As of October 4th, Peruvian Airlines is no longer operating in Peru. The company announced its decision via an official communication, which has since been circulated across every medium imaginable.
The shut down will have consequences for travelers in Peru, as well as the many Peruvian residents who used the airline regularly. The news came as a real surprise since no major incidents had occurred. So, what happened?
What Happened to Peruvian Airlines?
The company blames the Peruvian government, specifically SUNAT, the tax collection agency. At the heart of the dispute was the cost of two planes that the airline had imported to use in Peru.
Anyone who has tried to have a package sent to them here knows that Peruvian import laws are unfriendly to say the least. Not only could there be significant taxes on the type of item that you’re importing, but you’ll also have to pay Peruvian sales tax on those items. Even though you might have paid sales tax abroad when you ordered the item, you still owe Peru for a sale that didn’t happen in Peru.
With an 18% sales tax, miscalculations can be quite costly. That appears to be the case here. The airline claimed one price for the two planes, while SUNAT claimed they had a different cost. Ergo, there was a difference in the sales tax to be paid.
Both sides stood their ground until a customs court ruled in favor of SUNAT. This let SUNAT freeze Peruvian Airlines’ accounts to reclaim what the court deemed theirs. This happened on September 30th, 2019.
From there, a domino effect occurred. Without cash flow, they couldn’t pay for their fuel, also provided by the government’s oil company PetroPeru. No fuel, no flights. No flights, no income.
The company’s statement claims that this single interruption in services caused a drop in sales as travel agencies and websites were less likely to recommend the airline due to the uncertainty.
Although we often think of airlines as being these wealthy corporations, in reality they are very fragile. They typically operate on low margins and have to make massive purchases (new planes aren’t cheap) to stay competitive. If the bank account runs dry, even for a bit, the whole enterprise can collapse.
And that’s what has happened. So, where do we go from here?
What if I Booked a Flight on Peruvian?
If you were planning a trip to Peru and had booked a flight on Peruvian Airlines to travel to another part of the country, you will be able to get your money back. However, the company has outlined a very specific process for this.
First of all, if you bought your tickets through a travel website like Expedia or Travelocity, or a travel agency, then you must contact them in order to get your refund. Since they charged your credit card, it’s up to them to refund you.
If you bought your tickets directly from Peruvian’s website, or through an office in Peru, you should have already received your refund. However, some sources have indicated that some flights may not be refunded until the day the flight was supposed to take place. You can contact the company directly, as they still have an office, at 716 6000.
Alternatives to Peruvian
Peruvian provided competition to certain parts of Peru, such as Ilo and Jauja. Now only LATAM flies these routes. But if LATAM or Avianca seem too expensive to you, there are other options out there.
For flights to the jungle, consider Star Peru, which operates in cities such as Iquitos, Pucallpa, and Tarapoto.
Popular cities also have service from low-cost airline Viva Air Peru. Finally, some destinations are also served by the Chilean airline, Sky.