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

Transport Select Committee - public hearing

We submitted our written evidence to the committee in October 2014. On February 2nd, we went along to Portcullis House (just across the road from the Houses of Parliament), to do our bit.

For you.

Here you can watch the committee in action. We start with:

• Pauline Bradley (Director, Manston Skyport Limited)
• Alastair Welch (Interim Director, Kent Airport Limited)
• Alan Mackinnon (Interim Director, Kent Airport Limited)
• George Yerrall (Partner, RiverOak Investment Corp)
• Tony Freudmann (Partner, RiverOak Investment Corp)

At about 51 minutes in, we move on to:

• Paul Carter (Leader, Kent County Council)
• David Smith (Director of Economic Development, Kent County Council)
• Councillor Iris Johnston (Leader, Thanet District Council)
• Madeline Homer (Acting Chief Executive, Thanet District Council)
• Paul Cook (Interim Director of Corporate Resources, Thanet District Council)
• Sir Roger Gale MP

At about 1 hour 28 minutes in, we get:

• Ros McIntyre (Chair, No Night Flights)
• Dr Beau Webber (Chair, Save Manston Airport Group)
• Angie Sutton (Why Not Manston?)

Discussion from the 02/02/15 0 - 50:00 Pauline Bradley, Director, Manston Skyport Limited, Alastair Welch, Interim Director, Kent Airport Limited, Alan Mackinnon, Interim Director, Kent Airport Limited, George Yerrall, Partner, RiverOak Investment Corp, Tony Freudmann, Partner, RiverOak Investment Corp 50:00 - 1:28:00 Paul Carter, Leader, Kent County Council, David Smith,

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. 

Transport Select Committee - written submission

The Department for Transport has set up a committee to examine policy and make recommendations to the Government on the role of smaller airports. To our astonishment, they decided to spend an entire session looking at Manston, even though it's shut. Before the hearing, we submitted our written evidence.

Select Committee Response - October 2014 by NoNightFlights

US flights a £20m annual boost to county's economy

Direct flights between Kent and America will boost the county's economy by at least £20 million a year, tourist chiefs have been told. The prediction was made during an event to promote the start of passenger services from Kent International Airport at Manston to Norfolk, Virginia. The once-a-week service, which begins next spring, will bring in £5m from May to October 2007, it was claimed.

And if the route becomes permanent the financial boost for Kent could be four times that figure a year if US tourists stayed for just four days each, according to Tony Freudmann, chairman of aviation consultancy firm FT International. But he warned an audience of tourist managers at the Hop Farm in Paddock Wood on Tuesday:

"We have 10,000 tickets to sell and we need to sell them as quickly as possible."

KentNews 11th Oct 2006

Direct air link to US cleared for take off

Long-promised direct flights between Kent and Virginia look set to take off next year. Senior representatives of Norfolk International Airport, Virginia, and Kent County Council are poised to sign an agreement that paves the way for new aviation links from May 2007.

A weekly charter service between Norfolk and Manston would be operated by Cosmos in the UK and CI Travel in the United States. Norfolk Airport Authority has agreed to become a financial partner and is understood to have pledged half the start-up costs. The proposed service builds on a Memorandum of Understanding between the state of Virginia and Kent signed in Richmond, Virginia, last June. One of its stated aims is the creation of an air bridge between the two regions to promote business, education and leisure links.

Speaking from Fairfax, Virginia, Cllr Alex King, KCC deputy leader, said:

"A deal is close to being finalised and I expect the final arrangements to be completed soon. Thorough investigations have revealed a market for a charter flight between Kent and Virginia. It will get an extra lift from the 400th anniversary of the establishment of the first colony at Jamestown by the three boats that sailed out of the Thames from Gravesend. It is rather fitting that this new opportunity comes on the 400th anniversary of the epic tale of the first settlers."

Kent-based consultants Paul Tipple and Tony Freudmann of FT International, who both previously worked for PlaneStation, the collapsed former owner of Kent International Airport, Manston, and low-fares airline EUjet, have investigated the feasibility of a service.

Their report has convinced US and Kent officials that it would be viable, given sufficient financial backing. However, KCC, already bitten by its £100,000 cash injection in the failed EUjet venture, has refused to invest in the proposed venture. Norfolk Airport Authority chairman Peter Decker said:

"The history of England and Virginia is legendary. This is a tremendous opportunity to be the air gateway for international visitors coming to the Jamestown 2007 festivities. 'And also for local travellers to see one of the most beautiful parts of Great Britain."

Norfolk International Airport is the major airport serving south east Virginia and northeast North Carolina. Scheduled airlines currently using the airport include American, Continental, Delta, Northwest, Southwest, United Express and US Airways.

kentonline 4th May 2006

It's your choice, Manston told

Manston Airport has taken a step into the big league by unveiling an £8 million apron and taxiway. Aviation minister David Jamieson officially opened the 10 acres of concrete by cutting a ceremonial ribbon. The new facility can take more and larger aircraft under a master plan that could see £150 million invested in the Thanet airport, including a new terminal and fast rail links with London over the next 10 years.

These plans could see jobs rise from 400 to 6,000, and passenger numbers soar to thee million within five years. Talks are already well advanced with low-cost airlines to operate scheduled services and a deal could be finalised by the end of the year. Mr Jamieson, who arrived by helicopter, said the airport had developed "far beyond anyone's expectations". It was now the country's seventh biggest in terms of cargo handling. He said:

"The Government very much welcomes this development and we value the contribution that the airport makes to the local community, particularly in job creation."

Referring to the recent Government regional airport report that dismissed Manston's credentials in two paragraphs, Mr Jamieson said it was up to local people to say if they wanted more growth at Manston.

"What I've seen today is a very interesting new development but it's not for me to second-guess what the future of Manston is. People should respond to the consultation document and if they want more development at Manston, they should put that forward."

Dr Steve Ladyman, MP for Thanet South, said Manston was a significant regional airport and he was not disappointed by the report. That was about extra runway capacity for London.

"With the proximity of Ramsgate, we couldn't put up with the level of traffic that an international hub would require. I'm delighted with the scale that both the owners and Government have identified for Manston. It's jobs and no pain."

Tony Freudmann, for airport owner Wiggins, said the latest development was only the first phase:

"Within two years, this will be an airport that will be well-placed to see a very rapid growth in both cargo and passengers," he said. The government's report put forward ideas that were controversial and would take years to put into place. This airport is here, it exists, it has a runway long enough for international and inter-continental traffic and it has enough expansion land for the foreseeable future."

kentonline 1st Aug 2002