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Libyan Wings launches to help with Libya's aviation reconstruction. A320neos and A350s on order

Launching a new airline in Libya brings all the challenges that would be expected, and then others. Libyan Wings’ home base is at Tripoli; its base at the local airport has been destroyed, there are essentially no private banks or credit cards, and Libyan Wings must be designated by the government as a local carrier. A key challenge is that foreign governments may not recognise the Libyan government that authorises Libyan Wings.

Still, Libyan Wings persisted with an inaugural flight from Tripoli to Istanbul on 21-Sep-2015, only to be told that day Libyans would need a visa before their arrival; yet there is no Turkish embassy or consulate at Tripoli.

Libyan Wings has its challenges set out, but the privately-owned carrier’s investors retain a long-term view, assessing the carrier as meeting air travel demand in the country, and facilitating many reconstruction efforts. Full-service Libyan Wings' single A319 will be joined by another in Nov-2015, and then one or two more A320 family aircraft over a year. Libyan Wings already has an order with Airbus for A320neos and A350s, placed in 2013.

Signs of recovery in Libya in 2012 were short-lived. Now there is a cautious optimism.

Libya showed signs of a recovery in 2012 , with local and foreign airlines temporarily restoring their presence, but the situation deteriorated. Incumbents in aviation had their aircraft destroyed. Libyan Wings had no impact on its aircraft since it did not have any in the country.

Tripoli airport sustained significant damage, but the airport operator is confident there can be a relatively quick restoration to commercial service. Libyan Wings is currently operating out of Misrata instead of the main Tripoli airport.

Although Misrata has a handling limit, Libyan Wings is not planning to have more than a few aircraft over the next year.

Libya has mounted a strong economic recovery, enticing international carriers to rapidly rebuild their capacity, withdrawn after a bloody revolution engulfed the northern African state in Feb-2011.

The country’s two state-owned airlines, Libyan Air and Afriqiyah Airlines, which both suffered extensive damage to aircraft, resumed operations late 2011 and are gradually reestablishing their pre-war networks as aircraft return to service.

Their initial focus has been on linking key economic and political partners around the Mediterranean, including Turkey, and to the Middle East as well as Britain.

A merger of the two carriers is also progressing slowly though earlier expectations of a union in the first half of 2013 appear to have been put back to at least early 2014.*

Meanwhile Turkish Airlines, Tunisair and EgyptAir lead the foreign airline capacity levels reintroduced.

See related report:

*As at 15-Nov-2015: The proposal to merge Afriqiyah and Libyan Air has been shelved due to the on-going civil war and increased tensions in the airlines' home market.

Traffic dipped during the regional unrest but started to recover in late 2011 and early 2012 as carriers increased capacity or resumed service (see graph below).

Data for the present period, however, is not yet sufficiently robust.

Libya to Middle East capacity by carrier (seat per week one way): 03-Dec-2012 to 09-Dec-2012

Libyan Wings flies to Tunis and plans to return to Istanbul

Libyan Wings is a privately held company. Libyan regulations require that no party hold more than 10% of an airline, so Libyan Wings has at least 10 investors. The airline declines to specify exactly how many, or who they are, aside from their being business people with an interest in the reconstruction and regrowth of Libya.

Libyan Wings’ initial aircraft was in storage for over half a year – seemingly until conditions were right to launch. Libyan Wings’ single A319 is nine years old but has been refurbished in a two-class configuration of 12 business seats and 108 economy seats.

The airline's inaugural flight, from Tripoli to Istanbul on 21-Sep-2015, proved to be its first and only service on the route. Turkey had granted Libya four weekly flights and facilitated rare prime slots at congested Istanbul Ataturk airport.

On the day of departure Libyan Wings was told that Libyans, from that day, would need a visa. There was no Turkish embassy or consulate in Tripoli, but visas could be obtained elsewhere in the country. However, due to road conditions and safety, Libyan Wings does not expect passengers to be able to make the round-trip to the Turkish delegations in a day.

Libyan Wings planning was for services to resume to Istanbul from 04-Nov-2015. Passenger composition on the route is Turkish nationals, Libyans residing in Turkey (and who thus already have a Turkish visa), and the outbound Libya market. Turkey was one of Libya's top five markets before the revolution, with three scheduled carriers offering service.

Turkey to Libya capacity by carrier (seats per week, one-way): 19-Sep-2012 to 02-Jun-2013

Other start-up business is there for Libyan Wings

Turkish operations aside, Libyan Wings has been flying the relatively short 670km sector between Tripoli and Tunis in Tunisia.

Libya and Tunisia have an open skies agreement, and Libyan Wings’ double daily service will be increasing to triple daily, largely on the back of Tunisia supplying Libya with workers. Libyan Wings had considered service from Mitiga International Airport, but for now is operating out of Tripoli (Misrata).

Europe is a long term opportunity. More immediately, growth to Egypt and Sudan. Domestic is also an opportunity.

Libyan Wings is bullish about the prospect of one day being able to fly to Europe, which will be high yielding, and Europe can also be accessed from Libya with narrowbody aircraft. However, given Libya’s presence on the EU blacklist for its 28 member nations, and there being no timeframe for it to be removed (but expected to be long-term), this is a distant opportunity for Libyan Wings using its own metal. Wet leasing, however, could provide a more immediate solution.

During the late-2012 recovery, there were approximately 6,000 weekly one-way seats to Europe from Libya, with airlines planning growth to over 8,000 weekly seats in late Mar-2013 (see graph below). The foreign airlines have exited the market, however, while local carriers face the blacklist – and even without that, there are operational challenges such as damaged fleets.

Libya to western Europe capacity by carrier (seats per week, one way): 03-Dec-2012 to 09-Dec-2012

In 2010, before the initial conflict, Afriqiyah's European network included seven points: Amsterdam, Brussels, Dusseldorf, Geneva, London, Paris and Rome.

Afriqiyah Airways pre-conflict destinations: mid-2010

The CEO of Libyan Wings, Edgardo Badiali, speaking at the MENA Aviation Festival in Dubai, flagged potential markets as being Amman, Bangladesh, Beirut, Egypt, Pakistan and Sudan.

In Sudan, Khartoum could be served as a back-of-the-clock operation, boosting utilisation rates. For flights to Egypt, also a source market for workers, Libyan Wings would want more densely configured aircraft as the traffic is lower yielding. Later expansion within the African continent could be considered. Libyan Wings expects its narrowbodies to have the range to go to points in an arc passing south of Nigeria.

Stabilisation in the country could see Libyan Wings mount domestic services. Domestic flights were 25% of the country’s passenger volumes before the civil conflict. Libyan Wings expects only Tripoli-Benghazi would be operated by A320-family aircraft, with other routes needing smaller aircraft.

Website to be launched in Nov-2015. The operating environment is challenging.

Within 20 days of its launch, Libyan Wings was operating with a 70% load factor in both business and economy classes. That an airline could operate for a few months without a website attests to the unique environment in Libya. Its website is expected to launch by the end of the year.

Libyan Wings has a ticket agency at its operating base, Misrata, but most sales come from Libya’s travel agencies (80% of sales are in Libya). As Libya effectively only has a central bank and there are no credit card facilities, purchases are in cash. Libyan Wings has not hesitated in requiring that travel agencies put down cash deposits to cover future bookings. As is found in other small, emerging markets, there is essentially no revenue management for the operation at this time.

The aeropolitical environment is unique, and securing traffic rights can be challenging.

Even before that, of higher criticality is that Libyan Wings is having difficulty being recognised as a carrier from Libya, since this designation must be done by the government, and Libya effectively operates with three governments. The foreign country granting air access may not recognise Libyan Wings’ designating government as a lawful government.

Despite the challenges, Libyan Wings says it has found foreign government and political support, to some degree, to have the airline help Libya back onto its feet.

Outlook: a high risk but also high value market

Libyan Wings’ fleet is leased from DAE, according to CAPA's Fleet Database. In Nov-2013 the carrier placed an order for four A320neos and three A350s. These remain on order, with a projected A320neo delivery timeframe between 2017 and 2018.

Slotting these into regional use – or even to Europe, if conditions achieve a best-outcome scenario – is more straightforward than it is for the A350s. Passenger volumes, and the regulatory environment, will dictate when the widebody aircraft can be used.

Given the environment and challenges in Libya, Libyan Wings’ business is high risk, but also high value. Private ownership gives a clear commercial mandate, which can be lacking at small national carriers. Furthermore, Libyan Wings’ investors also see the airline as contributing to the country’s rebuilding, meaning that the direct profitability of the airline may not always be the sole objective. 

Libyan Wings notes that in 2012 Libya had passenger throughput of 2.5m, before increasing to over 4m, then rapidly declining during the turmoil of recent years.

It will be a very slow march back to those passenger volumes. In such a market it is necessary to be comfortable with, and also have confidence in, beginning with a small operation.

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