The bloodshed continues

It looks like we can add another all-cargo airline to the history books. On Saturday 2 June, five ASTAR Air Cargo DC-8Fs landed at Kingman International Airport in the Arizona desert, leaving the carrier – which provided US domestic lift for DHL – with just one active freighter.

What does this mean? Well, the following notice attributed to the Air Line Pilots Association Master Executive Council (MEC) at ASTAR, which has now been posted on two separate pilots’ websites, may have the explanation:

ASTAR MEC FastRead
May 29, 2012

This morning we were informed by ASTAR management that DHL intends to terminate its contract with ASTAR for air transportation. DHL indicated that it wanted to accomplish this sooner rather than later and by sooner it meant as early as the end of this week. While, at this stage of our history, no-one can be surprised at another example of DHL’s lack of consideration and regard for pilots who have supplied it faithful service, this announcement can’t help but be a bitter surprise for us. We will obviously review our legal rights, including our rights under the WARN Act and any residual rights we may have under the 2010 Settlement Agreement. We will also actively work for a severance package for the pilots who remained until the end of ASTAR’s operation.

Obviously there will be many other questions. We will be working on the potential end of our Company throughout the coming days and will transmit answers to you as soon as they become available.

ASTAR is the descendent of the former DHL Airways, ownership in which was sold by DHL to a group of three US citizens in 2003 in order to comply with US airline ownership laws. DHL, which was ASTAR’s main (and eventually its only) commercial customer, subsequently repurchased a minority stake, and used the carrier to provide lift in the US. In the past it operated 727-200Fs and A300B4Fs in addition to the DC-8Fs, but as its business shrank over the last decade it parked all but the DC-8s.

The termination of the DHL flying comes as no big surprise, and in fact we have been expecting it since DHL pulled out of the US domestic market at the end of 2008. Since that time both Air Transport Services Group (ATSG) and ASTAR have continued to provide lift in the US to support DHL’s international operations, but at a much lower level than before the pullout. And when DHL announced last year that it would outsource some of its US flying to Atlas Air, we felt the writing was on the wall for ASTAR.

In years past ASTAR might well have found other customers, and carried on flying. But as we pointed out here on cargofacts.net last month, the prospects for small independent all-cargo operators are increasingly bleak. Even small operators with new, efficient freighters are going out of business, so ASTAR, with its ancient DC-8s, had little chance.

However, the question has to be asked: Does DHL need to replace the ASTAR lift? And if so, where will it turn? Given that DHL’s US international business is growing, we suspect that it will have to supplement the existing US domestic lift provided by ABX and Atlas to support that growth. One unconfirmed rumor is that DHL will transfer some of the 757-200Fs it currently has in Europe to the US – likely for operation by one of ATSG’s subsidiary carriers (ABX, ATI, and Capital Cargo). We shall see.