An airport's not the best route to regeneration

Regen Park

"Regeneration work in Thanet includes improving buildings and public spaces in our towns, development of business parks and working with community groups to help bring their ideas to fruition to improve the area. The emphasis in regeneration is on working in partnership with a wide range of organizations, so that together we can make Thanet a quality place to live, an attractive location for investment and an enjoyable area to visit." (TDC website)

Manston is not a building or public space in a town. No community groups are pressing for expansion or night flights. A bustling cargo airport would not make Thanet an attractive place to live in, or visit. Any profits generated by the airport would be repatriated to New Zealand, to cover the tens of millions of dollars Infratil have already lost. Profits from freight transport would go to the hauliers, mostly national and international firms.

Airport expansion may be an eye-catching, high profile project, but it's more cost than benefit, and very little of value stays in Thanet. So why is TDC, and Brian White in particular, pushing it so hard?

Job creation keeps appearing in TDC's pro-Manston arguments. My problem with this is that Manston is a laughably inefficient means of job creation. On the edge of beautiful Herne Bay, just by the A299, a 50 bed Premier Inn motel and associated 50 table restaurant have just been built. This has created 50 jobs.

Two points here:

• this is close to the 70-90 jobs Infratil keep promising, but using a lot less land and making a lot less noise, mess and inconvenience: this has to be a better bet;
• a hotel and restaurant (by definition) encourage people to come and stay in Kent, and spend their money here: surely a more sustainable path to regeneration.

TDC's regeneration manifesto is pointing in the right direction. Investing money, time and effort in Manston is a wasteful diversion from that purpose. Rather than putting their eggs in one rather threadbare basket, TDC should be concentrating on actively promoting a multitude of small new businesses. If only there was some handy light industrial space to use as a regeneration business park...

Manston keeps failing. What next?

Controlled descent...

Down under. Going under?

The downward drifting squiggly line is Infratil's share price on the New Zealand stock market. Should we care? Definitely - it's time to plan ahead. Infratil describe their strategic interest in airports thus:

The huge growth in the world’s population of people financially able to fly (both because of reducing air travel costs and increasing incomes) is increasing airport throughput. In Europe, hub airport congestion is presenting additional opportunities to “urban edge” airports.

I've heard Manston called many things, but 'urban edge' is a first. Infradig describe the advantages of Manston thus:

KIA's major advantage is its lack of slot congestion and its ability to provide prompt ground service, a significant advantage to customers over the principal London airports. KIA can take delayed or unscheduled services, which other airports struggle to fit into congested passenger service dominated schedules. KIA will also offer freight airlines competitively priced aircraft parking.

So its advantages centre on the fact that it's not very busy. Presumably this puts KIA in something of a bind: every time they get more business, they will be making themselves less attractive. Idle is good vs busy is bad isn't a great starting point for a business model. The aggregated figures for Infrapenny's Urban Edges must make dispiriting reading for any of their shareholders, and the footnotes suggest that the actual figures are even worse.

• Infratil's founder supremo Lloyd Morrison is worth some NZ$70 million, and estimates his company's market capitalisation at NZ$1.2 billion.
• They bought Manston for £17 million and are happy to spend £10-20 million on it before pulling the plug, so from their point of view KIA is small but far from trivial.
• Infratil's European airport investments are performing poorly. Infratil are big enough to take the hit by cross-subsidising, but not indefinitely.
• Their airport at Prestwick had to fire a quarter of the staff due to falls in freight and passenger traffic; Manston just lost out to Stansted on a freight contract that was big enough to be a tipping point.
• The global decline in air traffic due to economic slowdown and contraction won't be reversed quickly.
• The mad fluctuations in oil prices over the last couple of years have highlighted the vulnerability of budget holiday travel and air freight.

Infratil's portfolio covers a couple of airports and bus companies in New Zealand, property investments, a port and lots of power generation. Close to home, well understood and relatively successful, these ventures are a comfort to Infratil's shareholders. In their shoes, I would be looking askance at the European airports, and Manston in particular. It's bleeding cash at the rate of millions a year. Realistically, a lot of good news has to happen to Manston very soon. Realistically, it won't.

So, we come to the forward planning. Infratil pulls the plug and Matt flies home, presumably from another airport. Twice-failed Manston lies empty. What shall we do with it?