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?