Select Committee Report

Manston: one last diversion

One of the few pieces of advice I’ve ever paid attention to is: ask yourself “What’s really going on here?” So… what was the Select Committee about, and why did it spend so much time looking at Manston?

The publicly stated remit for the Committee was to inquire on the “role of smaller airports, and the steps the Government and EU are taking to support them”. In practice, there was little exploration of their role, and much more emphasis on how to support them. In aviation, support usually means tax breaks - in this case the tax is Air Passenger Duty (APD).

The aviation industry has complained about APD ever since it was invented, and regional devolution has made things worse. Northern Ireland’s Belfast airport clearly illustrates the disadvantage of APD in the business it loses to neighbouring Dublin airport. Scotland has the power to drop APD, which would jeopardize Newcastle airport. If Wales does likewise, Bristol airport would be threatened. All the smaller airports in England are getting twitchy, complaining it’s not a level playing field.

The Select Committee provided the aviation industry with a forum to air its grievances about APD. The Committee’s report provides the Department for Transport and the (English) smaller airports with a stick with which to beat the Treasury. In that respect, it’s served its purpose.

So what about Manston?

Manston airport had already closed before the inquiry started. The Select Committee considered Manston as a case study "both to inform our wider recommendations and because the Kent public are concerned". In fact, the amount of "concern" in Kent had been exaggerated by aviation lobby groups, and then magnified by Sir Roger Gale’s access to Ministers and media. Manston turned out to be little more than a diversion.

Inexplicably, the Select Committee failed to take the opportunity to be “informed” by the people they questioned. Alastair Welch had been General Manager at Stansted, and then bucked the national trend in making Southend Airport a success. In contrast, Tony Freudmann (part of the team that wants to grab the site) has been closely involved with more aviation failures than anyone else I know.

It was a perfect opportunity for the Select Committee to find out what makes a small airport succeed, what makes it fail, and what role APD might play. And they fluffed it. Instead, they spent a large portion of their precious time delving into the share-holdings and ownership of the companies that own the ex-airport site.

I got the impression that the Committee Chair, Louise Ellman, didn’t fully understand the questions she was asking on this subject, let alone the answers. I suspect she had been fed the questions by Sir Roger, who in turn had been fed by the “pro-Manston” groups. The Select Committee learnt nothing from their case study of Manston that could usefully be applied to other smaller airports, or to their consideration of the impact of APD.

The Committee’s remit covered 40 or so airports across the country - open, active airports. Why did they spend so much time asking Sir Roger’s questions about a closed airport? For the same reason Minister Hayes came to Kent to re-announce a DfT inquiry while standing next to a parliamentary candidate - electioneering.

Anyway, on with the report…

* * * SPOILER ALERT * *  *

There’s a lengthy rehash of the time wasted on the 2nd and 23rd Feb - Manston’s history and irrelevant questions about ownership. Ann Gloag is invited to publish her commercial arrangements, TDC is dissed for being small fry, KCC and DfT are rebuked for not having been more helpful, DfT is encouraged to play the sensible grown-up, and the Government confirms it has no interest in buying Manston.

In TDC’s place, I would be peeved - central Government has no “right of oversight”, the Council has followed due process, and that should be the end of it. The Committee haven’t considered the possibility that it didn’t take long, and didn’t cost much, for TDC to reach their decision simply because it was so obvious. (Is this 6 month old company, based in a foreign tax haven, with no accounts, and no up-front cash a prudent choice? No.)

In KCC’s place, I would be peeved - yes, KCC did change their minds… because the facts changed. For years assorted owners had been telling KCC that the airport was a sure-fire winner. Then the owner tells them it’s a dead duck. And it’s not central Government’s place to tell KCC how to spend its budget, just as it's not KCC's place to prop up a failed business. KCC's job is to focus on what's best for Kent, and KCC has clearly decided that regeneration is the best available option.

In Ann Gloag’s place, I would tell them to take a running jump.

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SC Report by NoNightFlights

RiverOak

RiverOak Investment Corp. LLC

RiverOak seems to have been brought into this by Tony Freudmann. RiverOak is a US real estate company that is registered as an LLC in Delaware. This gives RiverOak considerable protection from prosecution. We’ve been looking at some Delaware Supreme Court judgements. As the Court says:

“…ultimately, LLCs and corporations are different; investors can choose to invest in an LLC, which offers one bundle of rights, or in a corporation, which offers an entirely separate bundle of rights.”

We think that TDC (who now has no Head of Legal) has no idea what kind of organisation the Council could be hopping into bed with.

RiverOak says that: "RiverOak funds invest in gap equity positions of $2 million to $5 million per transaction in deals that are typically $8 million to $50 million." So, they don't buy assets outright and they don't typically spend more than $5m.Their most recently launched fund was $50m and some of this money has already been invested. A senior construction industry contact of ours has said that the brownfield land at Manston, if Ann Gloag could get permission to develop it, would be worth around £1m per acre. If he’s right, that 720 acre site has to be well outside of RiverOak’s funding reach.

RiverOak invests in student housing; medical establishments and some domestic housing. The company says that one of their senior managers was involved in the refinancing of Alliance Fort Worth Airport when he/she worked for a previous employer. We can find no evidence anywhere that RiverOak as a company has any aviation experience, and definitely no trace of the company ever having been airport operators. We suspect that RiverOak wants the land for housing.

RiverOak Investment Corporation LLC set up RiverOak Aviation Associates LLC on 3rd July 2014. This suggests to us that Manston would indeed be RiverOak’s first ever foray into aviation. Ann Gloag said in her Gazette interview that she did not like the way that RiverOak/Freudmann did business and that RiverOak was not credible as an airport operator. 

Letter to Discovery Park

Discovery Park (Trevor Cartner and Chris Musgrave) now own 80% of the Manston site, and Ann Gloag is a minority shareholder. In a better world, TDC would now be talking to Discovery Park about their plans, in the hope of conjuring the best possible deal for Thanet. In practice, TDC are still fixated on the idea of CPO-ing the site on behalf of RiverOak so that they can run it as a freight hub.

Unfortunately, the only attention that Discovery Park seem to have received so far is a rather presumptuous letter from the Save Manston Gang, telling them what they can and should do with their property. In the interests of them having a more balanced view, we thought we would drop them a line, and copy it to some TDC bigwigs (Mr Boyle is their legal beagle).

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Dear Ms Homer and Mr Boyle,

Please find attached a letter to Messrs Cartner and Musgrave about future development at their brownfield site at Manston. We thought you might find it useful as a counterbalance to the letter sent by Dr Beau Webber on behalf of the various groups who want to see an airport developed at Manston.

We are very surprised by the enthusiastic and one-sided support that many Councillors have shown for a cargo hub to be developed at Manston by an untested and inexperienced (in airport operating terms) business partner. Could you let me know when talks will begin with the site's owners about their plans for the site? You will know that, without "exhaustive" talks with the owners about their plans for the site, the Council is not in a position to progress a CPO.

We look forward to hearing from you.

Cartner Musgrave Letter 11 Oct 2014 - MP by NoNightFlights

Manston Solved

Simple: TDC gets the District Valuer to value the Manston site, asap.

TDC will have to get it valued if they want to CPO it (and they appear to be dead set on carrying out a CPO), and they should do it sooner rather than later - it might resolve their current predicament.

If the value seems too low to Ann Gloag, she will (probably) make that clear to TDC, who will then know they will have an expensive legal fight on their hands, and might want to have a rethink.

If the value seems too high to RiverOak, they will withdraw.

As for any commercial transaction, the price has to be right. So far, nobody has bothered to find out what the price will actually be.

If you think this is a sensible course of action, do feel free to contact TDC's Leader and TDC's Acting Chief Executive:

madeline.homer@thanet.gov.uk - Madeline Homer (acting CEO of Thanet District Council)

cllr-iris.johnston@thanet.gov.uk - Cllr Iris Johnston (Leader of Thanet District Council, Labour)

RiverOak pledges to stop auction of airport assets

The American firm which has pledged to underwrite a compulsory purchase of Manston airport says it will take out an injunction to halt the further sale of assets at the site. RiverOak Investment Corp, of Stamford, Connecticut, says it will make the move to stop the "scorched earth" auction of vital airport goods, such as the control tower, off field lighting and communication systems, in September if Thanet council agrees to a commercial partnership.

RiverOak technical advisor, and Kent County Councillor for Sturry and Herne, Alan Marsh said it is vital Thanet council agrees to move forward with a CPO on Manston and announces the US firm as its preferred partner on Thursday. He added:

"As soon as TDC announce their commitment to working with RiverOak then RiverOak has, in this country, a legal position through which it can then go to the Inns of Court for an injunction, or whatever legal means needed, to prevent the September auction. But, if TDC keep talking about it but do not go forward, RiverOak will have no legal position because that position can only start when TDC go ahead with the CPO with RiverOak as preferred partner."

The firm sent a letter last week outlining its proposal to indemnify TDC against any costs of the CPO and the sale price of the airport. A Heads of Terms document, outlining a full agreement, was also sent after legal advice.

Mr Marsh, a trained pilot who has taken 3,000 flights out of Manston and was previously a test pilot for the and European Commission, said time is now of the essence with one asset auction taking place this week and the second, of major equipment, just weeks away. Another spokesman for RiverOak said if the main assets are sold it could cost £5 million to replace them.

The company says it believes Manston could be viable for air freight, aviation services including maintenance, recycling, private charter and commercial passenger services. It claims the experience of one of its senior team members in refinancing Alliance Fort Worth Airport in Texas had proved the case. The firm says it can turn Manston around from the annual £3 million losses before closure to breaking even in 16 months.

But an agreement to go forward with the CPO and partner RiverOak at last night's Cabinet meeting did not look likely. The council has received an initial consultant's report on the future of Manston airport and its possible compulsory purchase. The review, by Falcon Consultancy Limited, says Manston is unlikely to be successful unless it changes the way it is operated, although it "could be viable on the basis of a 20-year business plan that sets out a phased development of the airport".

At the meeting, cabinet members were due to be asked to decide whether they accepted the recommendations in the report and to share this with the airport's current owners. A further stage of developing a business plan and market testing would then follow. A CPO decision would involve a procurement process to identify an indemnity partner, says TDC.

Deputy leader Richard Nicholson said that process could "take quite a while", citing the Dreamland CPO as an example, and said the council was duty bound to approach airport owner Ann Gloag to see if there was any way to avoid the CPO.

A spokesman for Kent Facilities Ltd said:

"The auction is all part of the ongoing process of the decommissioning of the former airport site. The decision to pursue a CPO is a matter for the council and any potential partners to consider."

RiverOak sent the letter to Thanet council leader Iris Johnston, deputy leader Richard Nicholson and senior officers pledging to underwrite a Compulsory Purchase Order for Manston airport. The firm, which offered the full £7 million asking price for Manston prior to closure in May, but had its offer rejected by the current owner, pledged to take on the costs in a "back to back" agreement with TDC.

The online auction for Manston airport assets took place on Wednesday and yesterday (Thursday). More than 700 lots, including vehicles, duty-free goods, fire equipment, forklift trucks and container loaders, generators and furniture and equipment from the passenger terminal and security areas, went under the hammer.

Peaker Pattinson auctioneers plan to hold the second sale, by tenders only, in September.

Thanet Gazette 6th Aug 2014

Manston airport equipment to be sold at online auction

A mass auction of equipment used at Manston airport is to take place later this month. The site’s owners Kent Facilities Limited – owned by Stagecoach founder Ann Gloag – are putting dozens of items under the hammer following the closure of the airport in May.

Lots include boarding steps, an aircraft de-icer, mobile baggage conveyors, Land Rovers and specialist fire engines. Several items from the terminals are also for sale, including metal detectors, baggage scanners and even rows of seats.

Interested bidders will be allowed to view the kit up for sale at the airport near Ramsgate on Wednesday, July 23 and Tuesday, July 29, by appointment only. They are being sold online by Lincolnshire-based auctioneers Peaker Pattinson on Wednesday and Thursday, July 30 and 31. Their advert also indicates that items from the control tower will be for sale in September.

Thanet District Council is taking legal advice on the viability of issuing a compulsory purchase order for the site. It is thought US consortium RiverOak would help to fund a buyout of the airfield, having submitted three offers for it before it was closed.

Mrs Gloag is due to meet Thanet District Council leader Cllr Iris Johnston in London tomorrow to discuss the future of the site. The auction has been condemned by Thanet North MP Sir Roger Gale but he says it is likely to galvanise support to get the airport reopened. Sir Roger said:

This will simply strengthen the determination of Manston's supporters, the district council, Members of Parliament and, of course, the prospective purchasers, to buy the airfield and to get planes flying again. Much of what is on sale is past its best and any new operator would be looking to replace and refresh equipment more suited to the tasks generated by the new business that Manston will attract.

The Transport Select Committee's planned inquiry into regional airports will offer a political opportunity to air the true facts surrounding what I regard as the temporary closure of Manston and in due course I shall also be seeking a further adjournment debate. The inquiry that a compulsory purchase order will almost certainly generate will additionally offer the chance to get the facts on the record and to expose the manner in which potential business opportunities have been squandered.

Save Manston Airport group chairman Keith Churcher said:

It is absolutely nothing to worry about. It is all equipment that needs to go anyway. It is nothing special. This would do a favour for the new owners because there are a lot of bits and pieces lying around that needed to be cleared out.

A spokesperson for Manston Airport said:

We have retained Peaker Pattinson to complete the sale of the remaining assets at Manston following its closure as an airport in May.

Kent Online 2nd Jul 2014

Ann Gloag and Cllr Iris Johnston to meet in London

A high level delegation from Thanet Council will meet businesswoman Ann Gloag in London on Thursday after she shut Manston Airport. The long-awaited meeting will be led by Thanet council leader Cllr Iris Johnston, together with her deputy Cllr Richard Nicholson, acting council chief executive Madeline Homer, and a legal representative.

It is the crunch get-together that the council, MPs, businesses and organisations, plus former Manston employees and residents has been urging for many weeks. Cllr Johnston said:

“We are going to see Mrs Gloag and to outline the situation as we see it and to hear in person what she has to say. We will ask her for her reasons for declining offers that have been made re the airport and any updates on her decision that led to the closure and loss of jobs. She has treated me with courtesy before when we spoke on the phone and I am glad she had made time in her busy schedule to meet with us.”

Cllr Johnston described the meeting as “critical for the future of the airport.” She added:

“From an economic development point it is vital for Thanet to tell our potential investors that we have our own airport.”

Cllr Johnson said has received a petition of almost 8,000 signatures urging the district council to compulsorily purchase Manston. She added:

“We are exploring all avenues. A CPO is a possibility we will look at but it is a complicated procedure for a local authority and we will need a watertight arrangement with a third party if we are going to proceed this way.”

The American company RiverOak tried to buy the airport; its chief executive Steve DeNardo and fellow directors have reaffirmed their desire to buy the site, and have met with Thanet MPs Sir Roger Gale and Laura Sandys. The company has had three offers turned down by the site’s owners including an offer made on the day of closure which met the asking price.

Cllr Johnson, who is meeting East Kent and Medway authority chief executives and leaders, and Thanet Regeneration Board among others, to keep Manston alive, said expanding the current enterprise zone from the Richborough corridor into Thanet to include Manston would be essential to attract investors to the area. She added:

“We are all trying our very best to ensure that Manston airport has a future.”

She plans to meet with Kent County Council leader Cllr Paul Carter on Friday, July 4, after her meeting with Mrs Gloag.

Kent Online 30th Jun 2014

MPs meet with Manston 'bidders' RiverOak

Thanet MPs, Sir Roger Gale and Laura Sandys, yesterday met with the CEO of RiverOak, Steve DeNardo, and fellow directors who wish to purchase Manston and to re-open the airfield as an operating airport cargo hub.

At the meeting at the House of Commons RiverOak , the company which offered the full £7m asking price for Manston prior to closure but had their offer rejected by the current owner, Mrs Gloag, reaffirmed their desire to buy the airfield and their faith in its future as a significant cargo-handling and possible future passenger centre.

Earlier the RiverOak team met with Aviation Minister Robert Goodwill to outline their proposals and to maintain contact with the UK Government. Further meetings will follow later this week.

Following their discussions with Mr DeNardo The MPs said in a joint statement:

It is clear that RiverOak are committed in their determination to acquire and to operate Manston as an airport, with all the job-creating potential that will flow from that. There are, of course, obstacles to be overcome and much will depend upon the ability of Thanet District Council to bring a Compulsory Purchase Order to a satisfactory conclusion but with cross-party political support that exists we believe that this can be achieved.

Literally and metaphorically we and RiverOak are in this for the long haul. The due processes may take a little time but we intend to realise our objective and to see planes flying from Manston once again.

Thanet Gazette 18th Jun 2014

Official: Manston to close next week

Following yesterday's rejection of the American bid, Manston's management summoned their workers this morning to tell them that Manston will be closing on Thursday 15th May.

Here's their official statement (once again courtesy of the BBC's Mark Norman).

View fullsize

Manston bid rejected

Courtesy of the BBC's Mark Norman (@BBCmarknorman) the latest development in the long-dragging saga of Manston's decline and fall:

My reading of this is that Ann Gloag has had enough of showing an interest in any bid pushed under her nose by well-meaning MPs and local dignitaries. I expect she'll now focus on closing the airfield once the consultation period is completed, thus saving herself some £10,000 a day, and concentrate on Plan A - getting the site to make her money. Lots of money.