Major airlines in Peru evade ownership rules.

Redacción - Aviación al Día

5 years ago

Peru’s three major airlines operate with little or no Peruvian ownership, despite a rule that local airlines must be at least 30% owned by their nationals, according to company records, court documents, and interviews with industry officials.

Increased competition has reduced ticket prices for Peruvians in recent years, but has also meant that multinational airlines have put locally owned companies out of business.

Motivated by what lawmakers say is a lack of reinvestment in the country by its dominant foreign-controlled airlines, Peru’s Congress is considering a bill to create a state-owned airline, according to a report by Marcelo Rochabrun of Reuters.

Last year, 82% of Peru’s 13.8 million passengers flew on LATAM Airlines Peru, Viva Air Peru or Sky Airline Peru, all of which are foreign owned and operate popular routes such as Lima-Cuzco.

But while LATAM Peru, the largest airline, was for many years 30% Peruvian, only 0.39% remains in local hands after this year’s bankruptcy filing by Chile’s parent LATAM Airlines Group, court records show.

And the newest competitors in the Peruvian market, Sky Airline Peru and Viva Air Peru, only have non-Peruvian shareholders, according to company records and interviews.

The aviation regulator DGAC confirmed in a statement that Peruvian citizens must own at least 30% of any national airline. He did not respond to questions about compliance with the rule.

LATAM Peru said in a statement that it “fully complied” with Peruvian law, adding that the coronavirus crisis had forced it to change its capital structure.

“More than 30% of LATAM Peru’s capital is incorporated in Peru, which means that we are in full compliance with all the country’s regulations,” he added.

Viva Air said that “it follows and will follow the rules of each country in which it is present”.

Sky declined to comment.

Peruvian law says that the 30 percent participation must not only be incorporated in Peru, but “subject to the real and effective control of the shareholders or partners of Peruvian citizenship”.

“This is the perfect example of a law that does not generate any benefit for the country,” said Carlos Ozores, an ICF aviation consultant focused on Latin America.