The 1990s for Peru marked a gradual return from the abyss of the economic collapse of the 1980s, albeit one pushed by the dictatorial Fujimori administration. The economic reforms fuelled violence especially from the Shining Path, which in turn was largely funded by drug money since Peru was a major location of Cocaine cultivation. With the state in such continual crisis it is hardly surprising the nation’s airlines became mired in the politics and criminal behaviour also.
For more background on Peru in the 1980s see: Unshining Path: AeroPerú in the 1980s
Certainly the 1990s were not kind to Peru’s two established airlines AeroPerú and Faucett Peru, but then again they had struggled through the 1980s also. Neither had a particularly good reputation whilst both had substantial debts and old equipment. Privatisation of state-owned AeroPerú turned out to be a false dawn and both airlines were bankrupt by the end of 1999. They had competed heavily against each other during the 1990s but in addition had been forced also to compete against a third airline – Aero Continente.
Mr. Fernando Zevallos Gonzales (better known as "Lunarejo" due to a mole on his left cheek) had grown up in rural Peru and had a career as a pilot in the Air Force. In 1991 Zevallos acquired a 1969 build Boeing 737-200 for $3.5 million and on May 25, 1992 began operations with it as Aero Continente. Initial services included charters to the Caribbean and fulfilling a contract to Occidental Petroleum flying the Lima-Andoas-Iquitos-Lima passenger service.
A second Boeing 737 followed in 1993 and a shell company, International Pacific Trading in Miami, acquired three more. The airline began to compete against the encumbents mainly using price cutting to gain marketshare. Aero Continente never had a reputation for particularly good service, aircraft maintenance or safety but these were lesser crimes than those that would be its eventual downfall.
During 1995 3.5 tons of Cocaine were seized at Piura and the investigation into them linked ‘Lunarejo’ to the Los Norteños organization, led by brothers Jorge, Tito and Manuel López Paredes. Jorge Lopez declared from Mexico that in 1991 he gave US $ 1.5 million to Zevallos to found Aero Continente. José Mendiola Salgado, another Los Norteños boss, ratified that version. The Prosecutor's Office requested a sentence of 15 years in prison, but in March 2002 he was acquitted.
Aero Continente continued flying during this period as nothing could be pinned on Lunarejo, however in August 1996 US authorities banned its employees from travelling on the airline. This was due to safety concerns rather than the drug accusations. In fact Aero Continente’s business boomed as AeroPerú and Faucett Peru fell apart. By the end of 1999 it was in fact the only sizeable airline left in the country.
Accordingly it acquired the Lima-Miami service. International routes also started to Panama City and Santiago de Chile, whilst a Chilean subsidiary was setup to operate 737-200s in the domestic Chilean market. It would gain a leased 767-200, which was used to replace a leased 757 on the Lima-Miami route, which now started in Santiago. Other international services connected Lima with major South American destinations.
The airline was booming and there was even talk in 2001 of it potentially purchasing Aerolineas Argentinas! It was that year however that things began to take a turn for the worse. The Chilean authorities grounded the Chilean subsidiary accusing it of money laundering and drug trafficking. It seems there may well have been an anti-competitive aspect to this (with Lan Chile implicated), however the accusations themselves did not seem far-fetched. In fact when Carlos Morales, the executive director of the airline, flew to Santiago to meet with lawyers he had to hide in the embassy to avoid being arrested.
The drug running accusations really hit home in 2004 when the DEA were firmly on Lunarejo’s case. The US authorities added his name to a list of drug trafficking suspects. In fact this list, known as the ‘Kingpin Act’ list included Lunarejo as one of the world’s top 10 drug kingpins! The US treasury department prohibited him and companies associated with him from doing business with American companies and also revoked his visa to live in Miami. The US stated that Lunarejo was guilty of bribing court officials, ties to Fujimori’s security chief and ordering the killing of witnesses. This had apparently been continuing unabated with a prison murder on February 1, 2005 well after the airline itself had failed. As a US official said:
"Intimidation, bribery, corruption, he's used all the methods that you would think a person of this kind would use. He's had people killed. He's paid off the appropriate officials. He's intimidated witnesses."
With its route authority to the USA revoked and unable to either maintain or insure its fleet Aero Continente quickly collapsed and ceased operations on July 12, 2004. The airline stood accused of acting as a courier for drugs throughout its entire history. An attempt was made to restart Aero Continente removing Lunarejo from ownership and rebranding as Nuevo Continente, however this was a short-lived venture. Unable to shake of the accusations and lacking funding the airline’s AOC was withdrawn in 2005, at least officially, for safety reasons.
Lunarejo fought the accusations pleading not guilty and denouncing a commercial persecution however the evidence quickly mounted, including damningly from his former driver who had been recruited by the DEA. He was even found with a USB stick with his own sentence drafted on it showing his ties to corrupt government officials. He was sentenced to 20 years in prison for his crimes but despite being the subject of over 30 investigations this remains his only conviction.
Nowadays the Peruvian market has been carved up by LATAM and Avianca but Star Peru and Peruvian Airlines provide some homegrown competition. Aero Continente is not I expect missed by many.
2001, September. AeroContinente grounded over drug accusations. FlightGlobal
2005, March. Founder of Peru's AeroContinente Is Accused of Building Airline on Drugs. New York Times
2016, May. The History of Drug trafficking airlines. Utero.pe
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I'm Richard Stretton: a fan of classic airliners and airlines who enjoys exploring their history through my collection of die-cast airliners. If you enjoy the site please donate whatever you can to help keep it running: