Europe seeks UPS, Star Air probe
The European Commission has called on Copenhagen to investigate the ties between United Parcel Service and a Danish airline in an attempt to establish whether the US delivery giant has effective control over the carrier – a finding that, if confirmed, could lead the airline to lose its licence.
The Commission’s request was made in a formal letter to the Danish government in late August, and was sparked by a complaint from Deutsche Post, the German postal group and an arch-rival to both UPS and FedEx, another US delivery group.
According to a spokesman for Loyola de Palacio, the European Union transport commissioner, Brussels wants the Danish authorities to make sure that Denmark’s Star Air, which UPS uses for deliveries within the EU, is a European-controlled entity.
Though Star Air is a subsidiary of Moeller-Maersk, the Danish shipping group, the Commission cites complaints according to which almost all its economic activity is generated by UPS, which is also allegedly responsible for the airline’s fleet, crews and technical maintenance.
Should the Danish government or the Commission decide that this relationship constitutes effective control, Copenhagen would have to revoke the licence, since only airlines majority-controlled by EU companies are allowed to operate in the Union. Though the Commission itself is not empowered to revoke the licence, it could force the Danish government to do so.
Deutsche Post argues that its core competitors, UPS and FedEx, are breaching European aviation rules while exerting massive legal pressure on Deutsche Post to ground its US airline partner, arguing that it was de facto foreign- controlled.
Deutsche Post, fed up with the legal hassles caused by its competitors in the US, said it used the case of Star Air as an example to highlight just how unfairly it was being treated. It argues that UPS is not only Star Air’s main customer, but moreover features UPS’s trademark brown colours. Deutsche Post says the relationship between Star Air and UPS is similar to its relationship with Astar, formerly known as DHL Airways, in which Deutsche Post used to own a 25% stake but no longer owns shares.
“What we do with Astar is exactly the same as what UPS does with Star Air,” Deutsche Post said. “We don’t want UPS or anyone else to lose their licence, but we want the same chances for everyone.”
UPS and FedEx argue that Deutsche Post breaches US rules, which prevent airlines from being more than 25% foreign-controlled. The US Transportation Ministry has been holding a hearing on the matter since August.
