UPS acquisition may question the status of TNT Airways

From Transport Intelligence's Global Newsletter today:

The acquisition of TNT by UPS has thrown up what could evolve into a highly ironic situation. TNT has a wholly owned airline, TNT Airways SA, which is based at its European hub in Liege and which exists to provide TNT Express with an air freight network connecting all its locations throughout the world.

However, a change of ownership could have serious implications for the airline. TNT Airways SA is incorporated in Belgium and qualifies as a Belgian and EU carrier. This brings a number of privileges that include the company's use of Liege Airport, routings and reciprocal landing rights and trade arrangements.
As TNT itself sets out in its IPO prospectus published in 2011, changes in the company's shareholder base, such that the majority of the Ordinary Shares are held by non-EU shareholders, may result in TNT Airways no longer being able to benefit from its privileges. The airline may not be able to use certain airports, including its base at Liege. TNT admits that this could affect its revenues and profitability.

The situation calls to mind a very similar problem faced by DHL in the US. Due to airline ownership legislation, it was forced to sell a controlling stake in DHL Airways to a US corporation in 2003. However UPS and FedEx both challenged the ownership status saying that as the majority of work undertaken by the airline was for its largest customer, DHL, it was de facto, owned by a foreign enterprise. This argument was eventually thrown out by the US judicial system and the Department of Transportation.

Should the acquisition of TNT by UPS go ahead, TNT Airways may well be spun off to conform to EU legislation. However, there may be a case that the same issue exists over 'control' and 'ownership'. If DHL's management have long memories, they may well wish to test this issue in court.

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