For years the trend throughout Latin America has been towards more US dominance of north-south routes.
But LanPeru and AeroContinente have started to reverse that fashion since they launched Lima-Miami flights late last year. As a result, United Airlines will suspend flights to Lima in March.
Gino Rodriguez-Arnaiz, United's general manager in Lima, cites several reasons for the retreat. Despite Peru's sluggish economy, United's traffic was stable for much of last year because AeroPeru stopped flying in March. Through the third quarter its loads remained around 80%. But yields and loads plunged after LanPeru launched flights to Miami in November, followed by AeroContinente. Some fares dropped more than 50%, leading United to conclude that the route was unprofitable.
Stephen Beatus, United's vice-president, Latin America, adds that the number of seats to Peru has doubled since United began flying there in January 1995. "It's like any other business," says Beatus. "If you are not making money - and there is no prospect of making it in the foreseeable future - and you have assets you can use in another fashion, you make the decision."
Maria Garrido, a New York-based aviation specialist from Peru, thinks United hurt itself by changing from night to daylight flights and using smaller aircraft. But she agrees the Miami-Lima route has become crowded. "United should have shifted its Lima flights from Miami to Chicago, where there is a strong Peruvian population and good connections."
Other US majors show no sign of backing off, however. American Airlines has three daily flights to Lima - two from Miami and one from Dallas - and says it has no plans to reduce its schedule. Continental Airlines and Delta Air Lines also fly to Peru.
Washington gave both Peruvian carriers permission to start US services using wet-leased aircraft only. LanPeru wants permission to use its own crews on Boeing 767s which it would continue to dry lease from LanChile.
Lima is about to adopt a law to control fare discounts. It will direct the transport secretary to set minimum fares. Garrido says there is strong political support for this. The law will restrict sixth freedom traffic carried between Peru and the USA by Central American airlines such as Copa and Grupo TACA.
Source: Airline Business
