Combination Of Factors Lead To Decree

An airline in trouble with the law. A huge sporting event that will draw thousands. Combined, these are the reasons Peru has declared a 90-day aviation emergency.

Last week, a Peruvian judge grounded Lan Airlines' subsidiary, LanPeru, saying its permits were all wrong. The judge also ruled LanPeru doesn't meet the required level of Peruvian investment.

LanPeru has so far thumbed its nose at the court ruling and continues to fly. Last week's emergency decree ensures it will be able to do just that.

All this comes in a lawsuit filed by competing airline Andiandina, a small, local operation that says LanPeru is operating illegally.

There were other factors in the government's decision to issue an emergency decree. Airport workers threaten to strike if the government goes through with plans to privatize the country's airport operations. The country's biggest airline, Aero Continente, is in turmoil after its founder was named as a drug kingpin in the US and the company's assets there were frozen.

And, of course, there's the Copa America soccer tournament, which started Tuesday and will run through July 25th. An estimated 35,000 soccer fans are expected in Peru from 12 different countries. Put that all together and Peru's aviation sector is in trouble.

The decree, issued last Wednesday, makes the aviation industry the most important segment of the Peruvian economy for the next 90-days. It allows airlines to temporarily obtain aircraft from companies outside Peru and allows the minister of transportation to take special measures to ensure the planes keep flying.

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