Judge Rules Astar Air Meets US Citizenship Rules

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A U.S. Department of Transportation administrative law judge issued a recommended decision on Dec. 19 that Astar Air Cargo, formerly DHL Airways, is owned and controlled by U.S. citizens, allowing the airline to continue hauling packages domestically and internationally for Deutsche Post's DHL Worldwide Express unit.

The ruling was a setback for FedEx Corp. and UPS Inc. Both had challenged the ownership and control structure of DHL Airways, which had been Chicago-based before it was sold last summer for $57 million to a group of American investors and renamed Astar. The lead investor was DHL Airways chairman John Dasburg.

Under pressure from the U.S. cargo giants, Congress ordered the DOT -- months before the creation of Astar -- to review its previous conclusion that DHL Airways was a U.S. company and not an arm of Brussels-based DHL Worldwide Express. Under federal law, an airline owned or controlled by a foreign entity cannot carry passengers or freight within the U.S.

"We disagree with this decision, but understand that the Department of Transportation will now review the matter," said David Bolger, a UPS spokesman. "We urge a careful analysis. DHL is owned and controlled by the German government, which relies on the German postal monopoly to underwrite its competition with private industry. We continue to believe that DHL also controls Astar, in violation of U.S. law."

"Astar is, so to speak, its own person," judge Burton S. Kolko, the U.S. Department of Transportation administrative law judge, wrote in a decision released Friday. "Neither DHL Worldwide Express nor the DHL network can be said to be in actual control of Astar in any relevant or meaningful sense."

Since the ruling is a "recommended decision," DOT officials will review his findings. All parties will get a chance to petition the department for discretionary review with the final decision expected in 2004. It is uncommon for the agency to overrule an opinion of an administrative judge. The losing side can appeal any final decision to the federal courts.


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