Amid Aviation Crisis, Aero Continente Can't Get Insurance

The Peruvian government Monday grounded the country's biggest commercial air carrier, after Aero Continente was blacklisted by the US government.

The Peruvian Transportation Ministry grounded Aero Continente after the airline's insurance carrier, Global Aerospace, cancelled its coverage. At first, the government pledged to act as the airline's guarantor. But Monday, ministry officials reversed themselves, saying they couldn't find an insurance company to replace Global.

Global cancelled Aero Continente's policy after the airline and its founder appeared on a US list of suspected drug traffickers. Blacklisted companies and individuals aren't allowed to do business with US companies. Global Aerospace is partially owned by interests in the US.

The airline's founder, 47-year old Fernando Zevallos, has been targeted in several US drug investigations. Aero Continente was barred from US skies in April, after the FAA said it failed several safety inspections.

Aero Continente handles about 65-percent of Peru's passenger traffic. Monday, the government was scrambling to allow other carriers to take over Aero Continente routes, since no airline can fly without insurance in Peru.

The Peruvian government move came after officials declared an aviation industry "state of emergency." Peru is hosting the 12-nation Copa America soccer tournament. Workers at several airports are threatening to strike and then there's the mess with Aero Continente.

FMI: www.cia.gov/cia/publications/factbook/geos/pe.html