As a frequent flyer, 2005-2008 was also a period of time when there were empty seats on planes and the airline industry was still recovering from 9/11. You could fly and half the plane might be empty. Cancellations fees weren't nearly as bad either.
Let's not jump to conclusions that he was acting in bad faith.
That's true. Reminds me of a story of a guy who would buy a first class ticket, go to the lounge and eat lunch, and then reschedule his ticket for the next day, every day... free lunch for a year[0].
I re-booked a flight while in the security line because I got an alert that my original flight was delayed and was offered a "tap here to re-book on this flight" button.
So I did.
It took a minute to explain why my printed boarding pass no longer matched my flight itinerary when I got to the front of the security line, but not too big of a hassle.
In my opinion, if you want to judge this as fraud, you have to do it, at least in part, by looking at it through the lense of a regular passenger.
If a regular passenger who pays for each ticket individually did this, would they have a problem? Of course not. AA could only dream of such a passenger.
They abused people's generally poor financial reasoning to claim fraud uncontested. It's easy to get people to think of this as "free flights for life, poor airline abused" simply because the ticket was so massively undervalued compared to the use potential. In reality, each and every one of those seats were paid for, AA were just upset with themselves for the price they charged and fabricated a fraud claim to end it.
These are two different products, akin to a subscription service vs outright buying something, so the comparison isn't apt. You can return something to the big box store where you bought it if you don't use it. You're not entitled to that with the subscription service.
It's not a subscription, he outright prepaid for the rest of his entire life, for the service he was paying for individually. So similar is the product, that a separate system wasn't even designed for it and he'd still get stuff like airmiles per flight.
It was a prepay for the same product, not a subscription for a new one.
Let's not jump to conclusions that he was acting in bad faith.