Blow to UPS and FedEx as Astar is judged to be US-controlled

A federal judge has ruled that Astar Air Cargo is a US-controlled air carrier, dealing a hefty blow to UPS and FedEx which have long argued the airline is owned and operated by the German postal monopoly, Deutsche Post.

The decision, administered by Burton Kolko, an administrative law judge at the Department of Transportation, removes a major hurdle for Deutsche Post as it muscles into the lucrative $47bn US package delivery market.

Astar flies almost exclusively express packages for DHL Worldwide Express, a subsidiary of Deutsche Post.

The decision also signals the near end of a three-year ordeal by FedEx and UPS to prove Astar’s close ties with Deutsche Post violate foreign ownership laws.

Astar and Deutsche Post have both accused UPS and FedEx of using the foreign ownership argument as an excuse to protect their home turf.

Mr Kolko’s 38-page decision will be reviewed by the DoT and a final order will be issued, possibly in early 2004.

Both UPS and FedEx can call for a discretionary review of the decision. If the final order is still unsatisfactory, the companies can seek a judicial review in the US court of appeals.

Mr Kolko refuted allegations by UPS and FedEx that Astar’s dependence on DHL Worldwide Express for revenues effectively implied control by Deutsche Post.

The judge also dismisses the argument that Mr Dasburg received a “sweetheart” deal to purchase Astar in return for ceding control to Deutsche Post.

Mr Dasburg bought the Miami-based air carrier for about $60m with two other investors.

DHL Worldwide Express “is not a parent or affiliate or even, at bottom, a business partner of Astar. It is a client,” Mr Kolko wrote.

“The salient question is who has the power to direct or dominate Astar. And the answer is Astar.”