When was the last time that you shelled out $10k, $100k or like those $500k (in 1980s terms) for a single person's air travel expenses? With today's real inflation + financing cost certainly far beyond $2M.
Spending such amounts in the first place demonstrated very strong confidence and trust into AA and was a very sweet deal for AA as well (I'm sure it still is even though they are now wanting to get rid off the benefit of their counter-party / don't want to pay their part of the deal).
Keep in mind that none of those were in their teens when they put out such amounts so they are now merely coming to the end of their traveling spree. After all, this is only a life-time deal for those passengers if AA survives that long (and that wasn't so sure at that point as well).
For that amount - $500k in the 1980s - you could buy a pretty large house that even after the housing crisis will today still be worth a large multiple of that. Another example - even with all its ups-and-downs a better indication of the change in real value of the 500k till today might be e.g. the stock market with the Dow being below 1k then and now about 13k (this goes both ways and might also provide an indication for AA's financing cost since then).
But AA seemingly prefers to charge their normal U.S. customer even for luggage checked in, give vast discounts to their largest corporate customers (TMK the biggest in the industry - up to 70%), hike up their advertising spending and cut down in services.
The last figure I've seen is that they increased their spending for online display ads by 600% to about $27M - I guess a few 100K soft cost (the planes also fly without those few airpass holders and almost never fly at 100% capacity) for letting them carry on flying for a few more years and use this as a demonstration of their great customer service would have been better spent and provided a better story any online ad could ever tell. In other words - priceless!
What most companies don't realize is how differently these schemes are perceived among the masses.
The initial target segment of VIP's, companies purchasing as packages and business segment of people looks naive and too much of an wrong assumption to me. You really have to understand the mind of a common man here. How would your life be if you are told, you can travel infinitely for free your whole life? Is it worth investing a little extra money for such infinitely free vacations? I bet it is!
More than the money, I think the company is just irritated that the scheme was badly gamed and the customers have had the better of them.
Spending such amounts in the first place demonstrated very strong confidence and trust into AA and was a very sweet deal for AA as well (I'm sure it still is even though they are now wanting to get rid off the benefit of their counter-party / don't want to pay their part of the deal).
Keep in mind that none of those were in their teens when they put out such amounts so they are now merely coming to the end of their traveling spree. After all, this is only a life-time deal for those passengers if AA survives that long (and that wasn't so sure at that point as well).
For that amount - $500k in the 1980s - you could buy a pretty large house that even after the housing crisis will today still be worth a large multiple of that. Another example - even with all its ups-and-downs a better indication of the change in real value of the 500k till today might be e.g. the stock market with the Dow being below 1k then and now about 13k (this goes both ways and might also provide an indication for AA's financing cost since then).
But AA seemingly prefers to charge their normal U.S. customer even for luggage checked in, give vast discounts to their largest corporate customers (TMK the biggest in the industry - up to 70%), hike up their advertising spending and cut down in services.
The last figure I've seen is that they increased their spending for online display ads by 600% to about $27M - I guess a few 100K soft cost (the planes also fly without those few airpass holders and almost never fly at 100% capacity) for letting them carry on flying for a few more years and use this as a demonstration of their great customer service would have been better spent and provided a better story any online ad could ever tell. In other words - priceless!