Cargo Airlines Escalate Opposition to New Pact Between U.S. Postal Service and Federal Express

On the eve of a House Government Reform Committee hearing on Postal Service performance, executives of three airfreight carriers announced that their companies will step up opposition to an unprecedented agreement between the U.S. Postal Service and Federal Express.

In a joint statement, the three executives said:

"Mail users, taxpayers and our companies will pay a high price for the
fatally flawed contract between the Postal Service and FedEx. The
unprecedented contract is worth more than $6 billion over seven years. USPS
prohibited competition in making FedEx the sole source carrier for the three
types of mail most important to the general public: Priority Mail, Express
Mail and First Class letters.
"In scrapping the present system — which distributed responsibility among
several carriers — USPS will incur higher costs. Service standards will
decline. The public interest will be at serious risk because if a single
company's hub is crippled — by a strike, a natural disaster, or other
unanticipated event — paralysis will occur.
"USPS management sold this scheme to the Postal Board of Governors by
using grossly inaccurate figures. The data employed exaggerated the per-pound
price of shipping mail under the present system by 50 percent. USPS also
projected artificial inflation of costs if the present system continued. It
understated the expenses of the FedEx arrangement and ignored a proposal by a
potential competitor that actually would have reduced costs. For all these
reasons, the FedEx deal should be shelved and other alternatives examined."

The joint statement was made by Jerry Trimarco, CEO of Emery Worldwide
Airlines; Delford Smith, Chief Executive Officer of Evergreen International
Aviation; and Ron Ryan, CEO of Ryan International Airlines.
Written testimony on the FedEx issue is being submitted to the House of
Representatives' Government Reform Committee, which is holding its hearing on
Wednesday, April 4 at 10 a.m. While Congress has no direct role in approving
USPS contracts, legislators are likely to be called on to appropriate funds
necessary to offset USPS's growing deficit. Critics of the FedEx deal argue
that instead of saving money, it will add between $433 million and $1.17
billion to USPS' costs over the contract's life.
The airfreight carriers mentioned above, along with several other
companies, today are petitioning the Justice Department to open a formal
inquiry into the antitrust aspects of the transaction. The Antitrust
Division, according to news media accounts, is already considering this
possibility. By granting FedEx control over air transportation, USPS is
further narrowing what is already a concentrated industry. Over time, reduced
competition will force price increases, service reductions, or both. (Copies
of the petition and other materials can be obtained by going to:
http://wswinteractive.com/usps/ ).
In a matter of national security, the agreement threatens the existence of
a number of the regional airlines that participate in the Civil Reserve Air
Fleet (CRAF). The CRAF program is a highly successful partnership between the
airfreight industry and the government created in 1952. Under CRAF, air
carriers voluntarily contribute aircraft in the event the military is unable
to fulfill airlift requirements during an emergency. For example, CRAF
participants flew thousands of supply missions during Operation Desert
Storm/Desert Shield. Significantly, the two participants which flew more
missions than any other carrier were Evergreen and Emery. They were two of a
handful of carriers — which initially did not include FedEx — to fly into
the hostile Gulf region.
On another front, the U.S. Court of Appeals in Washington in July will
hear oral arguments in a suit brought by Emery Worldwide Airlines to block the
transaction. The suit argues that awarding the $6 billion-plus contract in the
absence of competition, and even in the absence of due public disclosure,
violated both statute and USPS regulations.

SOURCE Emery Worldwide, Evergreen International Aviation and
Ryan Web Site: http://wswinteractive.com/usps