BUSINESS

Out of the ashes, a new Libyan airline takes flight

Libyan Wings parked in Malta, awaits clearance to fly to its home base in Tripoli. (Photo courtesy: AIN)

Risk-averse entrepreneurs look away now.

In the notoriously volatile airline industry, even well-established operators are never more than a few months from bankruptcy. The threat is compounded tenfold for start-ups – and is incalculably higher in a warzone.

Small wonder that Libyan Wings, the full-service airline unveiled after the overthrow of Muammar Qaddafi, missed several planned launch dates.

Last year's near-total destruction of Tripoli International Airport, its planned home base, certainly didn't help matters. Nor did the wider unravelling of Libya's fractured political climate, with two rival governments claiming sovereignty in the country and an ugly franchise of Islamic State of Iraq and Syria (ISIS) rampaging over contested territory.

But the airline's private investors have persevered, and under the stewardship of chief executive Edgardo Badiali Libyan Wings finally took to the skies in September.

“This situation that we are in, as a country, on the one hand it's a problem, it's a hurdle, it's a challenge,” Badiali tells Al Arabiya News. “But on the other hand, it presents a huge amount of opportunities.”

Security threats

Those challenges are still coming thick and fast. A couple of days before the airline's inaugural service to Istanbul, a suicide squad from ISIS attacked its new base – Mitiga International Airport, just east of Tripoli's city centre – in an attempted prison break.

Then, a couple of days after the launch, Turkey imposed mandatory visa requirements on Libyan citizens – prompting the airline to suspend flights while passengers made the 200km journey to the Turkish consulate in Misrata.

A grenade attack on that same consulate several days later only poured salt on the wounds, forcing the diplomatic facility to temporarily shut its doors.

“You need the infrastructure to deliver those visas, which is not the easiest thing in today's Libya,” Badiali admits, promising that the four-times weekly service to Istanbul Atatürk Airport will resume shortly.

Undeterred, Libyan Wings launched flights to Tunis in October, and is now in the final stages of adding Sudan's capital Khartoum. Future route launches will focus on Jordan, Algeria and Morocco.

The airline is even looking to make good on its promise of European flights – a pledge that seemed more plausible in November 2013, when Libyan Wings broke cover amid much fanfare at the Dubai Airshow. At the time, Libyan expatriates and European oil companies were flooding into the country, seeking out business opportunities after four decades of sclerotic dictatorship.

None of them predicted what was to come.

Having fought side-by-side to overthrow Qaddafi, the country's disparate militias quickly turned their guns on each other. A slow descent into civil war followed, culminating in the August 2014 capture of Tripoli International Airport by Fajr Libya, an Islamist coalition.

European blacklist

Four months later the European Union formally added Libya to its aviation blacklist, arguing that national regulators could no longer provide oversight of local airlines. The move prohibits all Libyan-registered carriers from entering EU airspace on safety grounds.

Badiali, however, sees a way around the blacklist: flipping the registration of his aircraft.

“We could add an aircraft in a dry-lease, then sub-lease it to an operator [that is approved by Europe's safety regulator, EASA], then at the same time wet-lease it back … You can do it as a kind of hybrid system with certain parts of the classic ACMI [wet-lease contract] under your responsibility – for example, insurance.”

Though signing overlapping leases add complexity, the benefits are manifest.

By transferring the registration of an aircraft to a foreign operator – most likely one based in Europe or the Gulf – Libyan Wings would effectively secure an overseas 'flag of convenience', thus side-stepping the ban on Libyan carriers and gaining direct access to Europe.

It is a strategy already successfully tested by Afriqiyah Airways, one of Libya's flag-carriers, which last year contracted Ireland's Air Contractors to manage its European network.

A more simple approach is also being considered – signing bog-standard wet-leases, whereby a foreign operator provides its own aircraft and crew – although this model has one key drawback. Under such agreements, responsibility for insurance falls on the wet-lease provider. That, in turn, necessitates basing aircraft outside of Libya.

“If you go for a normal wet-lease, it is a little bit cumbersome at the moment to find an operator which will accept basing their aircraft in Tripoli,” Badiali admits.

Insurance safety net

He stresses that Libyan Wings has secured insurance with a “classical, recognized underwriter” in the London market, positioning it well for the hybrid model. “It took a little bit of time,” the CEO adds. “We could have gone for an easier one … a so-called Russian underwriter … but no [aircraft] lessor will normally accept that.”

With or without European routes, the airline can be certain of one thing: more challenges.

Plans to relocate to Tripoli International Airport are up in the air owing to the slow pace of reconstruction at the gutted gateway. Domestic route launches are also on hold given the strained political climate. If U.N.-brokered peace talks fail to deliver a unity government, further violence could easily sound the death knell for ambitious start-ups like Libyan Wings.

Nonetheless, Badiali's eye is firmly on the long-game.

“If you look at the post-revolution [air passenger] figures from 2011 to the beginning of 2014 … the increase of traffic was just incredible,” he notes.

“There is huge potential. If the country settles down, besides the big need [for air travel] of Libyans living at home and abroad, you also have all the demand of foreign investors, rebuilding workers, and so on … I am not a politician, but what I am seeing in Tripoli is very positive.”

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Last Update: Monday, 26 October 2015 KSA 22:55 - GMT 19:55
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Out of the ashes, a new Libyan airline takes flight
Under the stewardship of chief executive Edgardo Badiali, Libyan Wings finally took to the skies in September
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