Peru's airlines are scrambling to claim more than their current one-quarter share of the Peru-US market in the face of a growing invasion by US and fifth freedom airlines.

Three Peruvian carriers are vying to enter the US market, which has doubled over the last eight years, sparking a scramble not only for route authority but also for potential match-ups in an alliance race that remains very fluid.

AeroContinente has already gained Lima's go-ahead for daily US flights, but has delayed its launch. It is partly holding out for more frequencies. It wants 21 per week and has asked the Ministry of Transport to reconsider its refusal to grant more than seven. AeroContinente's bigger problem, however, is that Lima only approved its operation with Boeing 727s and 737s on the Miami route, but they cannot fly that far without stopping, probably in Panama. The Peruvian authorities did not approve AeroContinente's plan to use a L.I011 TriStar.

Rather than try to compete with its own narrowbodies, AeroContinente is now seeking an alliance with a US carrier. Continental Airlines, which lost to Delta in the race for an AeroPeru partnership, is the most likely candidate but neither airline will confirm that it is talking to the other.

The second Peruvian carrier seeking US flights is Alas del Pacifico ('Wings of the Pacific'), a startup that only recently secured its domestic licence. Alas is owned by the son of Alfredo Zanatti, but Zanatti senior is generally accepted as the driving force behind the new airline. He was CEO of Faucett Airlines before selling out to Faucett's current owner, Roberto Leigh. Zanatti recently completed a short prison term for misuse of a government subsidy during his tenure at Faucett, although some claim his bigger mistake was being too close to the wrong politicians.

Faucett Airlines is the final Peruvian applicant. It faces the most apparent obstacles because it is grounded and in a court-supervised reorganisation. Yet Faucett has a loyal following in Peru as the country's oldest airline, and could regain US approval quickly if and when its creditors accept a reorganisation plan. They were scheduled to meet in mid-August to decide the airline's destiny. Leigh's reorganisation plan includes a challenge to the US$20 million still owed to the government over the Zanatti affair, and a financing plan to pay off the airline's remaining $30 million in debt, mostly owed to its own employees.

Luz Helena Garcia, the lawyer representing Faucett during its reorganisation, says Faucett has financial and administrative backing from AeroCondor, the oldest and most stable domestic airline in Peru.

Garcia seems confident Faucett could regain its old US routes once it resumes flying. She says Peru's Minister of Transport has confirmed several times that Faucett's operating authority 'will be maintained, provided that once domestic operations re-start, Faucett will shortly thereafter restart international services'.

Faucett's re-emergence would complicate the alliance race. While Continental and AeroContinente are eyeing each other, Faucett's revival could change Continental's perspective. Regional match-ups are also possible. Chile's National Airlines, now owned by the Chilean family that owns Avant Airlines, sought an equity stake last year in Americana, another Peruvian carrier. Americana has since folded, but National/Avant is still interested in Peru. The plot thickens because National/Avant has also been talking to Continental.

Source: Airline Business