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I’d reiterate that he paid $150k for the right to have an empty seat next to him, give it away, etc.

This guy is my age. I knew a number of guys like this in college; operators, business majors at MIT in high stakes poker games in the cafeteria, people who use their brains for an edge in zero sum games, rather than other things. I would not have been this guys friend; I have a strong distaste for this sort of person. But what he did was not wrong. He made a calculation that any wealthy business guy could make, but few did, and got a few million return on an up-front $400k cash investment. And he didn’t know how, or couldn’t afford to hire the right representation when his counterparty decided to welsh on the deal.

"...welsh on the deal."?

I imagine you aren't aware, but in the future you may wish to pick a different word. The root of this phrase is the ethnic stereotype that the Welsh -- people of Wales -- are not to be trusted.

Bit of background here:

https://www.bbc.co.uk/news/uk-politics-33238925

Origins of the term is disputed.

I absolutely apologize. The slur I used is pretty ingrained.

I should have said, “escape from the deal.”

Again, I apologize.

Your comment is an excellent analysis of the article. I suggest in the future you choose a different idiom for reneging than "To Welsh".
A Wikipedia article lists the following reasons for the pass termination of Steve Rothstein:

> the pass had been terminated due to fraudulent behavior, specifically his history of approaching passengers at the gate and offering them travel on his companion seat and for using the companion program to purchase an adjacent empty seat under a fake name to keep them vacant, which was often used for privacy or extra carry-on luggage.

Source: https://en.wikipedia.org/wiki/AAirpass

Ah I didn't know this, and the author mentioned it but obviously glossed over the details... more details here: https://casetext.com/case/rothstein-v-american-airlines
American Airlines did this at a time when they needed to raise capital (when it was otherwise difficult to do so) so it solved a problem for them. And no one really foresaw how it would be (an)used.

But these pricing models are dumb because they create the incentive to invalidate the pass. And that was inevitable.

The problem here is that the airline invalidated the passes for behavior they enabled such as making multiple bookings at the same time (ie booking agents would tell them to do this and make the bookings for them).

Also I know selling your commission seat or transferring the pass was against TOS but one example quoted here of approaching people at the gate to use the companion fare wasn’t against TOS AFAIK as long as no money changed hands.

Also it’s worth pointing out that these passes cost serious coin back in the day.

Definitely... At an abstract level, it reminds me of "Unlimited is like a Ponzi Scheme" https://news.ycombinator.com/item?id=25406072
The most important thing about this story is the fact that there is in this world a man called Jacques Vroom.
Vroom means pious in Dutch. That may explain it's use as a family name.
Its definitely a first-world problem.

But I noted, he never made his own reservation on a computer, ever. He used the same booking agent his whole life. So all his tickets were arranged by AA themselves, with full knowledge.

How can it be fraud, when they were full partners in the deal?

Just like fraud in any other contractual agreement. He said he'd not do X and then did X which resulted in his unjust enrichment and/or extra expense to the other side.

Not saying it happened, but "you should have/could have stopped me from violating the contract" is not a defense to fraud.

From what I've read in the article the contract wasn't very clear about what was allowed and what wasn't.
Fraud in the inducement. If you lie to get someone to do something they wouldn't normally do, that's bad. If you give someone a fake name to get a ticket they wouldn't normally give you, that's bad.
If you ask, do you mind if I borrow your car, then they say yeah sure, here are the keys. Then they call the police and tell them you stole their car. I would call that a little disingenuous...and not fraud. They helped him book his seat and buy the one next to him using the ticket unlimited miles they sold him and their booking service. I think I would at least call AA a party to the fraud they were accusing him of. So, if they were defrauding themselves as agents of themselves, shouldn't they be mad at themselves. If you call BestBuy and order a widget and the BestBuy employee gives you 10% off a $100 item, should they be able to sue you for stealing $10?
I understood they told him to just use his kid's name or whatever. To reserve a seat for his papers.

Probably outside the rules of the agreement. But is it fraud?

Previously: https://news.ycombinator.com/item?id=20510933
I feel it’s very hard to game these sort of benefits these days because they will have some legalise in the contract that will put a limit or reserve right to revoke the benefit for any reason.

Is there anything similar today that one can purchase and get life time benefits like this? I feel the life of companies are so short that “life time” actually means less than 10 years.

I was surprised to learn that "lifetime warranty" nowadays means that the warranty is valid for the expected lifetime of the product, not the owner. So the company arbitrarily decides that e.g. a pair of headphones should last 5 years, they specify that somewhere in the fine print and just call it "lifetime".
I think this is about the fourth time I've seen this story on HN.
... and the fourth time I've rolled my eyes at the idea international day trips by air were "integral to his being" or whatever the exact wording of that legal stretch-of-the-imagination was.
Yeah it’s hard to sympathize with someone whose “entire persona was shifted by this event”. He abused the service and they found reason to terminate the contract, or sucks but if he didn’t ghost ticket or abuse the companion rule they would have had no recourse.
People attach a lot of self-worth and self-identity to aspects of their behavior. For some it’s where they go hiking, or where they live, or a hobby. It’s not hard at all for me to imagine that someone attached themselves to this idea.
At least .. https://hn.algolia.com/?q=golden+airline+ticket
He was sorta abusing it and airlines have tiny margins, so sooner or later they had to put a stop to it.