FEDEX AND UPS WANT INVESTIGATION OF DHL’S CITIZENSHIP STATUS
FedEx Corp. and United Parcel Service want the U.S. Transportation Department to reinvestigate the citizenship status of DHL’s operations in the United States.
The express carriers said in separate petitions to the DOT late last week that they have gathered sufficient evidence from other federal agency reports and from a presentation made to the Federal Aviation Administration earlier this year, which show DHL’s U.S. operations serve as “conduits for foreign influence and control.”
Air carriers may operate within the United States if they meet U.S. corporate citizenship requirements. This requires that the president and two-thirds of the board of directors and other managing officers are U.S. citizens and U.S. citizens own at least 75 percent of the outstanding voting stock.
“The (Transportation) Department must vigorously enforce its citizenship rules,” FedEx said in its filing on Aug. 7. “Foreign airlines are keenly interested in access to the U.S. air transportation market, and they can gain the desired access by having effective control of U.S. carriers.”
“If a foreign carrier can take advantage of the lucrative U.S. market simply by investing in U.S. carriers, individual countries will have little incentive to offer the United States greater access to their markets or more liberal bilateral agreements,” the Memphis-based express carrier added. “Accordingly, if the United States hopes to achieve its goal of worldwide liberalization, it cannot be party to schemes that have no substance but are designed only to avoid U.S. air carrier citizenship rules.”
Duetsche Post, based in Bonn, Germany, plans to increase its share in DHL International Ltd. of Brussels with its pending acquisition of a 25-percent interest held by German airline Lufthansa AG. DHL holds a 25-percent voting stake in Chicago-based overnight package carrier DHL Airways. DHL management continues to insist that it meets U.S. corporate citizenship requirements.
FedEx and UPS first asked the DOT to investigate DHL’s corporate citizenship in January last year. DOT dismissed the complaints on May 11, 2001, stating that it had conducted its own review into the citizenship of DHL Airways and found nothing wrong. “That review predates the complaints in these dockets and it would be inappropriate to now begin dealing with the matter in an enforcement context,” DOT said.
Both FedEx and UPS questioned the “openness” of the DOT’s decision to throw out their initial complaint against DHL.
“This is not to say that the Department (of Transportation) must follow an elaborate, time-consuming and detailed investigative process in all cases involving the citizenship of an airline,” said UPS in its DOT filing on Aug. 9. “But the Department also cannot properly impose a blanket foreclosure of open process in all cases, at least without considering the nature and extent of any particular citizenship dispute.”
“Such a denial of open process is most obviously inappropriate where the citizenship controversy arises, as in the instant case, from the alleged involvement of a foreign government, and a regulated foreign monopoly capable of massive subsidization of the airline whose citizenship is at issue,” UPS said.
The European Commission recently chastised Deutsche Post for its use of public money to expand its influence in the express freight business and offer shipping rates that are inconsistent with the market.
UPS, based in Louisville, Ky., told the DOT in a June 20 filing that “due to the inherent global aspect of delivery services, Deutsche Post’s illegal activity affects the U.S. domestic and U.S.-European market.”
“The European Commission decision highlights the importance of having a clear policy of requiring that U.S. carriers remain under the firm control of U.S. citizens, free from improper subsidies that could distort the U.S. market,” FedEx said.