Back in 1981, in an effort to raise some quick funds, American Airlines introduced a $250,000 pass (about $641,000 today) that would allow customers to fly on its airlines for free for the rest of their lives. In 1990, they bumped the price to $600,000 (about $1.07 million today), and then in 1993 to $1.01 million (about 1.7 million today). Despite the sticker price, the airline has since admitted this is one of the costliest mistakes it has ever made.

Introduced in the summer of 1981, the unlimited “AAirpass” was originally envisioned as, to quote the airline’s former chief executive Robert Crandalll, something that “firms would buy for top employees” and it was thought that the scheme would bring in many millions of dollars in revenue in a very short timespan- essentially, easy money now to grow the company with, with future costs of having people use these passes being negligible to absorb. However, the AAirpass’ high cost resulted in a less than enthusiastic response from customers and in the end, only 66 passes were actually sold.

This is a shame for consumers, because those 66 customers got an amazing deal. As Crandall later noted, “It soon became apparent that the public was smarter than we were.”

According to the rather loose terms of the original AAirpass contract, customers who purchased one were entitled to free first class travel anywhere in the world and were given lifetime membership to American Airline’s Admirals Club, which grants priority boarding, same day booking and access to lounges across the world that offer free food and drink for members.

These benefits alone have seen some likening the unlimited AAirpass to “owning a fleet of private planes”. As one of the top frequent fliers, Steve Rothstein said, “A very fun Saturday would be to wake up early and fly to Detroit, rent a car and go to Ontario, have lunch and spend $50 or $100 buying Canadian things…” and then be back by dinner.

In another case, an individual travelled all the way to London 16 times in a single month, sometimes just staying long enough for a bite to eat before flying back home.

But it didn’t stop there. Savvy customers found ways to get even more out of their passes. You see, under the terms of the agreement, customers were still allowed to claim air miles on all flights they took, allowing those who used the service frequently (because why wouldn’t you?) to rack up literally millions of air miles in the space of just a handful of years, which they could give away to family and friends or in the cases of some customers, sell.

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According to an internal report from American Airlines in 2007, the top unlimited AAirpass holders cost the airline in excess of a million dollars that year, each. Although, it would be interesting to actually see how they tallied this up, because if first class wasn’t sold out on a particular flight an AAirpass owner took, the airline wouldn’t actually lose money other than taxes, the price of in-flight consumables and the like, as it’s likely many of these customers wouldn’t have taken the flights in question had they not had the unlimited pass.

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For the curious, you can still purchase an AAirpass today, though not too shockingly, American Airlines no longer offers an unlimited version. The last time they did so was in 2004, three years before they’d realised exactly how much these passes were costing them every year. At that time, they offered the pass through Neiman-Marcus for $3 million (about $3.7 million today) per pass.  Despite that this would have still been a pretty good deal for a certain type of wealthy flyer or certain businesses to have such tickets at their disposal any time, nobody bought any at that price point.

Quoted:
American went bankrupt I thought. Wouldn't that nullify free passes if they wanted?

Quoted:
I can't imagine flying enough to spend a million on airfare, and I ride around in airliners professionally...