FedEx, UPS lose Astar appeal

FedEx, UPS lose Astar appeal

The Bush administration Thursday dealt a setback to FedEx Corp. and United Parcel Service, upholding an administrative judge's decision that Astar Air Cargo is a U.S. company and not illegally controlled by overseas interests.

The Department of Transportation declined to review the ruling on the international ownership dispute in the hotly contested case involving the former DHL Airways.

Months before DHL Astar was created, the U.S. express carriers pressured Congress to order a new review of the DOT's conclusion that DHL Airways was not directly owned or controlled by Brussels-based DHL Worldwide Express, a unit of German postal monopoly Deutsche Post World Net.

But last December, an agency administrative law judge found that Miami-based Astar easily met the U.S. corporate citizenship test and was not under the control of Deutsche Post, despite financial links presented by FedEx and UPS. They charged that Deutsche Post was using the airline as an entry to the lucrative domestic airfreight market. The airline gets most of its business from DHL.

The Transportation Department found in its final decision that Judge Burton Kolko "thoroughly analyzed" the evidence and "applied the correct legal standards" for determining corporate citizenship.

FedEx and UPS can appeal in federal court.

Under U.S. law, at least 75 percent of a domestic airline's voting stock must be owned or controlled by Americans. The carrier's operations also must be controlled by U.S. citizens.

An investor group led by Astar's chief executive, John Dasburg, purchased the carrier in July 2003 from William Robinson, a private investor who owned 55 percent of the equity and 75 percent of the voting shares in DHL Airways. DHL International owned the remaining shares.