Libya's two state-owned carriers, Afriqiyah Airways and Libyan Airlines, are to be merged and privatised as part of a government initiative to shake up the country's air transport sector, following years of sanctions.
Both airlines, together with business jet operator United Aviation and the handling, maintenance and catering companies, have been grouped under an umbrella organisation, the Libyan African Aviation Holding Company (LAAHC), which was created to oversee a co-ordinated development of Libya's air transport sector.
The handling, maintenance and catering organisations had previously been separated from former Libyan Arab Airlines, with the flying activities refocused under the name of Libyan Airlines.
LAAHC is owned by four government entities: the Libyan National Social Fund (30%), Libyan National Investment Company (30%), Libya-Africa Investment Fund - previously the owner of Afriqiyah Airways - (25%), and the Libyan Foreign Investment Company (15%).
LAAHC and chairman Captain Sabri Saad Abdallah Shadi says: "The ultimate goal is to have the private sector fully control such companies. We are working on this, trying to improve their financial position and getting them to a state where they become attractive targets for private investors. At the moment they are not."
Sabri Shadi says United Aviation, the Libyan Handling and Maintenance Company and the Libyan Catering Company will be the first to be privatised, a process he expects to be completed within two years. "The airlines will be the last to be taken out of government control," he adds. "No one is investing in airlines at the present time, anywhere in the world."
Although privatisation is the ultimate aim, the immediate priority is to concentrate on preparing the two airlines for a merger. "From day one of the operation of Afriqiyah Airways [in 2001], I knew that the time would come when we would have one airline," Sabri Shadi recalls. "I also knew that for the first five or six years we would both have room to grow without much overlap or conflict, and that one day this would have to change.
"That time is now. We need to expand our network, and for Libyan Airlines to do so also it will need to fly where we fly. The codeshare set to be implemented on all flights of the two airlines from 1 June this year is the first step towards a merger."
Sabri Shadi is convinced that such a merger will almost certainly take place in 2009, although he admits that there may be political obstacles to overcome first. Whose name will survive, or whether a new name will be created, remains open for discussion. In all probability, he says, there will be one international flag carrier and one domestic airline.
Although United Nations economic sanctions against Libya for its refusal to hand over two government agents suspected of the 1988 bombing of the Pan Am Boeing 747 over Lockerbie, Scotland, did not come into force until 1991, the national carrier, Libyan Arab Airlines, began to suffer as early as 1980. This was the year when Boeing was refused an export licence for three Boeing 747-200 Combis the airline had ordered for its long-haul network.
From that time on, Libyan Arab Airlines was no longer able to purchase any aircraft with more than a 10% US content. Obtaining spares and other equipment from the West was also becoming more difficult following a general trade embargo imposed by the USA in 1983.
The airline was then prevented from operating external flights, only managing to sustain a skeleton domestic service with just four airworthy aircraft out of a total fleet of more than 30. It was expected that following the lifting of the UN embargo, the USA would follow suit, but this did not happen until four years later.
Still prevented from obtaining new aircraft, Libyan Arab Airlines and newcomer Afriqiyah Airways were, however, able in the interim to slowly re-enter the international arena on the back of lease deals. The real breakthrough was made in 2006 when first Afriqiyah and then the newly restructured Libyan Airlines embarked on a wholesale renewal of their fleets.