Wednesday 22 August 2018

DCO accepted for examination

There was jubilation in the Airport Supporters last week when National Planning accepted the DCO application for "Examination". Does this mean aviation is returning to Manston? In a word NO.

What is now going to happen is people can register from the 3rd September 2018 so that they can submit their views to the examining inspector(s).
Every aspect of the application will be examined and questioned including whether there is enough money and whether there is a viable market for an Airfreight Hub.

Even as they accepted the application for examination PINS wrote to RSP and warned them that their financial statement was underwhelming with many gaps included.
This clearly shows that PINS is not accepting that RSP have sufficient money available as all they confirm is they have drawn down £1/2M and as their parent company is based in Belize there is no proof that they have the £15M they say they have said would be sufficient to buy the land and Blight claims.

Business plan
At no place in the 11500 pages of submission have RSP elected to provide a solid business plan which covers all the costs (including payment of interest and running costs) nor indeed do they actually state where the freight will be coming from. Nor indeed do they show how much each landing fee will be and how that interacts with the running costs of the Freight Hub. To give you an idea of the costs involved in 1995 the local MP stated the running costs where in the region of £7M a year.
So PINS has accepted that to be an Nationally Significant Infrastructure Project (NSIP) it is only necessary to have 5000 planes land and take off in a year. which is just under 14 a day. So how does that compare to its previous operational air transport movements
Best year (under Tony Freudman) 3333 of which airfreight 730, airfreight being 2 planes a day. For those that do not remember Planestation went into receivership in 2005 and Infertil bought the remnants from the official receiver umped £40-50M and still failed to make a profit. So how many flights did Infertil manage?
Rather less than 500 planes a year it seems, no wonder Infertil couldn't make a profit.

So now we are in 2018 and the airport has been closed 4 years and the airfreight market has moved on what is different?

The airfreight market has changed however the changes do not favour Manston. The airfreight tonnage has remained somewhat stable for the last 10 years at 2.3M tonnes but how it has carried has markedly changed. Tony Freudmann has committed the DCO business plan at dedicated air freighters and has stated, on more than one occasion, that they aren't interested in competing with Heathrow. So any talk about supporting UK Plc until the third runway is built is just that, talk.

Heathrow today handles 67% of all airfreight coming into the UK but 95% of that is carried in the belly of passenger planes a market that RSP have said they will not compete with. So to look at reality they will attempt to compete with the two largest airports carrying freight, that is Stanstead and the East Midlands, who between them carried just under 500,000 tonnes in 2012, equal to 21% of the total. Remember Heathrow carried 67% of the airfreight.

Now that only leaves 12% divided into every other airport in the UK.
In 2016 East Midlands carried 13%, Stanstead 9%, Manchester 4%, Gatwick 3% and Heathrow 65% Not a great deal left to share around  the 30 odd other airports.

What makes the situation even more perilous for a new player in the market is the way the market is now moving. Airfreight is up to 4x more expensive that lorry or sea freight so many freight forwarders are pulling out of the dedicated air freighter market to belly hold freight on passenger planes has meant that Freighter only movements have dropped.

In 2000 there were over 100,000 freighter Atms which declined to around 55,000 and has remained at that level whilst airfreight has remained fairly consistently around the 2,300,000 tonnes for more than 10 years. Proving that freight is transferring over to a more subsidised route. Heathrow expects this trend to continue and they expect to take more of this market in the future.

Much is made in the report done for RSP on why Manston is a good opportunity but neglects to explain how they would capture any of the Freighter only market when they were unable to capture more of the market when people actually used freighters to transport their goods and now that market has deteriorated by 40% they stand even less chance especially when Stanstead and East Midlands are spending money to expand their offering. They have a massive advantage being near the centre of the motorway network without the pinch point of the Dartford River crossing. Even Gatwick cannot compete as it is considered too far from the London Hubs.

The concentration of air freight (at Heathrow) presents a significant barrier to a newcomer trying to start from scratch in a declining market, especially when the major airports already have the cargo infrastructure in place with excess capacity still available.