UPS, FedEx Get More Time for Arguments in Astar Case

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United Parcel Service and FedEx Corp. received an extension last week to make their argument for a review of a recommendation to allow rival Astar Air Cargo to fly as a U.S. airline.

The U.S. Department of Transportation gave the airlines until Jan. 23 instead of Jan. 12 to file their petitions and let them use 50 pages to make their argument instead of 20.

The challenge by UPS and FedEx comes after a DOT administrative law judge issued a recommended decision 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.

FedEx and UPS are challenging the ownership and control structure of DHL Airways, arguing that it remains controlled by Brussels-based DHL Worldwide Express and its parent Deutsche Post despite being sold last summer for $57 million to a group of American investors and renamed Astar. Under federal law, an airline owned or controlled by a foreign entity cannot carry passengers or freight between U.S.-based locations.

"We disagree with this decision, but understand that the Department of Transportation will now review the matter," UPS spokesman David Bolger said. "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."

In his decision, DOT administrative law judge Burton S. Kolko wrote that "Astar is, so to speak, its own person. Neither DHL Worldwide Express nor the DHL network can be said to be in actual control of Astar in any relevant or meaningful sense."

Because 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 this year. 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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