My KCC Election Manifesto & Video

Thursday, 17 October 2013

Manston Plane Stupid

Bought from bankrupt  Planestation for  £17million 8 years ago and sold this week for £1. By my calculations that’s a loss of £5,822 per day even before wages, energy, repairs & maintenance costs are taken into account,  which I am sure were  not being covered by the Airport’s  tiny  trickle of income. 
Was it worth punting £1 on Manston? . In my view no! Or at least no if you wanted  to buy  an airport which it was claimed would be  handling 5 million passengers and 400,000 tonnes of freight in the next 10 years.   As transport pundit, Simon Calder, pointed out this week the passenger catchment area is simply too small to make Manston  viable. Even with a Parkway Station and faster rail links to London, subsidised at great expense  by the taxpayer, Manston would remain hard to reach.  Frankly who in their right mind would chose Manston when, for most passengers, it’s easier to get to Gatwick, Heathrow, Stanstead or even Southend?  Who  in their right mind would choose Manston and its limited facilities and services when you have a choice of modern, international standard, airports within 2 hours travel?   Even as freight focused airport Manston’s opportunities are limited. Distances to and from major storage and distribution centres are too great and the additional transport costs too high, for Manston to be a serious player.

Sadly, like the Port of Ramsgate, Manston Airport lives in the shadow of modern  transport colossi against whom it will never be able to successfully compete. So instead of continuing to prop  up this ailing aerodrome at the cost of £millions per year, perhaps its time, just like the port, to think about other uses. Which gets back to my original question. Was it worth punting £1 on Manston? Too damn right it was! £1 gets you an awful lot of real estate which could eventually be sold off at massive profit for  housing, retail, leisure, or industrial use. No wonder Anne Golag is one of the richest women in the country.

 

20 comments:

  1. Ian, Planestation fell into the trap of trying to make the airport, London Manston, something which Infratil also bought into. It is never going to be one of the main airports for London, but all around the UK there are smaller airfields operating quite successfully as long as they properly identify their own market. Some even exist on private aircraft and flying schools only.

    On the question of making an investment for a much greater return in due course, and assuming your figures are about right, why didn't Infratil go down that route if it is so easy? What exactly are Manston's assets, other than a few airport buildings, a large chunk of land and to realise millions from that would be dependent on getting the right planning consents. Even then, perhaps a business park, but we already have lots of business park space not fully utilised. Maybe housing, but where would all those people work? We don't have enough jobs for the people we have already. It is not that clear cut.

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  2. Ann Gloag is no fool and whilst Ian may be right about the potential for Asset-Stripping I believe Manston does have a future BUT the main barrier to growth has been the rather over-optimistic estimates of future passenger numbers. Any business needs to play to its' strengths and going in to bat against Gatwick or Stansted is NOT going to work. There are niche markets that could be targeted by Manston and I think we should sit and watch what Ms Gloag does. She obviously has some ideas. The company she formed to buy the airport had £750,000 tipped into it very quickly.

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  3. It's great to hear that Manston can't be compared to a major hub airport. However, when did this change of opinion occur? When Wiggins owned it we were treated to councillors and officers from both TDC AND KCC making increasingly ridiculous claims about Manston's potential. I can produce a front page from the Gazette where a senior council officer is quoting ten million passengers a year....by now. So, don't start belittling people who "fall into the trap of comparing it to a hub" when councillors and officers have, for years, told us that this is what they intended. When did they realise that they were talking b*ll*cks? Tell us that William.

    As for the idea that you could operate and airport the size of Manston for short haul and internal UK flights, dream on buddy. Manston has a big runway and big overheads. The only reason it was successful in the past was the MoD covered the operating costs. It has lost money hand over fist for the last 13 years and you'd have to be guilty of blind optimism to believe that this is suddenly going to change because of a simple change of ownership.

    Key to its future is investment. If the new owners aren't prepared to plough tens of millions into the infrastructure it's game-over. And thereby hangs a large unanswered question. We know that Ann Gloag has forked up £1 to buy the airport, but if tens of millions are required, who will be paying? She may be rich but she didn't get that way by being stupid and throwing money at a lemon. Unless there are some backers (like Infratil) who don't seem to mind losing large amounts of money year on year I don't see what difference a change of ownership will make. The big worry for me is that, somewhere along the line, KCC will get involved and will start throwing public money at it.

    And, hanging over the whole fiasco. like the sword of Damocles is the fact that TDC has spent the last 13 years desperately trying to avoid asking the airport operators for a planning application to expand. The airport can't be expanded without a formal planning application and this will trigger a host of statutory requirements, such as an environmental impact assessment and a public inquiry. At Lydd, the application to expand was held up for nearly ten years whilst these things were sorted out. Manston hasn't even started the ball rolling yet.

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    1. 17:48, exactly my point, people, whether that be the airport operators or the local authority, did fall into the trap of thinking too big for Manston. As to when they realised they were talking rubbish, how would I know? I am neither KCC or TDC, just a humble town councillor and only that for two and a half years, so I am expressing my opinion and not that of anybody else.

      As a point of interest though, since when did the distance travelled by an aircraft effect the charges at the departing or receiving airport? I always thought it was the number of movements that determined income, not how far they are going.

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    2. It's not about the distance travelled. It's about demand. And there is b*gg*r all demand for internal flights to other parts of the UK from Manston. That leaves your suggestion of short-haul holiday flights. Well, they fly predominantly in the Summer, so that's not going to keep you afloat, even assuming you could drum up enough business for the Summer months, something that neither Wiggins nor Infratil could do. Can you explain why Ann Gloag will be more successful than they were? Same airlines, same routes. Why would they be more likely to use Manston this year than last?

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    3. Never heard of winter sun, 16:48. Think you will find holiday flights to the south European and island resorts operate all year round with a very busy peak around Christmas. Keep trying because so far you are failing miserably.

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  4. Hi William. Struggling with some business basics again? Infratil and its UK based management have been talking up the airport since 2006. To suddenly turn around and say, "you know what, it's actually worth more as a cabbage field, apologies for the tens of millions squandered shareholders" would not be good for your career. They have made a graceful exit stage left, its still an airport, and any decision to turn it to something else is down to someone else. Face saved!

    Plus it will take millions to close it and get planning permission for something else. Oh, and years. They put it up for sale march last year because shareholders were fed up feeding the dying airport. To string it out with more cost over more years would have been impossible for them. New owner, no cost, wrote off the loss, "no regrets", move on.

    Now over to Ann..........

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  5. Drawback with your business basics, 06:57, is that they are all wrong. The new owner has to meet the running costs whilst open, all the closure costs including clean up and redundancies on shutting it down and then would still face all the delays associated with change of use and planning. They also cannot write off the loss against capital so it would have to be income. Since she is no longer involved with Stagecoach do you know if she has any or are you guessing again?

    The so called face saver for Infratil is also nonsense. If it was as easy as all that to change use and make some money, face saving would not come into the frame. Fancy attending a shareholders meeting and telling them we sold it for a £1 to save face, but we could have made millions by redeveloping the site. Just how long to you think the board would last in such circumstances.

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  6. Hi Joe,

    The elephant in the room is that these "advantages" have been there ever since the airport was privatised. Yet it has lost money year on year. I suspect you have only looked properly at one side of the argument; the one you WANT to believe in. Sadly, the remoteness of Manston which gives rise to the advantages you quote is also its Achilles heel. There are simply not enough people living closer to Manston than Gatwick to make it viable. I appreciate that arguments can be made both ways, but if you think it has great potential, you have to explain why it has failed time and time again over the last 20 years.

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  7. In big business, you don't take a hit if the company you own goes bust. This happens all the time and, if you thought about it you would be able to see some good local examples of this. Executives get paid whilst company spirals down into a pit of debt. Who does take the hit when a big company goes bust? Well, the employees take the biggest hit. They may not get their redundancy money and there's often a nasty shock when they look closely at the pension fund. Then come the creditors. People who have supplied the business don't get paid. Finally, we come to the banks. The banks which lent the money take a hit but they pass the costs on to their customers. Ultimately, if the banks lose too much money, the government bails them out using taxpayers' money. So, in reality the bank never loses. It's the taxpayer who picks up the tab. Anyone who thinks that the fortunes of an executive are tied to the success of the company doesn't live in the real world. Sometimes executives are paid substantial sums to manage the process of running down a company and closing it. The art is to ensure that the costs of closure are all passed on to someone else, ideally the taxpayer.

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    1. "..having been one of the top fifteen managers in a corporate banking organisation, "

      I really don't think that this is something to boast about. The biggest bankruptcies we've seen in recent years have been banks which have lost fortunes because they were unable to distinguish a good investment from a worn-out carpet. In fact the rest of us, and our children, will pay for your mistakes for the rest of our lives. No, if that's the extent of your "business" experience I don't think you have anything worthwhile to tell us.

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  8. So Infratil decided to unload armed with the knowledge of how well the KLM service was doing. doesn't look like KLM is going to be the game changer.

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    1. Surely Infratil unloaded knowing they were sitting on an asset worth hundreds of millions for redevelopment but they could not be bothered to do anything about it. Far easier to take a £1 and go. KLM did not even enter the frame for everybody knows that Manston as an airport is a dead duck, or so we are told often enough on the blogs, but it has massive potential as a business park, with no takers for the sites, or housing, with no jobs for the residents, or a giant theme park, with no catchment area or a host of other brilliant ideas, with no chance of getting there as evidenced by the air show. On second thoughts, perhaps its only use is as an airfield or cabbage patch, but you would seriously have to shift a lot of greens to cover the costs of closing it down.

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    2. Hi Ren (Have you got a brother called Ron?)

      I'm sorry, but your argument is plainly flakey. You say that Manston is worth hundreds of millions and that the only reason Infratil let it go was because they couldn't be bothered to do anything with it. I agree that Infratil didn't want it, but if it was worth hundreds of millions, as you claim, they could have sold it for a lot more than £1. They've had it up for sale for a long time and nobody was prepared to pay more than £1. This tells you that it is, in fact, only worth £1.

      You can prove this to yourself by trying to sell something on Gumtree or e-bay. It really doesn't matter what value you assign to it. The only way you're going to get rid of it is by selling it to someone who wants to buy it and, in the end, you have to accept their price. Whether you like it or not, the current value of Manston is £1.

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    3. If such is true, 19:38, and accept that my earlier comment was not without a certain sarcasm, why are some people telling us that Ann Gloag has snapped up a bargain which she will now make a fortune out of by redeveloping?

      My brother is David.

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    4. Ah well, that's the 64 million pound question isn't it? Is it that she is privy to information that we aren't? Is she acting on behalf of someone else? Is she in cahoots with someone else? I doubt that someone who isn't from this area and has had no previous contacts in this area would suddenly appear bidding £1 for the airport. If you go back to the days of Wiggins, they were already involved with the business park before they got involved with the airport. We'll never know who was speaking to who and who tipped who off, but they suddenly popped up as the preferred bidders for the airport. I'd like to know who Ann Gloag has been talking to in Kent. Someone at the Chamber of Commerce or someone at KCC? There are many possibilities but I'd be willing to bet there's a connection somewhere. If you find the connection, this transaction may begin to make sense.

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  9. Big business, 06:53, if you were experienced in big business you would not be living in Thanet and expounding your theories on a blogsite. As someone ignorant of big business can you explain to me why someone like Ann Gloag, evidently rich and successful, would buy Manston just to "take the hit of closure" you refer to. Does not make sense at all.

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  10. Stansted you mean .. not Stanstead..

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  11. I think that one is easy to answer. You take the hit of closure, haggle with the council for a few years, then make an absolute killing building houses. Is that easy enough for you to understand?

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