UPS, FedEx urge DOT to overturn Astar ruling

UPS, FedEx urge DOT to overturn Astar ruling

United Parcel Service and FedEx Corp. urged the U.S. Department of Transportation to overrule a recommendation by its own administrative law judge that Astar Air Cargo be allowed to operate as a U.S.-licensed airline.

The two big express carriers contended that Astar is controlled by DHL International and its corporate parent, Deutsche Post World Net, and does not meet requirements that domestic airlines by majority-owned by U.S. citizens.

UPS spokesman David Bolger argued that Deutsche Post is controlled by the German government and relies on its postal monopoly in Germany to underwrite its competition with private industry.

FedEx spokesman Anthony Hicks said, "We expect DOT will carefully scrutinize the recommended decision and enforce the law."

It's unlikely, however, that DOT will overrule Kolko's recommendation. The department had ruled on previous occasions that DHL Airways complied with U.S. citizenship requirements. It only complied with the demand by FedEx and UPS for an open hearing after legislation passed last spring mandated the appointment of an administrative law judge to investigate DHL Airways' ownership.

DHL Airways was renamed Astar after its sale in July to an investor group led by the airline's chairman and chief executive, John Dasburg.

Previously, a private investor named William Robinson owned 55 percent of the equity in the airline and 75 percent of the voting shares, with DHL International controlling the remaining shares.

The sale greatly undermined the case of the two big U.S. express carriers after DOT ruled that the administrative law judge should basically ignore the prior ownership structure and concentrate on the question of who controlled Astar after the sale. UPS and FedEx suffered a further setback after Ronnie L. Yoder, the judge initially handling the case, stepped down due to criticism from Astar that he was biased in favor of UPS and FedEx. UPS and FedEx had argued that DHL and Deutsche Post still controlled Astar after the sale because the airline gets more than 90 percent of its traffic from DHL.

"Now that FedEx and UPS have had the hearing they sought, we call upon them to accept Judge Kolko's decision and redirect their efforts to competing with Astar in the marketplace," Dasburg said in a statement.

The Astar chief expressed confidence that DOT will reaffirm Kolko's ruling.