DOT order limits scope of DHL inquiry

The U.S. Department of Transportation issued a decision on Wednesday that had something for everyone in the controversial DHL Airways case, which pits the world’s express giants against each other. In a victory for Deutsche Post World Net, owner of DHL International, the DOT ordered the administrative law judge conducting the inquiry to focus solely on the current ownership. of DHL Airways, now Astar Air Cargo.

But in a victory for FedEx and United Parcel Service, the DOT dismissed Astar’s motion to terminate the entire proceeding. The agency also said it would defer its determination on the legitimacy of Astar’s citizenship until the administrative law judge, Ronnie L. Yoder, issues his recommendations. In addition, it extended Yoder’s deadline from Oct. 31 to Dec. 1. Yoder had asked for a three-month extension.

Deutsche Post and DHL previously held 45 percent of the equity in the cargo airline through a subsidiary called DHL Holdings (USA) Inc. FedEx and UPS contend that Deutsche Post and DHL International effectively controlled the airline, even though an American citizen, William Robinson, nominally held 55 percent of the equity and 75 percent of the voting stock in the airline. U.S. law requires that U.S. citizens must control at least 75 percent of the voting stock in any U.S. airline.

Robinson and DHL Holdings sold their shares in DHL Airways to BD Air Partners, an investor group led by Astar’s chief executive, John Dasburg, on July 14.

The inquiry will apparently now focus on the question of whether Deutsche Post and DHL effectively control Astar because a Fort Lauderdale, Fla.-based subsidiary called DHL Worldwide Express provides more than 90 percent of Astar’s cargo.

FedEx and UPS contend that the July 14 sale was a mere shuffling of the deck, with Deutsche Post and DHL still holding the cards.

Holly Arthur, a Deutsche Post spokeswoman, welcomed the decision. “DOT did the right thing. We’re pleased that the process can move forward on this clearly drawn issue,” she said, referring to the order that Yoder focus on the carrier’s current ownership. As a result, she said, Wolfgang Pordzik, president of Deutsche Post World Net USA, the company’s U.S. lobbying arm, will not appear for a scheduled deposition on Friday, nor will Deutsche Post produce any documents subpoenaed by FedEx and UPS.

Arthur added that the decision “strengthens our case considerably that (Klaus) Zumwinkel and (Uwe) Doerken have nothing relevant to contribute here.” Zumwinkel is chief executive of Deutsche Post, while Doerken is DHL’s chief executive. FedEx and UPS had sought to compel both of them to testify.

The decision apparently lets Robinson, the reclusive Idaho investor who nominally controlled DHL Airways before the sale, off the hook. After Robinson defied orders from Yoder to appear for depositions first in Los Angeles and then in Washington, FedEx and UPS asked the federal district court in Washington to order him to testify. Robinson’s attorneys argued that his testimony would no longer be relevant since he no longer owned any shares in the airline.

Despite the ruling on Robinson, FedEx spokeswoman Kristin Krause said, “We’re really happy with the order and we think it reaffirms everything we’ve been saying.” Krause added that FedEx thinks it may still be able to compel Robinson to testify.