Welcome to the Marketing Rescue Podcast, the weekly show where we unpack epic marketing failures to brand rescues and comebacks. In this episode, Nico Coetzee and Chad Childress, co-founders of KPI Agency, are discussing Steve Rothstein, Jacques E. Vroom, and the AAirpass.
In 1978, American Airlines was hit by the Airline Deregulation Act, introducing a free market to the airline industry. Airlines needed to find creative ways to generate cash. They decided to sell their customer’s the ultimate travel perk, an unlimited first class ticket for life. Plus, passholders had the option to buy an unlimited companion pass, for anyone! Passes were typically purchased by wealthy individuals, including Mark Cuban. Steve Rothstein also purchased an unlimited travel pass, plus a companion pass. Rothstein accumulated over 40 million miles in 25 years. He ended up costing the airline millions of dollars each year because of his lifetime total of 10,000 flights.
Jacques E. Vroom also purchased the unlimited airline pass. He took out a loan to actually afford the high ticket price. However, it was well worth the price, Vroom flew an average of 2 million miles a year over twenty years. Vroom, much like Rothstein, trusted the contract with the airline, it was supposed to be an unlimited lifetime pass. Vroom allegedly booked flights for strangers and accepted payments in return for the companion pass ticket. At first, there were no limitations or rules for selling your seats. American Airlines was losing money left and right, so they gathered evidence against Vroom and Rothstein. Eventually, both Rothstein and Vroom were stripped of their unlimited air pass without any warning. Later, American Airlines ends up filing for bankruptcy, and Mark Cuban can still use his unlimited pass to this day.
The moral of the story is, don’t assume anything in marketing, do your research! People are going to take advantage of any and every situation. Despite the pass failing multiple times, American Airlines still sold it. Nico and Chad say it’s essential to have a process in place to avoid the same thing happening over and over again. After making a massive investment, and things start going wrong, people will double down to make it right. However, we shouldn’t be afraid of failure. If something fails, then learn from the mistake and move on. Greed, fear, a lack of understanding, and a lack of planning are reoccurring themes throughout every marketing failure.
Enjoy the show!
We speak about:
- [00:45] About Steve Rothstein
- [07:00] About Jacques E. Vroom Jr.
- [12:25] Terminating the unlimited air pass
- [16:15] American Airlines files bankruptcy
- [17:50] Pushing the limits
- [20:45] Have a process in place
- [22:10] Not understanding the customer