Peruvian airline suspended after court ruling

Airline Industry Information, Oct 15, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

Peruvian airline LanPeru has been grounded by Peru's government after a court ruled that it had broken foreign ownership rules.

Thousands of tourists are likely to be stranded by the action which the government said it took reluctantly. LanPeru is owned by Chilean company LAN Airlines and has recently added a string of new routes to its network which it claims has made it Peru's number one airline with 55% of the domestic market.

The airline was ordered to be grounded by a court in the southern city of Arequipa in response to a lawsuit filed in June 2004 by a small domestic airline, Aviandina, which has now gone out of business. Aviandina claimed that LanPeru had broken the law by not having the requisite 30% of Peruvian capital invested in it.

LanPeru's president said that he expects the ruling to be overturned quickly and the Peruvian government is also appealing against the judgement. The government warned that the suspension of LanPeru could damage exporters who are leading the country's economic revival, reports Reuters.

((Comments on this story may be sent to aii.feedback@m2.com))