don't really like flying with anybody, so I'm
• 9:43
  Speaker 1: just gonna book my companion seat to be empty on
• 9:46
  Speaker 1: every single trip, exactly. Yeah, and again basically what I
• 9:49
  Speaker 1: would do, yes, right, what what a lot of people
• 9:51
  Speaker 1: would do. And they were definitely not the only ones
• 9:53
  Speaker 1: doing this, and from from you know, the rules that
• 9:56
  Speaker 1: A had, it was not against the rules. A didn't
• 10:00
  Speaker 1: like it because they couldn't sell that seat and they
• 10:03
  Speaker 1: you know, UM had trouble filling a seat when it
• 10:05
  Speaker 1: was you know, their extra flights were canceled at the
• 10:08
  Speaker 1: last minute, UM because these people didn't pay cancelation fees.
• 10:11
  Speaker 1: So but there there wasn't anything they could get them on.
• 10:14
  Speaker 1: The one that they went after, these guys four was
• 10:17
  Speaker 1: selling their extra companion pass and it turns out like
• 10:21
  Speaker 1: they both did. They both gave away their companion passes
• 10:24
  Speaker 1: to total strangers pretty frequently. UM, Room had a habit
• 10:27
  Speaker 1: of finding people who suffered from AIDS, HIV AIDS, and
• 10:32
  Speaker 1: this is back in like the eighties and nineties, um,
• 10:34
  Speaker 1: when it was a totally different jam. And he said,
• 10:37
  Speaker 1: you know, hey, let me let me fly with you
• 10:39
  Speaker 1: and you can go see your family for free. But
• 10:42
  Speaker 1: they also they it really is. They also definitely sold
• 10:45
  Speaker 1: them to Room made a hundred grand alone from just
• 10:50
  Speaker 1: one couple or one couple alone paid him that much
• 10:54
  Speaker 1: UM to shuttle them back and forth to Europe. So
• 10:57
  Speaker 1: they were both definitely making money off of this on
• 10:59
  Speaker 1: the side too, And that's what American went after him for. Yeah,
• 11:03
  Speaker 1: I mean it sounds like for that one couple he
• 11:05
  Speaker 1: was just acting as their de facto travel agent at
• 11:08
  Speaker 1: one point. Yeah, and almost travel agent slash escort too. Yeah,
• 11:13
  Speaker 1: I'll fly well because he kind of had to fly
• 11:14
  Speaker 1: with him, right, that's my understanding of it. Yeah, So
• 11:17
  Speaker 1: if you read some of these articles, you can read
• 11:20
  Speaker 1: from Caroline Rothstein, who was I believe his daughter, and
• 11:25
  Speaker 1: she said, you know what, like my dad gets a
• 11:27
  Speaker 1: bad rap um. Sure he sold some, but it's not
• 11:31
  Speaker 1: like he was out there getting rich off this, and
• 11:33
  Speaker 1: it's not like there was anything in the policy at all,
• 11:36
  Speaker 1: saying they couldn't do it because they got the first version,
• 11:39
  Speaker 1: which did didn't say anything about selling him. I guess
• 11:42
  Speaker 1: they didn't think ahead. And then later and further subsequent
• 11:45
  Speaker 1: contracts they pointed out that you couldn't do it. But
• 11:47
  Speaker 1: she was like, they didn't break any rules even no,
• 11:49
  Speaker 1: they didn't, and UM, so American just basically said, well,
• 11:54
  Speaker 1: we still say you're you're you're abusing your passes and
• 11:57
  Speaker 1: they terminated both of them, and so some law stuits,
• 12:00
  Speaker 1: lawsuits started going back and forth. Um, and then Americans
• 12:04
  Speaker 1: parent company filed bankruptcy and so from everything I could find,
• 12:08
  Speaker 1: those lawsuits are now still sitting out there in like
• 12:11
  Speaker 1: legal limbo. But neither man has their air pass anymore.
• 12:14
  Speaker 1: And so you might say, you know, oh boo, who
• 12:17
  Speaker 1: these guys made their money back many times over with
• 12:20
  Speaker 1: all the travel they did, and you know, they kind
• 12:22
  Speaker 1: of almost seemed like they took advantage of a a
• 12:25
  Speaker 1: and played them for chumps. But Caroline Rothstein, Stephen Rothstein's daughter, says, like,
• 12:30
  Speaker 1: my dad lived to travel, or lives to travel. I
• 12:34
  Speaker 1: believe he's still alive. Um, and he he was basically
• 12:38
  Speaker 1: lost his life when American took away his his air
• 12:42
  Speaker 1: pass and much the same for Jacques room to Like,
• 12:45
  Speaker 1: all that guy loved to do was travel. That was
• 12:48
  Speaker 1: what he loved to do, and that's why one of
• 12:50
  Speaker 1: the reasons he would travel so much. Yeah. I got
• 12:53
  Speaker 1: a couple of feelings about that. One is, you, you
• 12:57
  Speaker 1: make this deal with American Airlines, they should have honored
• 12:59
  Speaker 1: it for life. Yeah. But the other also is like,
• 13:02
  Speaker 1: these guys can still travel, they just gotta pay for it, right. Well, yeah,
• 13:06
  Speaker 1: it's true. No, for sure, It's not like they're like
• 13:07
  Speaker 1: not like right, I bet I bet they didn't fly
• 13:11
  Speaker 1: American Airlines ever again, though I would guess not. But yeah,
• 13:14
  Speaker 1: I just have the impression that was a very bitter
• 13:16
  Speaker 1: pill for both of them, too small to swallow, and
• 13:19
  Speaker 1: they both I think, feel like they were targeted because
• 13:21
  Speaker 1: they were among the least wealthy air pass holders, so
• 13:25
  Speaker 1: they made easy targets. But they were also probably among
• 13:28
  Speaker 1: the two that were the um using it far and
• 13:31
  Speaker 1: away the most too. So who knows, But as far
• 13:35
  Speaker 1: as I know, it's not really resolved legally, but I'm
• 13:38
  Speaker 1: guessing as far as American Airlines is concerned, it's done.
• 13:42
  Speaker 1: You got anything else I got nothing else. I've never
• 13:45
  Speaker 1: heard of this. It's super interesting. I love it. Uh.
• 13:47
  Speaker 1: If you want to go learn more about this, go
• 13:51
  Speaker 1: check out Zachary Crockett stuff. He as a writer I
• 13:54
  Speaker 1: don't know if he still has or not, but a
• 13:55
  Speaker 1: long time writer for Priceonomics and others, and he just
• 14:00
  Speaker 1: really does a great job of finding really interesting stuff
• 14:03
  Speaker 1: and writing about it. So UM, hats off to him,
• 14:06
  Speaker 1: Hats off to the l A Times and to Caroline
• 14:09
  Speaker 1: Rothstein for publishing all these great articles, and hats off
• 14:12
  Speaker 1: to you for listening to short stuff Audios. Stuff you
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