BBC Radio Kent airport debate in Rochester

BBC Radio Kent is hosting a debate on airport expansion.

A panel will come together at Cliffe Memorial Hall near Rochester on 30th October with doors opening at 18:00 GMT.

The panellists will be:

• Daniel Moylan, the Mayor of London's Aviation Advisor
• Councillor Alan Jarrett, Deputy Leader of Medway Council
• John Grant, Executive Vice President of aviation experts, OAG
• Charles Buchanan, Chief Executive, Manston Airport
• Sue Armstrong-Brown, Head of Conservation Science at the RSPB
• Clive Lawrence from Demand Regeneration in North Kent

If you would like to be in the audience, you can request tickets by emailing radio.kent@bbc.co.uk or writing to: BBC Radio Kent, The Great Hall, Mount Pleasant Road, Tunbridge Wells, TN1 1QQ.

Admission is by ticket only. Tickets are free but are limited to a maximum of two per person and will be allocated on a first-come first-served basis. Applications for tickets close on 19 October.

Infratil Airports Europe; right ingredients wrong outcome

Infratil's assessment of their European airports, in their own words...

In the 1990s Australia and New Zealand were amongst the first countries to sell state-owned airports and to allow their commercial operation. The resulting value uplift encouraged Australasian investors to look at markets where similar developments were occurring, which led to Europe.

Infratil invested in Prestwick, Kent and Lübeck airports and purchased an option over an airport near Berlin. These airports were acquired at well below replacement cost as rapid growth in European air travel made it likely that their capacity would soon become needed and valuable.

Kent for instance cost less than £20 million and the next London runway will cost over £2 billion (Mayor Boris Johnson’s preferred site in the Thames Estuary is likely to cost over £20 billion).

Notwithstanding this enormous potential, Infratil has now called it quits. European air traffic growth has slowed so that the need for additional airfield capacity is postponed, and Infratil’s assessment of the relative benefits of waiting (and continuing to meet operating cost) versus refocussing elsewhere have favoured exit.

Infratil Update September 2012

Thoughts from the think tanks

A couple of think tanks (Policy Exchange and Centre Forum) have got their heads together to produce a thoughtful and thought-provoking analysis of possible solutions to aviation capacity in the south-east.

The best approach would be to build a new four runway Heathrow, immediately west of the current site. These new runways would replace the existing runways. This would be straightforward to construct, and relatively low cost by the standards of hub airports. A combination of tightening permitted noise classes, ending night flights and landing narrow bodied planes more steeply makes it almost certain that this airport would be significantly quieter than the existing airport, despite catering for almost twice as many flights.

Leaving the airport where it is works for air traffic control. It also works for the wider economy: companies that have located near to the airport because they need to be near the airport do not have to move. The design of airport proposed here would be operationally efficient for both passengers and airlines, and would be the world’s best hub.

Bigger and Quieter: The right answer for aviation

Synopsis

Bigger and Quieter: The right answer for aviation examines all of the options for increasing airport capacity in the UK. It supports placing four runways immediately west of the current Heathrow site. This would double the existing capacity to 130million passengers, cementing it as Europe’s premier hub. If this was politically unfeasible, then a four runway airport at Luton would be the next best option.

The report says that the UK needs a new hub airport located in the South East which has spare capacity to accommodate the likely increase in demand, especially to cope with the rise in middle class travellers from emerging markets.

It doesn’t rule out the current proposal to build a third runway to the north of Heathrow, but claims that less people would be affected by aircraft noise if the four runways were instead located 3km to the west of Heathrow.

To reduce the effect of noise the report proposes:

• A complete ban on the noisiest aircraft at all times, rather than just at night. Airlines would have to ensure their fleet complied with new decibel measures by the time the new runways were ready for use
• Imposing a complete ban on night flights. The increase in the number of slots available would mean no planes would arrive or depart between 11pm and 6:15am
• Landing narrow bodied planes at a steeper angle as they already do at London City airport. This again means they are higher over any part of West London on their descent. For example, a plane would be 925m rather than 260m above Hounslow
• In addition, moving the airport west means planes will be higher over London than at present

Because the proposal reuses existing terminals and infrastructure, the price is likely to be around half that of Foster’s proposal for an estuary airport. Approximately 700 properties would need to be demolished compared to the 1,400 that would need to go to make way for the estuary airport. The cost and ease of travel to Heathrow as well as the fact many businesses are already located near the current airport makes it the most suitable site.

The report says that other than Heathrow, Luton is the best located London airport. It is close to a high quality, four track rail line that goes to London St Pancras in 21 minutes as well as to key cities in the Midlands. It is also close to the M1, arguably Britain’s most important road. If expanding Heathrow is politically unfeasible, Leunig proposes a four runway Luton Hub with two terminals, the first adjoining the M1, the second the Midland Main Line rail route. The disadvantage of Luton over Heathrow is that the terrain is much more challenging, and the location is not as strong.

The paper rules out:

• Foster + Partners estuary airport (aka “Boris Island”) as it is too hard to get to for too many people. The environmental and construction challenges are also much harder to overcome than at Heathrow
• Connecting Heathrow and Gatwick to become a single hub. The two airports are 25 miles apart meaning that a direct high speed rail link would cost approximately £15 billion
• A four runway airport at Gatwick. The costs are higher than for Heathrow, and the location is not as good. Instead Gatwick should consolidate its position as a good quality base for point to point traffic geared towards leisure travel and short haul flights
• A four runway airport at Stansted. Like the estuary airport proposal, Stansted suffers from a poor location, with a weak hinterland and slow connections to London and the rest of the country

Friday, 05 October 2012. 

Read the FULL report below:

Bigger and Quieter

All aboard the 4.20am flight to Amsterdam?

Let's have a quick look at the latest exciting news to come from Manston airport. The suggestion is that KLM's decision as whether or not to run a twice a day service between Manton and Schipol will be influenced (but not decided) by the response to Manston's online survey.

• Charles Buchanan says that KLM would have a plane parked at Manston overnight, ready to fly to Schipol each morning.
• Charles Buchanan has often said that planes only make money when they are in the air, so it follows that KLM would want their "Manston" plane back in Schipol bright and early so that it has plenty of working (flying) hours ahead of it through the rest of the day.
• Schipol Airport is effectively closed between 10pm and 6am, and Amsterdam is one hour ahead of us (at the moment).
• The flight time from Manston to Schipol would be about 40 minutes.
• To arrive in Schipol at 6am (local time), KLM's "Manston" plane would have to leave at 4.20am (local time).
• The online questionnaire doesn't ask what time of day people would like to fly - now you know why.
• The online questionnaire doesn't ask how much people would be prepared to pay for their flight.

As influential local commentator Maurice Byford has pointed out:

Any business worth its salt would carry out due diligence, population and traffic analysis and SWOT analysis without resorting to a survey. You might want to ask, how many people travel to Europe from Kent, but then you need only look at the traffic figures from EuroStar train from to see the passenger footfall for Belgium.

There are plenty of reputable consultancies that specialise in providing detailed economic and demographic analyses to help businesses make rational commercial decisions. They have access to all the available data on business activities, income distribution and socio-economic groupings by post code. They have a pretty good idea how many people run businesses with European interests, and how many people are likely to take weekend jaunts to the Continent or connect to long-haul flights.

It is very likely that KLM have already done their homework, which is why they were looking for £600,000 of public money to underwrite the risk of operating from Manston. The online survey doesn't cover two of the questions that KLM most clearly need answered - how much will people pay, and how willing are they to accept KLM's offering (i.e. first thing and last thing, and nothing in between).

Airlines are high investment, high throughput, low margin businesses. They employ people full-time to examine every available business opportunity, and re-examine each option every couple of years. All of the major airlines will have examined and re-examined Manston over the years it has been owned by Infratil. With the exception of FlyBe's tentative experiment with a couple of minor routes (which failed for lack of passengers), there have been no takers.

KLM's interest in Manston may simply be that it is cheaper to park a plane there than at Schipol, and there's the possibility that the passenger fares would exceed the fuel costs to Schipol. In all probability, KLM will discover what others have discovered before them - Manston's catchment area cannot support a successful passenger or freight airport. It doesn't matter how keen the local residents or the local businesses are - there simple aren't enough of them.

After years of fanciful forecasts, missed targets and false hopes, this may be Infratil's legacy - a minimal passenger service that only ever flies at night, while the airport is almost entirely idle through the 16 hours of daytime. This is Infratil waving goodbye, with two fingers.

Fan mail

You are so backward sorry

I live in Ramsgate & am on the flight path. I have no problem with flights between 6am & midnight. I am on the approach & realise that for the future we need to allow Manston to expand a bit. So if a fire station or Ambulance station was to open near you would you complain about the sirens at 3am???? Perhaps if I was your neighbour & you had to have an ambulance at 3am I would stop it due to the noise from the sirens.

Your

Alun

Cheers, Alun - you're a pal.

Airport Working Party: unprepared

The AWP may be prepared to shoot itself in the foot, but it's not preparing for much else.

In August this year - 5 months after the airport was put up for sale - the Airport Working Party had one of their games of musical chairs, when the membership and chairmanship changes. When the music stopped, Cllr Jo Gideon had become chair of the Group, the rest of the merry crew being Cllrs Alexandrou, Bruce, Gibson, Grove, Harrison, Marson and Worrow.

At that meeting in August, the AWP laid out its action plan and timetable for the foreseeable, starting with a review of the S106 and a good hard look at the results of a number of research trips to airports around Britain over the last few years.

Nothing like being prepared

The only members of the original cast to turn up for yesterday's meeting were Cllrs Alexandrou, Gideon and Marson, with Cllrs Campbell, King and Wise there as understudies, substituting for some of the absentees. It was one of those meetings where I found myself shaking my head in disbelief and growing horror, hoping that I might wake up.

The first stumbling block identified by Cllr Gideon was that none of them had the legal expertise necessary to make specific recommendations for a new S106. Fair enough. Cllr Gideon went on to say that they could instead look at why there had been so many concerns over the adequacy of the document. Good idea - identifying the flaws and short-comings of the current agreement would help when producing the next version.

However, Cllr Marson was concerned that they might just end up with a wish list of things they might like to talk about at some point in the future. Er, yes, that's the point - that "wish list" would be TDC's negotiating position, and that "point in the future" would be the negotiations.

Cllr Campbell pointed out that if the Council could come to a position on what it would want from a S106 agreement, then it would be ready to enter into negotiations with a new owner, should the opportunity arise. Thus the Council would be ready for negotiations if there is a quick sale, and it would be remiss of the Council not to have a starting position for negotiations. (EXACTLY!) Cllr Alexandrou agreed, saying that without an opening negotiating position, there is the risk that TDC will be seen as having an "anything goes" attitude, so there is a clear need for some ground rules.

The next stumbling block to be discovered was that the airport is up for sale. Er, we all knew that in August when the AWP's terms of reference were defined and the agenda for this meeting was set. Some of the AWP viewed the fact that airport is up for sale as a reason for not reviewing the S106 at all, but Cllr Alexandrou pointed out that there is currently someone to negotiate with - the current owners.

Nonetheless, Cllr Gideon concluded that the consensus was that this is the wrong time to review the S106 agreement, and that it should be revisited as and when the airport sale goes through, or a planning application is received. It would be marvellous if the AWP adopted the motto used by hundreds of thousands of scouts and guides across Britain - "Be Prepared".

It wouldn't be very difficult or time-consuming or expensive to produce an outline of TDC's ideal S106, with "must have" and "nice to have" elements listed in priority order.

• Right at the top of the list would have to be: the S106 must be attached to a planning permission - this would give TDC the leverage it is so woefully lacking at the moment.
• The new S106 must include an element of compulsion - it is absurd that the airport operator can choose whether or not to discuss the terms of its permission to operate on TDC's patch.
• The new S106 must be completely unambiguous - the current version has no clear definition of what counts as a scheduled night flight.

Do feel free to add your own ideas for what should be included in the new S106 in the comments section below.

Wasted Journeys

Our attention was then turned to the reports produced by earlier AWP outings to airports around the country. The intrepid councillors had been to Prestwick (Glasgow), Southend, Norwich, Bristol, Bournemouth and Luton. Cllr Gideon dismissed the papers as "reading a bit like someone's diary - not an incisive or meaty comparison document the AWP could do something with". Oh dear. Perhaps it was just as well that none of the councillors who spent all those days and nights away from their constituencies were present to see their work being rubbished.

Self-destruct

And things went from bad to worse. Having decided that there was no way they could force Infratil into a root-and-branch review of the S106, the AWP thought it might be a good idea to go to Infratil with the suggestion of making some "minimal amendments - bringing the agreement up to date, data compliance and so on".

This would be a disaster. The S106 stipulates re-negotiation every 3 years (although we all know this has not happened so far). Any negotiation with Infratil to make minor tweaks to the S106 would effectively reset the 3 year clock.

This would mean that the new owner of the airport (and Infratil for as long as they continue to own the airport) would then be completely within their rights to refuse to enter into any further S106 negotiations with TDC for the next 3 years.

---

---

Where the S106 renegotiation is concerned, the only thing worse than doing nothing is not doing enough.

A reader writes

I should like to make a few points, of which Cllr Carter should be informed! Firstly, he says that Manston's runway is 2,752m. When I checked, it was 2,658m. Heathrow has two runways - 3,500m and 3,570m, with Gatwick's one at 3,750m. So nowhere near comparable.

He says that Manston "is able to cater for all modern jet aircraft"; that's all very well, but a fully-laden 747 or 767 could not safely take off because there is no room to abort a take off in case of problems. If you remember, an Afghan DC-8 almost came a cropper on 11th August 2010 when, as it was later discovered, it tried to take off 25,000 lbs overweight! (So where are our CAA checks? Who was responsible? How could this happen?) It only just blundered into the sky after gouging grooves in the grass at the end of the runway, just before it could have collided with the traffic on the bit of the B2190 between the Prospect and Manston Road roundabouts! Details of the AAIB investigation can be found here: www.skybrary.aero/bookshelf/books/1670.pdf. If it had been taking off over Ramsgate, it could have ploughed into the traffic on the Haine Road. So, safe, is it?

I don't want night flights, but I'm not against the airport succeeding. But why don't people look at past history? (Sorry - no one ever does!) No one has succeeded with pie-in-the-sky, fantasy ideas. It is a small airfield, not a major airport! It could succeed as a part cargo/part holiday destination airfield. Small aircraft, such as the Fokkers that had European destinations, could attract most of our limited catchment area. I note you say that people living within reach of Heathrow, Gatwick, Luton, Stansted, will obviously go there because of the choice of destinations. Agreed. We need someone to take over Manston who can see it for what it is and accept its limited capabilities. But now, I suppose, I'm looking at pie in the sky!

S.B.

Infratil is selling Manston, but wants to buy Stansted. Why?

In March 2012, Infratil announced that Manston was up for sale because it wanted to "refocus its investment profile" and concentrate on retail, production and supplying gas and electricity. What they didn't mention in their press releases was that Manston had lost them money hand over fist ever since they bought it.

In the previous couple of years Infratil had "written down" the value of its two European airports (Manston and Prestwick) from £70m to £36m. These write-downs were simply more realistic estimates of the actual value of the airports, in the light of their performance and the fact that they were losing Infratil about £6m a year.

Don't forget, dear reader, that Infratil is an infrastructure investment company. They buy and sell "big stuff" (putting it technically) to make money for their investors. On their website, Infratil state that "Infratil’s primary goal is to provide its shareholders with a consistent return of 20% per annum over the long term".

Clearly this 20% hadn't happened at Manston, and Infratil realised it wasn't going to happen soon enough to please their investors, if ever. So they decided to cut their losses.

But now we learn that Infratil are joining forces with Morrison & Co (the bank that owns a large chunk of Infratil) and a large pension fund to put in a bid for Stansted Airport. Stansted is owned by BAA, the largest airport operator in Britain, and the Competition Commission ruled some time ago that BAA owned to much of Britain's airport capacity and would have to sell some of it. BAA spent a lot of time and and money fighting this through the courts, but has finally accepted that it will have to sell Stansted.

This makes Stansted a very interesting purchase for a number of reasons. BAA also owns Heathrow, and has spent years carefully managing the mix of flights and carriers at the two airports to avoid them cannibalising each other's customer base. It hasn't been in BAA's interests to have Heathrow and Stansted competing with each other. Clearly, this will change when a new operator takes control of Stansted - there will be a massive increase in competition.

Stansted is well placed to take on new business. Throughout the recent hoo-hah about airport capacity in the south-east, one simple fact has been under-reported - there isn't a shortage of capacity in the south-east. BAA's own chief financial officer was reported as recently as April 2012 saying that Stansted is "only half full".

Both Stansted and Manston have spare capacity, long runways, and are in the "aviation-hungry" south-east. So why would Infratil balk at spending a few million a year at Manston, but leap at the opportunity to invest a BILLION in Stansted? The answer, of course, is in the question - it's the difference between "spending" and "investing". And this is also the answer to those who ask why not Manston.

Manston doesn't feature in any of the serious discussions about the future of aviation in the south-east (and it doesn't feature in Infratil's strategy) for one plain and simple reason - it's in the wrong place. If these two maps don't explain it clearly enough, have a look at this. 

Rival group enters battle for Stansted airport

A consortium led by an Australasian investment manager has emerged as an early rival to Manchester Airports Group in the £1bn battle for Stansted airport.

Morrison & Co, which operates out of New Zealand, Australia and Hong Kong, is heading a bid team that also includes the New Zealand Superannuation Fund and Infratil, a Wellington-based infrastructure investor.

Stansted was finally put on the block last month after a three-year legal fight by owner, BAA, which tried unsuccessfully to halt the forced sale of the airport demanded by the Competition Commission. BAA’s controlling shareholder, Ferrovial, is thought to have issued non-disclosure agreements last week to interested bidders, effectively kick-starting the process. The sale is being handled by Deutsche Bank and ING.

The interest of Infratil in Stansted has surprised some industry observers because it is currently trying to sell its two smaller British airports Glasgow Prestwick and Manston in Kent after a difficult foray into the UK aviation market. Infratil, which runs about £2.5bn of assets, has twice written down the airports in the past two years, with their carrying value almost halving from £70m to £36m today. The two airports lost around £6m last year.

Even so, Infratil is an experienced airport operator, with its interests including a 66pc stake in New Zealand’s Wellington Airport. Infratil’s operations at Prestwick have also enabled the company to develop a relationship with Ryanair the low-fare airline responsible for almost 70pc of Stansted’s traffic. The Morrison consortium is believed to have held early talks with Ryanair. The NZSF, which has more than £9bn assets, devotes about 9pc of the fund to infrastructure investment, spanning airports, transport, energy and oil.

The Morrison consortium faces early competition from the council-owned Manchester Airports Group, which is building up its firepower via a potential deal with Australia’s Industry Funds Management. The giant antipodean infrastructure investor, which has around £21bn under management, has agreed to inject about £1bn for a 35pc stake in the Manchester airport company on the condition it wins the bid for Stansted.

The Stansted auction, which may also attract interest from JP Morgan, Citi Infrastructure Partners and Morgan Stanley Infrastructure Partners, is complicated by the Government’s review of airport capacity in the south east, led by former Financial Services Authority chairman Sir Howard Davies. While there will be no decision on where to build a new runway before 2015, the recommendations of the Davies Commission could have a major impact on Stansted’s value.

Michael O’Leary, the Ryanair chief executive, can also influence how much BAA gets for Stansted. He has already expressed interest in taking a minority stake in any new owner of the airport as long as it agrees to lower both landing charges and the cost of building new facilities. Mr O’Leary has also attempted to drive down the price by declaring that any bid based on the airport’s £1.3bn regulated asset base the regulator’s proxy for its value is “artificial” and based on “Noddy land” economics.

telegraph.co.uk 22nd Sep 2012

Low flying