Cargo Airlines Escalate Opposition to New Pact Between U.S. Postal Service and Federal Express

Exclusive Deal Will Add to Costs and Give FedEx Monopoly Powers



Apr 03, 2001, 01:00 ET from Emery Worldwide, Evergreen International Aviation and Ryan

    WASHINGTON, April 3 /PRNewswire/ -- On the eve of a House Government
 Reform Committee hearing on Postal Service performance, executives of three
 airfreight carriers announced that their companies will step up opposition to
 an unprecedented agreement between the U.S. Postal Service and Federal
 Express.
 
     In a joint statement, the three executives said:
 
     "Mail users, taxpayers and our companies will pay a high price for the
 fatally flawed contract between the Postal Service and FedEx. The
 unprecedented contract is worth more than  $6 billion over seven years. USPS
 prohibited competition in making FedEx the sole source carrier for the three
 types of mail most important to the general public: Priority Mail, Express
 Mail and First Class letters.
     "In scrapping the present system -- which distributed responsibility among
 several carriers -- USPS will incur higher costs.  Service standards will
 decline. The public interest will be at serious risk because if a single
 company's hub is crippled -- by a strike, a natural disaster, or other
 unanticipated event -- paralysis will occur.
     "USPS management sold this scheme to the Postal Board of Governors by
 using grossly inaccurate figures.  The data employed exaggerated the per-pound
 price of shipping mail under the present system by 50 percent. USPS also
 projected artificial inflation of costs if the present system continued. It
 understated the expenses of the FedEx arrangement and ignored a proposal by a
 potential competitor that actually would have reduced costs. For all these
 reasons, the FedEx deal should be shelved and other alternatives examined."
 
     The joint statement was made by Jerry Trimarco, CEO of Emery Worldwide
 Airlines; Delford Smith, Chief Executive Officer of Evergreen International
 Aviation; and Ron Ryan, CEO of Ryan International Airlines.
     Written testimony on the FedEx issue is being submitted to the House of
 Representatives' Government Reform Committee, which is holding its hearing on
 Wednesday, April 4 at 10 a.m. While Congress has no direct role in approving
 USPS contracts, legislators are likely to be called on to appropriate funds
 necessary to offset USPS's growing deficit. Critics of the FedEx deal argue
 that instead of saving money, it will add between $433 million and $1.17
 billion to USPS' costs over the contract's life.
     The airfreight carriers mentioned above, along with several other
 companies, today are petitioning the Justice Department to open a formal
 inquiry into the antitrust aspects of the transaction.  The Antitrust
 Division, according to news media accounts, is already considering this
 possibility. By granting FedEx control over air transportation, USPS is
 further narrowing what is already a concentrated industry. Over time, reduced
 competition will force price increases, service reductions, or both. (Copies
 of the petition and other materials can be obtained by going to:
 http://wswinteractive.com/usps/ ).
     In a matter of national security, the agreement threatens the existence of
 a number of the regional airlines that participate in the Civil Reserve Air
 Fleet (CRAF).  The CRAF program is a highly successful partnership between the
 airfreight industry and the government created in 1952. Under CRAF, air
 carriers voluntarily contribute aircraft in the event the military is unable
 to fulfill airlift requirements during an emergency. For example, CRAF
 participants flew thousands of supply missions during Operation Desert
 Storm/Desert Shield.  Significantly, the two participants which flew more
 missions than any other carrier were Evergreen and Emery.  They were two of a
 handful of carriers -- which initially did not include FedEx -- to fly into
 the hostile Gulf region.
     On another front, the U.S. Court of Appeals in Washington in July will
 hear oral arguments in a suit brought by Emery Worldwide Airlines to block the
 transaction. The suit argues that awarding the $6 billion-plus contract in the
 absence of competition, and even in the absence of due public disclosure,
 violated both statute and USPS regulations.
 
 

SOURCE Emery Worldwide, Evergreen International Aviation and Ryan
    WASHINGTON, April 3 /PRNewswire/ -- On the eve of a House Government
 Reform Committee hearing on Postal Service performance, executives of three
 airfreight carriers announced that their companies will step up opposition to
 an unprecedented agreement between the U.S. Postal Service and Federal
 Express.
 
     In a joint statement, the three executives said:
 
     "Mail users, taxpayers and our companies will pay a high price for the
 fatally flawed contract between the Postal Service and FedEx. The
 unprecedented contract is worth more than  $6 billion over seven years. USPS
 prohibited competition in making FedEx the sole source carrier for the three
 types of mail most important to the general public: Priority Mail, Express
 Mail and First Class letters.
     "In scrapping the present system -- which distributed responsibility among
 several carriers -- USPS will incur higher costs.  Service standards will
 decline. The public interest will be at serious risk because if a single
 company's hub is crippled -- by a strike, a natural disaster, or other
 unanticipated event -- paralysis will occur.
     "USPS management sold this scheme to the Postal Board of Governors by
 using grossly inaccurate figures.  The data employed exaggerated the per-pound
 price of shipping mail under the present system by 50 percent. USPS also
 projected artificial inflation of costs if the present system continued. It
 understated the expenses of the FedEx arrangement and ignored a proposal by a
 potential competitor that actually would have reduced costs. For all these
 reasons, the FedEx deal should be shelved and other alternatives examined."
 
     The joint statement was made by Jerry Trimarco, CEO of Emery Worldwide
 Airlines; Delford Smith, Chief Executive Officer of Evergreen International
 Aviation; and Ron Ryan, CEO of Ryan International Airlines.
     Written testimony on the FedEx issue is being submitted to the House of
 Representatives' Government Reform Committee, which is holding its hearing on
 Wednesday, April 4 at 10 a.m. While Congress has no direct role in approving
 USPS contracts, legislators are likely to be called on to appropriate funds
 necessary to offset USPS's growing deficit. Critics of the FedEx deal argue
 that instead of saving money, it will add between $433 million and $1.17
 billion to USPS' costs over the contract's life.
     The airfreight carriers mentioned above, along with several other
 companies, today are petitioning the Justice Department to open a formal
 inquiry into the antitrust aspects of the transaction.  The Antitrust
 Division, according to news media accounts, is already considering this
 possibility. By granting FedEx control over air transportation, USPS is
 further narrowing what is already a concentrated industry. Over time, reduced
 competition will force price increases, service reductions, or both. (Copies
 of the petition and other materials can be obtained by going to:
 http://wswinteractive.com/usps/ ).
     In a matter of national security, the agreement threatens the existence of
 a number of the regional airlines that participate in the Civil Reserve Air
 Fleet (CRAF).  The CRAF program is a highly successful partnership between the
 airfreight industry and the government created in 1952. Under CRAF, air
 carriers voluntarily contribute aircraft in the event the military is unable
 to fulfill airlift requirements during an emergency. For example, CRAF
 participants flew thousands of supply missions during Operation Desert
 Storm/Desert Shield.  Significantly, the two participants which flew more
 missions than any other carrier were Evergreen and Emery.  They were two of a
 handful of carriers -- which initially did not include FedEx -- to fly into
 the hostile Gulf region.
     On another front, the U.S. Court of Appeals in Washington in July will
 hear oral arguments in a suit brought by Emery Worldwide Airlines to block the
 transaction. The suit argues that awarding the $6 billion-plus contract in the
 absence of competition, and even in the absence of due public disclosure,
 violated both statute and USPS regulations.
 
 SOURCE  Emery Worldwide, Evergreen International Aviation and Ryan