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48 Admin. L. Rev. 579 (1996)
Aeroperu and Lapsa: Peru, Paraguay, and Privatization

handle is hein.journals/admin48 and id is 589 raw text is: 579 AEROPERU AND LAPSA: PERU, PARAGUAY, AND PRIVATIZATION W Christopher Shea T his article focuses on the privatization of two troubled airlines. The first, AeroPeru, served as the flagship airline of Peru during its days as a state- run enterprise. Wracked by debt, a poor reputation, and a disintegrating fleet, this Peruvian carrier was targeted by the government of Alberto Fujimori in a massive privatization effort. This effort became reality in 1993 when AeroPeru began operations under private ownership. The second airline profiled is Lineas Aereas Paraguayas, S.A. (LAPSA), the former state-owned airline of Paraguay. Like AeroPeru, LAPSA has had a troubled past as a state-run entity. LAPSA also became the target of privatization efforts by a reformist government bent on lessening the role of the state in industry. This airline finally began to operate formally as a private enterprise in March of 1995. There are many parallels between the privatizations of AeroPeru and LAPSA. In order to fully explain these similarities and highlight the differences, this article will examine such topics as: the factors leading to the privatizations of AeroPeru and LAPSA; the privatization plans followed by the governments with respect to their airlines; the effects of privatization on performance; and the future of both airlines. I. Peru A. AEROPERU AeroPeru was founded as the Peruvian national flag carrier in May 1973.' This state-owned airline took over an already existing state airline, Servicio Aereo de Transportes Commerciales (SATCO). Initially possessing only SATCO's domestic routes and using former SATCO planes, AeroPeru did not secure a plane of its own until 1974 when the carrier purchased a Boeing 727 from United Airlines.2 AeroPeru expanded into the international market in July 1974 with service to Buenos Aires, Santiago and Guayaquil, Ecuador. In September 1974 this service expanded north to Miami. By 1978 AeroPeru served 1. R.E.G. DAVIES, AIRLINES OF LATIN AMERICA SINCE 1919 316 (1984). 2. Id. at 314.

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