Fedex, UPS want new review of DHL U.S case

FedEx and United Parcel Service want the Department of Transportation’s inspector general to review the controversial inquiry into the ownership of the former DHL Airways. The inspector general, Kenneth Mead, issued a report earlier this year that was highly critical of DOT’s prior handling of complaints by FedEx and UPS that Deutsche Post World Net and DHL International illegally controlled DHL Airways, now Astar Air Cargo, which operates 40 aircraft on U.S. domestic routes.

Mead’s report helped pave the way for legislation mandating that DOT appoint an independent administrative law judge to review the citizenship case. Astar and Deutsche Post won a key victory on July 30 when DOT ruled that the judge should limit his inquiry to the airline’s ownership after it was sold on July 14 to BD Air Partners, an investor group led by John Dasburg, the carrier’s chairman and chief executive.

“This is simply another delaying tactic by increasingly desperate competitors,” said Matt Triaca, a spokesman for Astar. Triaca likened FedEx and UPS to a boxer “who’s gone eight rounds and can’t see anymore and is just flailing.”

The latest move by FedEx and UPS came one day after Astar urged DOT to deny a request by its competitors to reconsider the July 14 order.

“Competitors are taking a nonsensical view of the law, and we are hopeful that the DOT will reject their petition,” said Ray Lutz, Astar’s vice president for business development and strategic planning. “It’s time for all parties in this case to focus on what really matters: the kind of company that Astar is today. We are confident that the upcoming hearing will confirm that Astar is an American-owned, managed and controlled company.”

The hearing is scheduled for Aug. 19. However, that may be postponed in light of the plethora of motions before DOT. The administrative law judge, Ronnie L. Yoder, has postponed indefinitely a pre-hearing conference that had been scheduled for Thursday.

In their motion to DOT requesting intervention by the inspector general, FedEx and UPS cited DOT’s award of $4.86 million to DHL Airways in compensation for losses resulting from the Sept. 11 terrorist attacks. “Confidential documents must be reviewed to determine whether DHL Airways could have had any compensable losses, given that all of DHL Airways costs should have been reimbursed by DHL Worldwide Express,” the filing stated.

FedEx and UPS also complained bitterly about the failure of their rivals to comply with requests to produce both key documents and executives as witnesses in deposition proceedings. They “act as if they have amnesty from oversight and compliance with the laws and regulations administered by the Department,” the companies charged.

Deutsche Post, and Astar contend, however, that FedEx and UPS are simply trying to preserve their duopoly in the U.S. express market by preventing the emergence of a strong third competitor.