By Neil Drake
BBC World, Middle East Business Report
Buraq Air was Libya's first private airline.
Colonel Gaddafi has been looking to stoke up Libya's economy
It started operations at an ex-US air-base in Tripoli at the end of 2001.
It was a long haul for the founder - Captain Mohamed Bubeide. Just getting permission took him 4 years.
Now he flies to Turkey and Syria, and plans to launch services to Dubai and Manchester.
Pioneers like Mohamed are pushing through restrictions on private business but moving the old bureaucracy is a grinding process.
"Privatisation is new in Libya and there a lot of things that have to be changed" he says.
Although tickets on Buraq are nearly a third more expensive than the state carrier the passengers I spoke to were certainly convinced that moving business out of government control is a positive step for Libya.
'Resistance to change'
Colonel Gadhafi started clearing the way for the private sector here nearly nine years ago by legalising foreign investment.
Against the background of a generation of inefficient management of infrastructure and industry, the "new realities" as he has called it, make reform essential for the country's future prosperity.
Despite being the richest country in North Africa, investment and productivity are still low, which means its citizens are still relatively poor. After years of international sanctions there's been a lot of talk about modernising the economy, but progress has been slow.
Libya's economy is large but inefficient and underperforming
Two years ago the government started selling off its private industries and so far 70 small and medium companies have been privatised.
The Privatisation Agency is a central plank of the drive to enhance management, improve productivity, and make Libya competitive with the outside world.
The governing General People's Congress is not entirely convinced though, and it has branded the reforming Prime Minister a traitor for messing with the revolutionary ideology.
"There is resistance to change I think it's natural to any programme," said Dr Mahamud Al-Ftise, head of the Privatisation Agency.
Signs of progress
Dr Al-Ftise is very clear about the advantages though.
"The first thing is to increase productivity, second is to widen ownership, third thing is to introduce competitiveness┐so Libyan people will be competitive in their own country and outside," he said.
There are signs the government is getting serious about competitiveness now, and the Gadhafi Foundation commissioned the eminent economist Professor Michael Porter of Harvard Business School to set out the priorities for restructuring.
Last month, he presented a surprisingly frank report, and although it has not yet been published, the BBC has seen a copy.
It's considered by many to be the first realistic assessment of Libya's problems, a country where viscous bureaucracy has meant the vast majority of proposed foreign investment deals have fallen through, while exports from countries like Britain are actually falling.
One sign of progress is that company shares are now being traded.
The Libyan Stock Market opened two years ago and now has five stocks. It's an unsophisticated set-up; there are no market makers, no brokers, and it's not yet computerised.
It operates not unlike a dating agency, with buyers and sellers registering their requirements, which are then matched with corresponding requests as the forms appear in the file.
'Not for selling'
Symbolically it's a giant step for Libyan business and there are added benefits to formalising company finances.
Once listed on the stock exchange, companies have to disclose their accounts, and the workers get issued up to 30% of the shares.
"The Market's not for selling and buying only" said Suliman Alshohomiy, director of the bourse. "It's for saving money for the people and the people want more information" about company finances.
There's always been private business in Libya but now there's a feeling within the country that things have reached a turning point.
Like the ex-communist countries of Eastern Europe, there are vested interests that need to be placated and for many workers the change will be unsettling.
If this transformation is to succeed the people will need to be persuaded the country could be better off leaving the state economy behind.