2017 Annual Summary

Hello Members past and present,

 

You have brought it to our attention that our traditional annual report was too detailed, complicated, a little…“sterile”… and doesn’t really explain why the direction of the Plan sometimes changes, why we make the decisions we do, what we are working on and could all this be more easily explained. Based on your feedback we decided to change to an easier-to-read format summarizing the year’s problems (and victories!) and our solutions moving forward. The full financial  statement should be completed by the end of April and we will post that on the website. In this email, all monetary figures are in AED (except where stated otherwise). 

 

Before we continue we want to offer our heartfelt condolences to the family and friends of Robert Brown following his passing; Robert was a long-time claimant and exemplified the true meaning of Pilots Helping Pilots; we also share the pain of one of our members following the death of his wife and the upcoming claim from one of our pilots who was involved in a tragic motorcycle accident resulting in the loss of limb.

 

We also want to take this opportunity to welcome Captain David Cerio to the API Team. API has always prided itself on being Emirates Pilots helping Emirates Pilots and David’s eagerness to step in keeps that line unbroken from the first day that Andy Bell offered his help to his fellow pilots to today. David has been with Emirates for nearly eleven years and believes, as do we all, that we can’t effectively represent the Emirates Pilots without an Emirates Pilot going through exactly what you are, knowing the problems you face and bringing your concerns to the rest of the management team. Welcome, David!

 

Lastly we’d like to say thank you to Captains Lajos Szabo and Sebastien Bertin for taking the time to write testimonials for our website regarding their loss of license experiences.  

 

So, here we go…

CHALLENGE: Increase in Self-Reported Disability claims. According to our actuary’s projections, there has been an unaccountable increase in these claims (54% of the current beneficiaries with another 9 pending) for disabilities that are disabling from a regulatory standpoint  (Meniere’s Disease / unexplained hearing loss  / chronic fatigue) and often have no medically identifiable symptoms beyond the patient’s own statements vs. life-limiting disabilities (cancer, diabetes, tumor, loss of limb) and are statistically well outside the standard range of the population. It appears to our actuary as well as to Harvey Watt & Co. (the independent medical advisory service contracted by the API Trust) that a small group of our fellow pilots have found a clever way to leave the company, collect the Emirates three-year Loss of License payout and take money for two years from API.

 

Unfortunately this level of claims for Self-Reported Disabilities is unsustainable to the preservation of the fund as well as to the core principle of the founders of the Plan which was caring for truly ill pilots like Robert Brown. Based on this the API management, as well as the Trustee, resolved that the only way to reduce these statistically improbable numbers is to reduce the benefits payout for self-reported disabilities to six months. This was, without question, the hardest decision we have had to make but we must always find the balance between the protection of the individual vs. the protection of the fund. This reduction still provides a limited protection to the individual pilot on top of the three year loss of license payout from the company and protects the fund for future claims.

 

2011

2012

2013

2014

2015

2016

2017

Self-Reported

2

1

1

1

4

1

6 pending

3

3 pending

Life-Limiting

1

0

2

2

3

3

1

 

CHALLENGE: Decline in membership. This is due, primarily, to the world-wide pilot shortage and the massive number of resignations from Emirates. While there is little we can do to combat this particular problem, we were able to make contact with new pilots joining the company and offering a free-month’s incentive if they join while still in training as well as trying to bring back old members who had been terminated after not paying their contribution. Due to company restrictions we are unable to advertise our product so word-of-mouth still remains the best (and only) way of bringing in new members and if someone joins based on your referral you get a free month’s contribution as our way of saying thank you! At the same time our actuary is recommending a rise in the contribution rate from AED 395 to AED 449 (13.67%) for members under 60 and for members over 60 from AED 490 to AED 559 (14.08%).  The last time contribution rates were raised was January of 2013 and this new rate will go into effect on March 1, 2018. 

 

We also ask you, the member, if you can suggest anything we might have missed as a way to increase membership beyond word-of-mouth? Perhaps you have ideas, seen from the outside, that we haven’t considered. It is in every member’s benefit to increase the number of contribution-paying members to keep the mutual-benefit fund growing!

2014

2015

2016

2017

1758

1587

1587

1546

 

CHALLENGE: Increased accounting and data entry costs. Since its inception in 2007 our accounting was done on an excel spreadsheetmanaged by Daniella Williams. As the organization grew we recognized this was an unsuitable way to do business and resolved  to automate the accounting services and move from sole individuals to a corporate team; we contracted with Fuller Accounting in Dubai to provide full-time accounting and the data entry from daily .pdf bank statements into our website. Our ultimate goal is to have a fully automated system where data is uploaded directly from our bank but presently our bank does not have the computer capacity to execute this. We are currently investigating other banking options but for now, we are where we are.

Provider

2016

2017

2018 (forecast)

Fuller Admin

12,000.00

76,500.00

102,000.00

Fuller Accounting Services

90,000.00

90,000.00

108,000.00

TOTAL

102,000

166,600

210,000.00

 

CHALLENGE: Legal services and the API Trust. LIPS (the forerunner to API) was started by a few good men wanting to do nothing more than help their fellow pilots and that has remained the core of why we do what we do. However, watching how other pilot-run companies in Dubai have done business coupled with your concerns about fraud (or outright theft) of your hard-earned contributions led us to place the Rules and the funds in a UK-based trust, regulated by the Guernsey Financial Services Commission. While this resulted in increased legal costs for the set-up and maintenance of the API Trust (not to mention the time-consuming burden to you in completing the document delivery requirements of joining the Trust) our product has become much more stable and independent than ‘back in the day’ when pilots actually reviewed your medical records, made decisions regarding benefits entitlements and paid entitlements out of personal bank accounts. 

 

There are several, ongoing legal disputes from claimants regarding their entitlements which also increases the legal costs of the Trust’s attorneys. This is an expected by-product of the impartiality of the Trust which bases its entitlement decisions solely on the recommendation of Harvey Watt & Co. which makes its recommendation based on the Rules of the Plan which are written by your fellow Emirates pilots. 

 

For those of you unfamiliar with the API Trust; having placed the bank account where you make your contributions into the Trust, payments from the account can only be directed by the Trustee, not by the pilots who manage the Plan. The Trustee makes that decision based on the recommendation of Harvey Watt & Co. or the Admin team (regarding Leave Service Benefit calculations); the pilots who manage the Plan have no authority to direct the Trustee in that payment process. By placing the Rules into the Trust the pilots who manage the Plan wanted to ensure that the Trustee reviews any changes to the Rules and makes the decision to approve or reject based on the Trust’s legally-regulated duty to protect the members (you) as well as the fund (for everyone); again, the pilots who manage the plan have no authority to direct the Trustee as to whether their suggestions will be followed.

Provider

         2016

          2017

Hamdan Al Harmi (Dubai)

84,591

84,240.00

Sovereign Trust (Guernsey UK)

123,970

126,848.56

Total

   208,561

    211,088.56

 

CHALLENGE: Corporate contracts. We have included the larger service providers we contract with on your behalf. We are constantly negotiating with the providers but they remain ‘the cost of doing business’. As an aside, we are often asked if Harvey Watt & Co. receive extra payments based on the recommendations they provide and the answer is no; they receive a flat-rate per member per month regardless of their recommendation or extra time spent in the appeals process when disputes occur.

Provider

2016

2017

2018 (forecast)

Oman Insurance Company (life insurance included with membership)

913,989.00

886,724.54

943,247.84

Harvey Watt & Co. (USA)

250,687.86

243,294.25

243,755.57

Experion Website Management

26,163.49

61,538.36

34,138.86

Total

1,190,840.35

1,191,557.15

1,221,142.27

 

SUCCESS: Employee costs. As part of the two-and-a-half-year process to upgrade our accounting and website services we were forced to enlist experts to design, develop and test the specific website systems we needed to: onboard  members to the API Trust; migrate the information from our spreadsheets to an online database; give members access to view their own payments, membership status and Leave Service Benefit calculation online and be prepared for the future when we can upload data directly from our bank. Thankfully that process has been completed and we reduced those employees. Looking beyond that, we made the decision to reduce the administrative staff even further and take on more of the work ourselves in order to lower costs as much as possible. 

 

2016

2017

2018 (forecast)

Number of API employees

11

11 to 5

5

Employee cost

823,857.66

681,856.83

300,413

 

SUCCESS: Investments. API is a truly unique product offering exceptionally low contributions vs. enormous payout potential. Unfortunately, due to its unique characteristics which are often not understood by UAE regulators (specifically the concepts of “trusts”, “non-profit” or “mutual benefit”) as well as our aversion to risking your contributions made it cartoonishly difficult to acquire an investment platform.  This year we were, finally, able to do so with the help of Mondial Investments and Takaud Savings and Pensions, LTD. and we have begun conservatively investing the fund. Our first investment was made in April and the returns are shown below.

 

In several weeks we will post the investment summary on our website; these are your funds being invested and you have an absolute right to know what’s happening with them.

Amount Invested (USD)

8-month Return (USD) net of fees

Percentage

993,895

101,217

10.18

 

SUCCESS: Customer Service. We are often asked why we don’t engage you, our customers, by email; it is simply because we cannot afford to overlook even one message from you and you wouldn’t forgive us if we did; we all know what it’s like to send an email and not get a response ☹!  You are paying us to support you and you deserve a timely, accurate answer to your question; we have no excuse for not providing it and with emails, logistically, we just couldn’t. This is why we ask you to open a support ticket because  it allows the entire API organization to see the problem, communicate internally, maintain a record and most importantly provide timely resolution to you. We receive an average of six customer messages a day (7 days a week)and each one must be read, researched and answered on the same day received and some of our more involved cases have over one hundred separate communications embedded on the same ticket.

 

Our customer service platform (Zendesk) provides us with feedback on how we do and for 2017 we had an average ‘real-person’ reply time of 5.2 hours; this is 17.3 hours shorter than the industry average and 88.7% better than the other 114,000 companies which use the same platform! As well, your overall satisfaction rate, based on your comments, was 84.2%. And next year we hope to do better. When we solve a ticket we ask you to take the time to write down how we did and how we can do better; it’s only through this process that we learn what you want from us.

 

SUCCESS: Contacting us. We now have a ‘duty phone’ which allows the members to call and speak to the pilots who manage the Plan about the Plan. We can’t answer questions about your payments because we don’t have access to that but we’ll do the best we can for you; notwithstanding the varying time zones in which we all operate we are trying to be available during Dubai working hours and if we can’t answer right away we will call you back.

 

We hope you have found this report useful and informative. If you have any questions please visit our website at www.aircrewprotection.org, go to the Member Support section and click the green box that pertains to your question; this will open a support ticket form for you to fill out. And, as always, we welcome any suggestions you have to make the Plan better. 

 

Best regards and thank you for your loyal support,

Darwin Triggs, Peter Davis, Joe Pack and David Cerio