Chile LAN enters Ecuador domestic flights market

QUITO (Reuters) - Chile's dominant airline LAN LAN.SN (LFL.N: Quote, Profile, Research) was granted a two-year concession to operate domestic flights in Ecuador, a top aviation official said on Thursday.

The airline's Ecuadorean unit will be allowed to fly local routes to major cities like Guayaquil, Quito and Cuenca. The company will also operate flights to top tourist destination the Galapagos islands.

"The concession is for two years," Guillermo Bernal, head of the national aviation council, told Reuters. "We want healthy competition in the local industry."

Bernal said he didn't know how much the company plans to invest in the Andean country, but added that LAN had expected its participation would boost the nation air traffic by more than 20 percent. The South American airliner has said is reviewing its investment plans due to the global economy slowdown.

Ecuador's busiest route between the cities of Quito and Guayaquil registered more than half a million passengers in 2006, according to aviation authority data.

Local carriers opposed LAN's application to operate domestic flights, arguing unfair competition with the major airline, one of the region's largest air carriers.

(Reporting by Alonso Soto; editing by Derek Caney)