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The frequent fliers who flew too much

Many years after selling lifetime passes for unlimited first-class travel, American Airlines began scrutinizing the costs — and the customers.

May 05, 2012|By Ken Bensinger, Los Angeles Times

"There was one flight attendant, Pierre, who knew exactly what I wanted," Vroom said. "He'd bring me three salmon appetizers, no dessert and a glass of champagne, right after takeoff. I didn't even have to ask."

Creative uses seemed limitless. When bond broker Willard May of Round Rock, Texas, was forced into retirement after a run-in with federal securities regulators in the early 1990s, he turned to his trusty AAirpass to generate income. Using his companion ticket, he began shuttling a Dallas couple back and forth to Europe for $2,000 a month.

"For years, that was all the flying I did," said May, 81. "It's how I got the bills paid."

In 1990, the airline raised the price of an unlimited AAirpass with companion to $600,000. In 1993, it was bumped to $1.01 million. In 1994, American stopped selling unlimited passes altogether.

Cable TV executive Leo Hindery Jr. bought a five-year AAirpass in 1991, with an option to upgrade to lifetime after three years. American later "asked me not to convert," he said. "They were gracious. They said the program had been discontinued and if I gave my pass back, they'd give me back my money."

Hindery declined, even rebuffing a personal appeal by American's Crandall (which the executive said he did not recall). To date, he has accumulated 11.5 million miles on a pass that cost him about $500,000, including an age discount and credit from his five-year pass.

"It was a lot of money at the time," Hindery said. "But once you get past that, you forget it."

In 2004, American offered the unlimited AAirpass one last time, in the Neiman-Marcus Christmas catalog. At $3 million, plus a companion pass for $2 million more, none sold.

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Raised just miles from American's Fort Worth headquarters, Bridget Cade started in its reservations department in 1990. In 2007, she was promoted to the elite revenue integrity team, charged with rooting out passengers, travel agents and others suspected of cheating the airline.

Her first big job was to investigate AAirpass users.

In September 2007, a pricing analyst reviewing international routes focused the airline's attention on how much the AAirpass program was costing, company emails show.

"We pay the taxes," a revenue management executive wrote in a subsequent email. "We award AAdvantage miles, and we lose the seat every time they fly."

Cade was assigned to find out whether any AAirpass holders were violating the rules, starting with those who flew the most.

She pulled years of flight records for Rothstein and Vroom and calculated that each was costing American more than $1 million a year.

Rothstein, she found, would sometimes pick out strangers at the airport and give them surprise first-class upgrades with his companion pass. Once he flew a woman he'd just met in New Delhi to Chicago, a lift American later valued at nearly $7,500.

There was nothing in the AAirpass terms prohibiting that. But Cade considered the habit striking in light of something else she found. Rothstein made 3,009 reservations in less than four years, almost always booking two seats, but canceled 2,523 of them.

To Cade, this was evidence that Rothstein reserved flights he never intended to take. It also allowed him to hold seats until the last minute and offer them to strangers, she said later in court depositions, preventing American from selling them. Cade decided it was fraud and grounds for revocation.

On Dec. 13, 2008, Rothstein and a companion checked in at Chicago O'Hare International Airport for a transatlantic flight. An American employee handed him a letter, which said his AAirpass had been terminated for "fraudulent behavior."

He apologized to his friend and filed suit in Illinois the following March.

Vroom's travel history told a different story, Cade found. Time and again, he booked trips with people he'd never flown with before, traveling round-trip to Japan or Europe without even staying overnight.

"We suspect he is selling his AAirpass companion tickets," Cade wrote in a February 2008 email. That, she later said, was against the rules.

She decided to try to catch him in the act.

Checking Vroom's bookings for first-timers, Cade came across Auyon Mukharji, a recent college graduate abroad on a music scholarship. He was scheduled to fly from London to Nashville with Vroom on July 30, 2008.

Working with airline security, Cade hatched a plan to confront Mukharji at London's Heathrow Airport, challenging him to admit he had paid Vroom.

"Mukharji appears to be naive, without financial wherewithal, and most probably very anxious to return 'home,'" American's head of global investigations wrote in an email.

At check-in, American agents detained Mukharji and escorted him to a private office. A former New York police detective working in American security offered a free ticket to Nashville if he'd confess to giving Vroom money.

But Mukharji insisted he hadn't, and American ultimately released him and gave him a coach ticket home. He could not be reached for comment.

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