MercoPress. South Atlantic News Agency

Aerolineas Peru is born to compete with Lan Peru

Peruvian president Alejandro Toledo announced Thursday the launching of Aerolineas del Peru, a company with strong Spanish participation and acting as subsidiary of Aerolineas Argentinas.

"Today a new airline, a Peruvian flag carrier is born with the participation of private and national capital, and registered in Peru. Staff and pilots will be Peruvian", underlined President Toledo in Government House.

"The new company will be in the air in 90 days", said President Toledo standing next to Antonio Mata CEO of the Spanish group Marsans and president of Aerolineas Argentinas.

The first international route will be Lima-Madrid with connections to China.

"We are depositing our trust in Peru attracted by its sound legal system and the stability of its tourism market", said Mr. Mata whose group not only owns Aerolineas Argentinas but Air Plus Comet in Europe.

President Toledo pointed out there will be no Peruvian government participation in the new company.

He also denied there was any connection between the Aerolineas Peru project and Lan Peru, Lan's affiliate that recently caused a national uproar when they aired "involuntarily" in the company's aircrafts a video described as "infamous" by the government and Lima press.

"Procedures are normal and the airline will begin flying with three aircrafts, which will grow to six by the end of 2005. Competition is good for everybody", added Mr. Toledo.

Apparently Aerolineas Peru was scheduled to begin operating in 2006 but the growing tension between the Peruvian government and Lan Peru forced an advance in the program, admitted Mr. Mata earlier in the week to the local press.

The initial investment involves ten million US dollars, 49% belonging to Marsans and the rest to local Peruvian investors, so far unidentified.

Mr. Mata added that Aerolineas Argentinas will play a crucial strategic and logistic support in the development of the Peruvian subsidiary.

According to Peruvian law foreign companies wishing to operate in the country are forced to have local partners who will hold a majority.

The Peruvian commercial air market is made up of just over two million people.

Lan Peru currently has a dominating position in the market controlling two thirds with little competition and difficulties to cover all domestic destinations.