With a blue top half and a red bottom half, Echo stands in for "E" in the signal flag alphabet. I'm just as confused as you are as to why they chose a word with a "ch" in the middle that makes a "K" sound, and frankly I'm tired of making excuses for the International Civil Aviation Organization (see here and here).
I guess you could consider this one a turn signal. Echo is used to signify that you are changing your bearing to starboard. You might be thinking that it's really easy to turn a boat in time to avoid something, but the communication is still key. You don't want to both correct in the same direction right?
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