Professor: AStar owners scored a 'sweetheart deal'

Professor: AStar owners scored a 'sweetheart deal'

A Columbia University law professor hired by United Parcel Service and FedEx Corp. told a Department of Transportation judge that the new owners of AStar Air Cargo have scored a sweetheart deal by buying the airline formerly known as DHL Airways.

Jeffrey N. Gordon, co-director of the Columbia University Center for Law and Economic Studies, said during a hearing examining the corporate citizenship of AStar that the company's largest customer and former partial owner controls the airline. Gordon said German-owned Deutsche Post World Net and its subsidiaries exert an illegal degree of control over the Miami-based airline.

Gordon's statements came during the third day of a hearing presided over by DOT administrative law judge Burton S. Kolko. Gordon, an expert witness contracted by AStar's competitors, spent most of the day answering questions posed by lead AStar attorney Sanford M. Litvack. The hearing began on Tuesday and could last as long as three weeks.

During questioning by FedEx attorney Jeffrey Kelsey, Gordon outlined a National Mediation Board proceeding from earlier this year that Gordon said showed that AStar's predecessor, DHL Airways, was under the control of DHL Worldwide Express, a wholly owned Deutsche Post subsidiary. Gordon said he concluded that because DHL Worldwide Express documents used in that case said DHL Worldwide and DHL Airways were under common control and that AStar and DHL Worldwide would therefore also be under common control.

"There was no change in the way in which the integrated enterprise (Astar) continued to conduct its business," Gordon said.

Litvack countered that the federal board's final decision in that review found that the airline was not under the control of the German-based company. Therefore, he said, the same finding should apply to the new company, which changed ownership on July 14.

U.S. law requires airlines that fly within the U.S. meet corporate citizenship requirements, including that they be under "actual control" of U.S. interests.

Earlier in the hearing, AStar Chairman and Chief Executive John Dasburg, one of the company's new owners, took the witness stand. Dasburg testified that he and his two co-owners, Richard C. Blum and Michael R. Klein, are in full control of the company.

Judge Kolko faces a Nov. 30 deadline by which time he must give DOT officials his opinion about whether AStar meets U.S. citizenship requirements.