UPS Duckwalk

UPS Duckwalk

Copyright 2003, Traffic World, Inc.

If it looks like a UPS plane and flies UPS cargo, it must be a UPS plane. At least, that''s the argument Deutsche Post World Net officials are making as they try to turn citizenship complaints in Washington around by attacking UPS''s European operations.

In a "white paper" DPWN started circulating on Capitol Hill last week, the German operator argues that Deutsche Post subsidiary DHL''s activities in the United States are little more than what UPS has done with its extensive flights in Europe. German-based Deutsche Post and its subsidiaries comprise 90 percent of Miami-based AStar Air Cargo, the air operator for DHL in the United States.

UPS and FedEx are in the middle of a court challenge charging that AStar should not be treated as a U.S. corporate citizen. A finding that a foreign entity illegally controls AStar would ground the airline.

The main comparison Deutsche Post offers is UPS''s relationship with Star Air A/S, a Copenhagen-based, fully owned subsidiary of Maersk Air A/S. Star Air flies intra-European flights for UPS on UPS-owned planes painted in UPS livery that Star leases from the integrator. In the United States, much of AStar''s 40-plane fleet flies painted with DHL livery. The airline''s hub is in Cincinnati.

DPWN does not charge wrongdoing by UPS in how it conducts its European business. Rather, Deutsche Post says the comparison suggests the citizenship complaint is hypocritical. "There''s absolutely nothing unlawful or sinister about the UPS-Star Air relationship, just as there''s nothing unlawful or sinister about the DHL Worldwide-AStar relationship," AStar spokesman Matt Triaca said.

After Department of Transportation administrative law judges began examining DHL Airways'' citizenship last spring, representatives of the airline and of Deutsche Post have sought to paint FedEx and UPS as protectionist of their position in the U.S. domestic express marketplace.

DHL Airways evolved into AStar when three U.S. investors became the airline''s 100 percent owners in a July sale. UPS and FedEx argue that regardless of the change in ownership, the airline is still unduly controlled by German interests.

Deutsche Post World Net USA President and CEO Wolfgang Pordzik said the company prepared the UPS paper after hearing from its federal lobbyists that there were a lot of misperceptions on Capitol Hill about UPS''s role in the European market. "Here on Capitol Hill, sometimes there is the perception out there as if UPS in the EU, in Germany has all these restrictions," Pordzik said.

The paper''s target audience is Congress members and their staff. Pordzik said he kept the two-page paper short intentionally. "We don''t claim that this is a comprehensive analysis," he said. "Attention span on Capitol Hill is limited."

UPS spokesman David Bolger said his company''s European network is irrelevant to the case in the United States involving AStar. "What they''ve essentially gone to is our website or our annual reports, which I think the entire world has seen," Bolger said. "And they seem to be discussing an issue that has no relevance to the pending case, none whatsoever."

Bolger said UPS is not the company that should be examined. "We''re not on trial," he said. "We''re not on trial in the United States. We''re not on trial in Europe."

Triaca called UPS in Europe a "mirror image" of AStar in the United States. In Europe, UPS operates out its Cologne, Germany, hub. The Atlanta-based company undertook a major European expansion in the mid-1990s. "It is clear that Europe has become UPS''s largest international market and that the company plans to build and grow its network there," the Deutsche Post paper reads.

The DOT case resumes this week when AStar Chairman, President and CEO John Dasburg and co-owner Michael Klein, are expected to return to answer more questions.

A federal magistrate also heard arguments last week that Deutsche Post has not been forthcoming in supplying documents on DPWN''s relationship with DHL Airways and AStar.