ALPA’s dues are 1.95 percent of your airline income. That’s the easy part. More complex is the manner in which the dues income is allocated to provide funding for all of the union’s activities. This structure has been carefully honed over time and has served ALPA members well. (As a reminder, the MEC is the Master Executive Council, the highest governing body at the airline level, and is made up of the elected status representatives from each domicile, plus the MEC chairman, vice chairman, and secretary‐treasurer.)
The first 0.35 percent of the 1.95 percent is allocated to the Special MEC Reserve Account (SMRA). SMRA funds are allocated directly to each MEC, which uses SMRA only after the MEC operating income (discussed below) is exhausted. The MEC has the option to budget and spend SMRA funds, save them for future use, or refund the funds to the members of its airline. MECs often retain unspent SMRA funds for future years to support contract negotiations or special MEC needs.
The next component of dues⎯0.10 percent of the 1.95 percent⎯is allocated to the ALP A Administrative and Support Account (A&S), discussed below.
After deducting the two components of dues allocation mentioned above, 1.50 percent of the 1.95 percent remains; it’s called “operating income.” This 1.50 percent is allocated to the MECs, the A&S account, and the Operating Contingency Fund (OCF). The MEC account allocation is 24 percent of the 1.50 percent, the A&S account allocation is 71.5 percent of the 1.50 percent, and the OCF account allocation is 4.5 percent of the 1.50 percent.
The MEC account allocation (24 percent of the 1.50 percent) is distributed to each MEC, except that ALPA’s largest groups⎯Delta, FedEx, Continental and United⎯are allocated 20 percent of the 1.50 percent. The remaining 4.0 percent (24 minus 20 percent) of operating income of the largest pilot groups is redistributed to smaller MECs throughout ALPA. In essence, ALPA’s larger pilot groups provide a subsidy to ALPA’s smaller pilot groups to ensure adequate funding for their union activities.
The A&S account allocation (71.5 percent of the 1.50 percent, plus 0.10 percent of the 1.95 percent discussed above) provides services that are available to all ALP A pilot groups, including representation, economic and financial analysis, legal, retirement and insurance, communications, engineering and air safety, ALPA’s air safety structure, membership services, over three dozen training programs, aeromedical services, and local council funding and services.
In addition, the A&S account supports administrative services such as the National Officers, National Committees, Legislative Affairs, Governing Bodies, Finance, Information Systems, and Human Resources.
Over 86 percent of ALPA’s current 315 employees and 89 percent of its employee expenses are paid out of the A&S account.
When an MEC uses the services of the departments described above, that MEC is not charged for the services provided by the A&S account. This is the ALPA “toolbox” of services that includes professional, technical, administrative, and clerical personnel. The central pooling and allocation of these resources has enabled ALP A to ensure the availability of highly qualified and experienced personnel to all member pilot groups on a cost‐effective basis.
The OCF account allocation (4.5 percent of the 1.50 percent of operating income) primarily provides funds to smaller pilot group MECs during times of financial need, usually as a result of contract negotiations. A large portion of the OCF account is allocated in advance to the smaller pilot groups’ MECs during the budget preparation process based on anticipated negotiating schedules and other special needs. A portion of the OCF is also set aside for contingencies and other special needs of the union.
ALPA’s budgeting system has been refined over the decades so that it best serves its members. Along with highly qualified staff professionals, there is significant pilot involvement in ALPA’s financial process. ALP A is required to establish a balanced budget annually, which is approved by the Executive Council.
The rules established regarding the use of each fund discussed below have a common thread: to ensure the financial integrity of the Association while simultaneously providing to its members the best services of any pilot union in the world.
ALP A has specific accounts⎯MEC Account, A&S Account, SMRA, and the OCF⎯out of which specific services are provided to the membership. Policies have been established within ALP A to identify the specific share of total dues income to be allocated to each account. Such policies have provided significant benefit to the Association by ensuring financial discipline within the development of Association budgets.
For 2009, the Association reported a $1.6 million deficit from operations on $101 million in revenue. For 2010, the preliminary results show a $.5 million surplus on $108 million in revenue. The Association expects a breakeven year in 2011.
ALPA’s key financial asset, the Major Contingency Fund, had a balance of $53.2 million as of December 31, 2010.
The MCF is used to provide funding for MECs to support communications, Family Awareness, strike preparation and Pilot‐to‐Pilot® activities during advanced stages of negotiations, and if necessary, running an effective strike. It is also used to defend the integrity of the Association
and address issues of urgent concern that significantly and adversely affect the airline piloting profession and which cannot be funded by normal Association budgeting practices and policies.
Information provided by: ALPA’s Finance Department
Updated April 2011