Out of the ashes

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Libyan carriers see a route to recovery since UN sanctions were suspended last year

Andrew Chuter/TRIPOLI

Scattered around Tripoli Airport's edge are the remains of much of a fleet of over 30 aircraft used by Libyan Arab Airlines to ply routes to Africa, Europe and the Middle East before United Nations trade sanctions hit Libya in 1992.

Seven years of sanctions aimed at persuading Libyan leader Col Muammar Qadhafi to hand over two government agents allegedly involved in the 1988 bombing of the Pan Am Boeing 747 over Lockerbie, Scotland, exacted a heavy toll on the once-thriving North African carrier.

While never specifically a target of the sanctions, Libyan Arab was a prime casualty. By the time the embargo was suspended last April, after a deal between the UN and Tripoli to bring the two men to trial, the airline had been reduced to running an intermittent domestic service with four aircraft .

The country's other main aircraft operator, Light Air Transport, recently renamed Air Jamahiriya, fared better. Much of its fleet - primarily de Havilland DHC-6 Twin Otters - remained airborne as its charter operations ferried personnel and equipment to the strategically vital local oil industry.

Among other restraints, the UN sanctions severed international air links, banned Libyan airlines from operating outside the country's borders and stopped trade in aircraft and spares - although some contracts with Western aviation firms to supply charter aircraft for oil-field services were allowed to continue.

The UN sanctions, which were targeted at specific sectors of the Libyan economy, have been suspended, but a general trade embargo imposed by the USA in 1983 remains in place.

Today, the Clinton Administration's continued efforts to ban trade impedes Libyan efforts to revitalise its aviation industry, but has not stopped the process. A good example is Libyan Arab. Its deal with Airbus to buy a large number of new aircraft cannot proceed without Washington's approval, but the carrier continues to rebuild on the back of lease deals which the USA is unable or unwilling to block.

European companies have moved in quickly to meet Libyan efforts to revive an industry virtually strangled by the US embargo. Aircraft builders, leasing companies, air traffic management (ATM) equipment suppliers, spares providers, training and airport modernisation concerns are among those businesses filling the aircraft of the many European airlines that have resumed services to Tripoli.

Neither have the Libyans wasted time. A new chairman has been installed at Libyan Arab to push through revival plans, a national aviation plan is being discussed by the industry and government and Air Jamahiriya, the country's leading charter operator, has been granted permission to start flying scheduled international and domestic routes. In addition, improvements to the country's ATM system and airports are under way.

Leaving aside the large numbers of Western business travellers passing through Tripoli Airport, the most visible change since sanctions were lifted can be seen at Libyan Arab. By last April, the airline had been reduced to a skeleton operation, operating two Boeing 727s , a Fokker F28 and a Fokker F27 turboprop, on irregular domestic services.

Today, the airline's revival is well under way on the back of leasing deals for three Fokker F28s, an Airbus A310 and two Airbus A320s to add to its own restored fleet of two F28s, three 727s and two F27s - although the latter will be phased out by the end of March.

The airline's new chairman, Sabri Abdallah, admits: "Sanctions affected us badly financially, where our turnover dropped 90%, and from a morale standpoint."

Sabri, a commercial pilot, was chairman of Air Jamahiriya until the middle of last year. Now he is at the sharp end of one of Africa's toughest aviation appointments.

The first task has been to get Libyan Arab back on the international aviation map. An A310 leased from Air Djibouti allowed services to expand into the Middle East and North Africa, although a second A310 from Royal Jordanian, which was meant to have joined the fleet, has failed to materialise. The Libyans are also attempting to recover two A300-600s that have been operating from Egypt since the early days of the sanctions.

Most importantly, two A320s have joined the fleet on a £60 million ($95.6 million), two and a half year wet lease from Irish airline TransAer, allowing Libyan Arab to open potentially lucrative European markets such as Amsterdam, London, Milan and Rome. African and Middle East destinations are also served by the A320s. Future destinations include Frankfurt, Paris, Vienna and Zurich. Talks on leasing at least a further A320 are under way.

The 727s the airline will continue to operate - none of which have the noise and avionics updates required to allow them to return to Europe - are to be based at Sebha in southern Libya mainly to serve African destinations such as Accra, Kano and Mali. The five F28s, three of them leased ex-Merpati aircraft, will ply regional and domestic routes.

Most of the remaining pre-sanctions fleet - mainly Boeing 707s and 727s and Fokker F27s - are either already scrap, or will be scrapped. The bulk of the disused aircraft sitting on the apron at Tripoli Airport are fit only for breaking up, although Libyan Arab awaits an assessment by Bureau Veritas on their exact condition.

Sabri estimates that the airline will need at least three years, as well as a government cash injection, if it is to recover from sanctions and return to its pre-embargo position as one of Africa's leading airlines.

"The government knows the losses were not caused by the airline, so they will also guarantee future loans for equipment purchases. They know the airline is needed as part of the wider development of the economy," Sabri says.

Funding problems

He cautions that there could be funding problems, caused by "bureaucracy, rather than the money being unavailable". Sabri is reluctant to estimate capital spending requirements, beyond saying they will not be less than $1 billion over the next five years. He acknowledges, however, that the figure could more than double, depending on the extent of fleet expansion.

Other expansion schemes include constructing a new administration building, returning the structure it now occupies to its original role as a training centre, and installing a new reservation centre. Add to that plans for a new maintenance hangar and smaller investments in areas such as ground handling and it becomes clear the capital requirements could be significant.

In socialist Libya, however, Sabri cannot generate funds to invest by slashing costs - at least not on the employee front. One of Libyan Arab's roles in the economy is to offer jobs, not necessarily to make profits. As a result, the workforce stayed at roughly its pre-sanctions level of between 5,000 and 6,000 people throughout the 1990s, even though wages were often not paid on time and workers, pilots and managers were rarely fully employed.

The number of employees is coming down as natural wastage and retirements take a toll. Sabri hopes that, before too long, "growth and natural wastage will bring staff numbers to an equilibrium". In the meantime, Libyan Arab's management seeks to help rejuvenate the airline and its staff by upgrading standards.

New livery, uniforms and aircraft all serve to draw a line under the demoralising sanctions era. "We cannot compete on routes against airlines like British Airways and Lufthansa with low standards. We must guide the airline towards the excellence required," says Sabri.

Maintenance standards are also an issue, although Libyan Arab is clearly proud that a department meant to be isolated from the rest of the aviation world circumvented the sanctions to the extent that D checks and engine overhauls were added to its capabilities.

Despite reports of spares sanctions-busting operations, the steady rundown of operational aircraft available to Libyan Arab suggests that, while the embargo was not 100% successful, it was enough to choke the airline's operations.

Technical director Naas Suleiman is coy about how the D-check status was achieved or how the spares were obtained. It is apparent, however, that considerable technical expertise was spirited into Libya to bring the operation to the standards required. D checks, which took around 12 months each, centred on the 727s.

With sanctions suspended, Suleiman says the priority is to improve Libyan Arab's Tripoli maintenance facility. The airline is evaluating bids from overseas companies for an upgrade, while also on the agenda is construction of a new widebody hangar.

While infrastructure improvement is integral to the revival plan, most attention is centred on other strategic issues. Most important is aircraft acquisition and the possible division of domestic routes with Air Jamahiriya.

Crucial aircraft acquisition

Libyan Arab aims to re-equip its fleet with up to 20 Airbus A318/A319/A320s, two A330s and two A340s, the latter as VIP aircraft. The deal, agreed late last year, should see deliveries start in the first half of 2002, but only if the USA lifts the embargo.

Although Sabri is confident the issue will be resolved in time for deliveries to begin on schedule, pointing to a recent easing of the ban affecting medicines as the first sign of a softening of US attitude, he is well aware of the disappointments suffered by Libyan Arab over the past 20 years in trying to secure new jet aircraft. 747, 737, A310 and A300 deals have all fallen foul of the US Government. With a US Presidential election coming up, it is difficult to see much progress on sanctions from the US Administration this side of a new President entering the White House next January.

While the US ban remains, so will speculation that a deal involving Russian aircraft is possible. In particular, the Sirocco Aerospace consortium has sought to interest the Libyans in acquiring the Rolls-Royce RB211-535-powered Tupolev Tu-204-120.

Sabri and his senior managers, however, have reservations about Russian industry's ability to sell and support their aircraft in export markets - but the Russians will not be ruled out until the US sanctions are lifted. The question that remains is how long Libyan Arab will wait for progress on the embargo front before acting.

Indeed, in late January, Tripoli radio reported meetings between the Russian ambassador, the Libyan Government and airline officials to consider the sale of aircraft and maintenance hangars. Libyan Arab told national news service Jana that it was to purchase "different types of aircraft for passengers and cargo-For this reason, the company has decided to sign deals for the purchase of Russian-made aircraft".

Egyptian-based Air Cairo, owned by a Sirocco consortium member, leases out two cargo versions of the Tu-204 and has more on order. If the Libyan statement is taken at face value, it is not impossible that a cargo aircraft deal could initially be in the offing.

Regional aircraft manufacturers have also been pursuing sales, although they ae constrained by the US embargo. BAE Systems demonstrated an Avro RJ100 in Tripoli late last year and other leading airframers have had varying degrees of contact with Libyan Arab and Air Jamahiriya. Nevertheless, it is unlikely that there will be progress on the regional front until the country's draft aviation plan is approved. In particular, the two airlines will seek to reach an accommodation on how to divide the domestic market in the wake of the government's decision to let Air Jamahiriya move into scheduled operations with aircraft larger than 35 seats.

The sanctions era virtually destroyed domestic services as Libyan Arab's operations became increasingly erratic. Nevertheless, they now offer considerable potential for growth, although not much profit unless the government eases its fares policy, as the country emerges from an isolation that saw domestic passenger traffic fall from more than 1.3 million trips a year in 1991 to just a few thousand in 1998, although this recovered to 450,000 last year as sanctions were lifted.

Sabri's stated policy is to acquire a shareholding in Air Jamahiriya and divide the domestic market, with Libyan Arab continuing to run services on high-density routes between Benghazi, Sabah and Tripoli, leaving most of the secondary destinations - perhaps requiring aircraft with 100 seats or fewer - and one or two cross-border regional routes to Air Jamahiriya. Libyan Arab sees the Air Jamahiriya operation as a feeder to its international services from the country's three main airports.

The position of the two sides appear not to be far apart. Air Jamahiriya chairman Meftah Zaidan agrees that his airline should be a feeder, rather than a competitor, and he is also seeking an investor. Both men, however, appear to want the Benghazi, Sebha and Tripoli market as the centre of their domestic operations. Ultimately, it will probably be the government that decides the terms of engagement.

With no railways in a country spreading across 1.75 million km² (676,000 miles² - slightly larger than Alaska), the airlines offer the only practical way to travel long distances, particularly if an increase in tourism becomes a reality. While Libya will never become the West's next playground, the country has Roman ruins that even the Italians envy and a growing business in desert-wilderness holidays, which could bring the hoped-for boost in the tourism industry closer to reality.

That, and the growing number of business travellers moving through the largely antiquated airports, have led the Libyan Civil Aviation Authority to move quickly to upgrade airports and ATM systems.

Tripoli Airport boss Eng Mustafa El Magrebi, who is also a senior CAA director, says passenger numbers this year could reach 3 million, compared with 3.5 million pre-sanctions.

"Limited terminal upgrade work under way at Tripoli will take capacity up to 5 million passengers by early next year. That should give us sufficient capability until the end of 2002. Phase two should start later this year, with the ultimate objective of expanding the site to its original 1980s' plan of 25 gates, rather than the present seven. Eventually there will also be a second terminal, allowing Tripoli to split international and domestic passengers," he says.

Airport expansion plans are in place for all three international gateways, followed by domestic airports such as Surt and Tobruk. Similarly, ATM improvements are moving ahead. Thomson-CSF is particularly active in Libyan plans, which include new primary and secondary radars at several locations and upgrades at Benghazi and Tripoli.