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Mon, Dec 17, 2012

AOPA Winds Up 2012: Sweetheart Deals, Big Salaries And 'No More Questions'

After Much Delayed Receipt Of AOPA's Latest IRS-Form 990s, We Have More Questions Than Answers -- And AOPA Isn't Interested In Talking Anymore...

First of all, ANN realizes that it has had some pretty tough questions to ask of and about AOPA this year... but after the last few years of aero-decline, we felt that it behooved us to demand more of what our associations are supposed to be doing for us, than ever before.

It took ANN what we consider to be in inordinate amount of time to get AOPA to cough up the latest IRS Form 990 (for 2011), which are required to be disclosed to the public. Despite promises that the documents, signed by former AOPA CFO Doug Kitani on August 9th, 2012, would be available by the first week of November, we did not get them (and only after several requests and some mysterious delays), until over a month later.

First... a little 'good' news... Total AOPA revenue in 2011 increased to $34,470,816, compared to $32,631,227 in 2010. In addition, Membership dues revenue was up in 2011, $16,051,829, compared with $15,390,752 in 2010.

For 2011, AOPA reported a small decrease of 3.1 percent in total assets ($90,333,696) and its total liabilities ($16,784,550) remained virtually the same with an increase of less than one percentage point.

Big Bucks

Now... the no-so-good: Despite the fact that AOPA claims that salaries are declining at what they unabashedly call the most powerful voice for general aviation, the ratio of top salaries to the amounts taken in by the association are kinda worrisome. AOPA CEO Craig Fuller received a combined total of $815,293... supposedly a 4% cut from the previous years total (as claimed by AOPA's Katie Pribyl).

Former CFO Roger Myers pulled down a total of $800,817 (with some of that being deferred funds). (Then) COO Rob Moran took down some $462,387 (Moran has since departed AOPA). 'Director' Diana Roberts received $416,219 (also from what appears to be some deferred funding). Sr. VP For Gov't Affairs, Melissa Rudinger received $321,757. There are a number of other salaries in the 200-300K range, but its obvious that while aviation struggles to survive, that the upper reaches of the AOPA staff are experiencing little of the hard times that the rest of the industry is battling.

While the numbers appear sky-high, AOPA's Pribyl states that, "AOPA’s compensation practices are reviewed by an independent compensation consultant to ensure that our compensation policies and practices are reasonable and comparable to other organizations similar to AOPA. Ultimately, our goal is to attract and retain the talent we need to best serve our members; therefore our compensation and benefits structure is based on competitive market rates."

ANN submitted about a dozen questions to AOPA, via Pribyl, over the past several days, and received a number of short answers, that were limited in detail -- before basically being told that they were not going to answer our questions anymore.

Among the questions that ANN brought up were questions as to the true nature of some $5,030,256 in expenses, that were written off in a non-descript category listed as "Other." When questioned, Pribyl told ANN that "Regarding the $5,030,256 figure -- the 'other' notation is classified as such based on the IRS definitions used to prepare the 990. That is, if professional fees do not fall into the other categories listed in a-f, then they are classified as 'Other'. These fees were paid for a host of services, including research, show logistics, magazine production, creative services, software maintenance agreements, software hosting fees, web development, etc." Mind you, there are a number of classifications for expenses and money asserted to have been paid for items like Magazine production, and the like... so something a little more detailed would clear up a lot of confusion that such a short-shrift answer creates.

Please keep in mind that we are not accountants and that much of the forms and language one needs to wade through does require careful study and accounting-specific knowledge/explanations that AOPA should be able to answer and explain. If they want to. But we clearly get the impression that AOPA does not. ANN has been seeking the guidance of folks with accounting credentials and we're learning that they seem to have as many questions as we do... and we will present those shortly.

Still; there are some glaring issues that truly concern us. More than the sky-high salaries for an organization representing an industry in decline, more than the issue of increasing membership dissatisfaction with the direction of the organization, more than the multiple reports of (occasionally lavish services and treatment received by Fuller and other senior members of AOPA, and even more than issues raised about conflict of interest; we simply see an organization that is increasingly antagonistic towards who question it, as well as being more and more evasive about its mission, conduct and internal operations.

ANN is receiving, on a seemingly daily basis, calls and emails from members, former staff, current staff, major donors, senior advisers and/or industry players that are voicing extreme concerns about the direction and conduct of AOPA. Some of the information they impart and the stories they tell are occasionally very worrisome, while others are sadly amusing (the stories of Craig and his many 'pseudo-pontifical' Limousine arrivals, in particular, have been voiced by quite a few -- and the specifics of those tales would be funny if not for the fact that we need 'lean' leadership, not outwardly extravagant operations at a time when much of the industry is simply struggling to stay alive.

Fuller's predecessor was known, for instance, to be highly averse to the use of limousine services, reportedly noting that he thought that members seeing him hopping into or out of a limousine was an image he did not want his members to be subjected to. Fuller, apparently, doesn't have the same concerns... with a number of detailed reports of extensive limousine usage, expensive dinners and social events, and quite a bit of "no expense spared" treatment being accorded to the AOPA President on many of this travels.

One intriguing issue that AOPA glossed over was the use of two high-end eating establishments, both reportedly having Fuller as a financial partner/investor, for AOPA functions. Pribyl stated that there is no conflict of interest in using those businesses (one right in Frederick, MD) for AOPA business. Pribyl stated that, "There is no conflict of interest. Craig Fuller had a small investment in 2 restaurants when he joined AOPA in 2008, which was fully disclosed as required. AOPA hosted events at dozens of establishments during the year and only involved a restaurant in which he had an investment 5 or 6 times that yielded no direct benefit to Mr. Fuller."

Sweetheart Deal?

Finally (for now), there was the glaring issue of an item that appeared in a document that Pribyl claimed was an independent audit of AOPA for the years, 2010-2011. A lone item caught our attention right away... in the last few pages of the report (Page 22 of 24), under a heading of "Note J-Subsequent Events," we read the following data, "In February 2012, a subsidiary corporation was formed to manage the relationship with and a potential investment in an aviation technology organization (the "ATO'). AOPA entered into a financing agreement with the subsidiary to provide a $650,000 line of credit at a rate of one month LIBOR plus 100 basis points to support the short-term working capital needs of the subsidiary. The subsidiary entered into a commercial agreement with the ATO to support the development of aviation software. An advance against the ATO's share of revenue from potential, jointly developed products in the amount of $300,000 was made in February 2012."

The published statement did not identify the "ATO" and gave no clue to the ID of that organization or more detailed info as to the services provided, but questions put to AOPA just before they decided that they would not answer any more of them, identified the ATO as Seattle Avionics, the so-called partner for AOPA's very controversial "FlyQ" offering.

In other words... AOPA made hundreds of thousands of AOPA member dollars available to Seattle Avionics for what appears to be one heck of a sweetheart deal in which they not only got to be the beneficiary of a partnership with AOPA and its willingness to play favorites, but in a way that just reeks of all manner of concerns. No one among the many players in the online/computer based flight planning community reports having been offered a similar deal... there is no evidence that the matter was put to fair (much less, public) bid, and there still seems to be little or no concern on the part of AOPA about the damage that might be done to those private businesses (the same companies that literally created the aero-business segment that AOPA has now entered and is attempting to profit from) that not only have to compete with AOPA's anointed flight-planning partner (one whom has been the subject of multiple complaints here at ANN). To many who have commented to ANN about the FlyQ matter, the general sentiment seesm to be, "This deal stinks..." and the news that AOPA put hundreds of thousands of member dollars up in a reportedly no-bid gig to a player that has an "interesting" history could make this all the more problematic.

AOPA itself admits the funds were "new product seed money" -- and further notes that other details of this so-called 'sweetheart' deal are "proprietary" (though AOPA members may have their own opinion of about that--it was THEIR money, after all) and that they will not be discussed with ANN... and that further, they seem to have had enough of our questions... end of story.

No More Questions

ANN is studying a lot of data right now... and we have a pretty (and growing) unsettled feeling about it all. No matter how contentious some of our questions may have been with other aviation leaders, we do not recall such a wholesale repudiation of a series of what appear (to us) to be appropriate questions. Tom Poberezny never pulled this (and even admitted that he occasionally enjoyed our 'pain-in-the-ass' questions). Phil Boyer never pulled this (and often enjoyed a good "heated discussion" so long as it remained respectful). Rod Hightower didn't pull this (and in fact, granted reluctant approval to one of the tougher series of questions we asked last year). Pete Bunce never pulled this. Ed Bolen never pulled this.... you get the idea.

We are relying on professional experts to look over some accounting topics and issues in the most recent 990s as well as other issues that continue to be brought up by folks that allegedly have significant knowledge of AOPA and AOPA operations. At a time when aviation is all but swirling the drain, we SO need VERY strong, 'beyond reproach' leadership that is dynamic, professional, on-mission, innovative, caring and TRULY devoted to the best interests of the average Mom and Pop Aviator... and concerns seems to be growing that AOPA is not living up to those desires. We're hearing from hundreds of readers and industry personnel... and we're beginning to feel very strongly that an overhaul of AOPA's leadership, protocols and mission may be necessary if it is going to be of real value to an industry that needs all of that... and then some.

More info to follow...

FMI: Hey ANN Readers -- What Do You Think Of AOPA 2012???

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