The Peruvian government has grounded the country's largest airline due to a dispute over its insurance arrangements.
Aero Continente's insurance policy ran out on 10 July 2004, but the airline said it had secured new cover. It was able to keep flying until midday on 12 July, when the Transport and Communications Ministry grounded the airline, said a report.
Aero Continente was unable to renew its policy with its long-term insurer Global Aerospace, a UK-based company, had links with the US.
In June, the US treasury Department added Aero Continente founder Fernando Zevallos, to a list of alleged foreign drug ‘kingpins', a charge which Zevallos vehemently denies, said a report.
This meant that the airline's assets in the US were frozen and prohibited US citizens and companies from dealing with the company. It also stopped the airline from flying to the US.
An Aero Continente spokesman said the company had purchased insurance from a Bolivian company, Adriatica, with reinsurance placed in the London market. He said the policy was effective until July 2005.
Aero Continente said aviation authorities wanted the new policy to spell out that it covered personnel on the ground. The airline said it was fully covered by the policy.
According to a report, Transport Minister Jose Ortiz said the government was working closely with the airline to resolve the situation.
He said the airline had told the government that is had secured partial coverage, but that full insurance coverage needed to be in place before the airline could be authorised to fly again.
Aero Continente has 60% of the Peruvian market, said the report. Following the suspension, the Peruvian government has temporarily granted the airlines routes to competitor airlines.
