Manston 2017     |     home Manston 2017   |   sma   |   lhb   |   blog   |   tdc   |   nnf   |   shp   |   RTC   |   CPRE   |   Ramsgate Soc.   |   Michael Child shp 23 July 2017 PO Box 3297 Bristol BS1 9LL Dear Sir/Madam Consultation on RiverOak Strategic Partners’ Proposals for the Former Manston Airport Site, Kent We write on behalf of Stone Hill Park Ltd (SHP), the owners of the former Manston Airport site. This letter sets out comments on the June 2017 Statutory Consultation documents produced by RiverOak Strategic Partners (RSP) regarding their intention to seek a Development Consent Order to acquire and develop the site as a cargo airport. Our principal comment is that in our opinion the consultation material fails to demonstrate that the proposed development is deliverable, on the following principal grounds: 1. There is no evidence of RSP’s ability to fund the proposed development; 2. The Outline Business Case and suggested ‘market opportunity’ is fundamentally flawed and not credible; 3. RSP does not own the land that it proposes to develop, and does not present a credible means of acquiring it; 4. The level of detail provided in the Preliminary Environmental Report (PEIR) is inadequate to reach even a preliminary view on the likely environmental effects of the proposed development, or the scope of mitigation necessary to make it acceptable; and 5. There is no evidence to demonstrate a genuine ability/intention to deliver the proposed development. We further note that the level of consultation with the landowner and other statutory consultees in the formulation of these proposals has been lacking, particularly bearing in mind that compulsory purchase powers are likely to be sought. We expand on each of these points in further detail below: 1. No Evidence of RSP’s Ability to Fund the Proposed Development The Outline Business Case confirms that the delivery of the proposed development will require investment of at least £300 million on essential capital works, plus site acquisition costs (para 25-28). The consultation documents confirm that securing the funds for this investment is a necessary precursor, without which the proposed development cannot be delivered: 65 Gresham Street London EC2V 7NQ T: +44 (0)20 7911 2468 F: +44 (0)20 7911 2560 gva.co.uk GVA is the trading name of GVA Grimley Limited registered in England and Wales number 6382509. Registered office, 3 Brindleyplace, Birmingham B1 2JB. Regulated by RICS. Birmingham Bristol Cardiff Dublin Edinburgh Glasgow Leeds Liverpool London Manchester Newcastle Page 2 gva.co.uk “…Manston Airport, with the high level of investment proposed by RiverOak, its geographic location and airspace position, is capable of handling air freight at least to the volumes required by the DCO process” (“Manston Airport – a Regional and National Asset, Volumes I-IV” Executive Summary pg. II, emphasis added)……………“This requires an operator and investor with the resources to take a long-term view of the airport as an investment and not expect an instant return” (Overview Report, pg. 13, emphasis added). Despite acknowledging the necessity of significant, committed investment over the lifetime of the project and the certainty of operating losses which will be incurred over the short-long term, no credible information is provided in the consultation material in respect to the source, commitment, or capability to fund the works set out in Part A-M (para 6) and A-D (para 9) of the OBC or the costs to acquire the land, all of which RSP confirm are fundamentally required in order to deliver the scheme. Nor is there any evidence that the project will be viable and self-sustaining over the longterm, an assurance the Secretary of State and any investment partner will surely require bearing in mind the airport has never made a profit over the course of all of its years of private ownership. The description of how the project will be funded consists of four paragraphs (the shortest section of any document submitted for consultation) and asserts meekly that “RiverOak’s consortium of investors has a history of investment in and development of major capital projects and they have combined assets in excess of £1 billion”. This sentence is the extent of RSP’s evidence of financial resource and funding structure to date, which we consider to be fundamentally inadequate. RSP themselves have no track record in the development of major capital projects and have no known investors capable of providing or willing to provide over £300m towards this project. Nor is any information provided on the composition of the alleged “consortium” of investors. This glaring gap in the consultation material supports our continued opinion that RSP’s putative proposals to reopen the airport are entirely speculative. History has shown that despite considerable investment and concerted efforts from numerous capable owners throughout the duration of Manston’s 15 years under private ownership, the airport consistently underperformed, never made a profit, and cost investors a total of over £100m (see Enclosures 1 & 2). No evidence has been presented in the consultation material to suggest that RiverOak’s proposals will be any different. In light of the above, we must conclude that on the basis of the consultation material RSP’s proposals are not financially viable or deliverable. 2. The Outline Business Case and Suggested ‘Market Opportunity’ is Fundamentally Flawed and Not Credible As per (1), this point is explored in detail in the paper at Enclosure 3, with the key points considered below: The Outline Business Case is academic and provides no evidence of the commercial deliverability of the proposal. The assumptions contained therein are flawed and the conclusions are not credible. The absence of a comprehensive business plan incorporating a detailed financial/investment appraisal supported by recognised institutionally acceptable investment advisors, as would be normally be expected for a project of the scale, is missing in RSP’s consultation material. The business case relies entirely on the purported existence of ‘insufficient capacity’ in cargo capacity within the South East, and their assertion that their proposals will be a commercial success simply by virtue of this capacity shortfall. This alone is clearly not a credible business case. Furthermore, RSP’s ‘vision’ for Manston as a cargo hub to serve the South East of England is not unique. Freight formed a core component of the airport’s strategy for growth from 1989 until its closure in 2014. Over this period, three private owners of the airport (all of whom had experience in operating airports) made consistent, sustained and significant efforts to promote the airport as an Page 3 gva.co.uk alternative to London and increase freight and passengers services to an extent that would make the airport’s operation viable (see Enclosures 1 & 2). In 2001, Wiggins Group projected that the airport would process 100,000 tonnes of freight by 2004, doubling to 200,000 by 2005. Annual CAA statistics show that actual freight levels during this period peaked at 43,026 tonnes in 2003, less than half levels projected. Following the significant financial losses incurred during ownership, the owner went into administration in 2005 and the site was sold by administrators to Infratil, an infrastructure investment company with previous experience of owning airports. In 2009, Infratil published a masterplan for the airport, which included strategies to help it realise growth potential in both passenger and freight services. Again, congestion in London airports and the perceived deficiencies/shortfall in capacity in the South East was considered one of the key drivers for growth and success. It envisioned gradual increases in freight tonnage per annum, combined with step changes in provision as existing operators at other airports in the South East relocated to Manston to access available capacity. The masterplan included plans for additional infrastructure to achieve receive freight dislocated from congested London airports and achieve this growth. The anticipated growth in freight was initially projected to grow starting from 31,600 tonnes in 2010, to 107,000 by 2014, 167,500 tonnes by 2018 and eventually reaching 401,000 tonnes by 2033. Again, the airport only ever achieved a fraction of projected growth, with freighter traffic peaking at 31,078 tonnes in 2012. SHP’s in-house experts have reviewed the aviation evidence supplied by RSP and have found fundamental flaws in RSP’s assessment of the existing and projected demand and supply for freight capacity which they use to underpin their proposals (see Enclosure 3). Total air volume of freight in the UK has been broadly flat since the year 2000 and freighter flights, outside Heathrow, Stansted and East Midlands have fallen by almost 75% between 2000 and 2016. Forecast expansion capacity at Heathrow, East Midlands and Stansted is already more than sufficient to meet expected operational needs and there appears to be more than enough capacity within the system to meet all expected demand. Even if there was existing or projected demand for additional airport freight capacity in the South East (which we do not accept), the mere existence of demand is not a sufficient reason to conclude that it could be fulfilled by Manston. The key characteristics of Manston would remain unchanged irrespective of any significant investment RSP promise (albeit without a demonstrable funding source): Its peripheral location and the lack of strategic infrastructure connecting it to the wider UK supply network means that other airports will continue to be preferable for existing operators. Investment cannot change this. 3. RSP Does Not Own the Land That it Proposes to Develop, and Does Not Present a Credible Means of Acquisition RSP does not own the land that it proposes to develop. The development proposals being consulted on are not capable of being implemented unless it acquires the land. The current landowner does not intend to sell the land, as it has its own development plans that are supported by the emerging development plan for the area and bring with them very considerable public benefits with the certainty of an ability to deliver. The consultation materials suggest that in order to overcome this, RSP intends to seek powers as part of a DCO application (under the 2008 Planning Act) for the compulsory acquisition of the land. No detail is provided in terms of which specific CPO powers are to be used and no detail is provided on RSP’s proposed grounds to justify a CPO. It is our view that there is no case to justify the granting of compulsory purchase powers. We explain this position below: Page 4 gva.co.uk General principles underpinning compulsory purchase legislation confirm that powers should only be used as a last resort and that the ‘bar’ to satisfy the relevant tests is set very high. As per s.122 of the Planning Act (2008), a DCO may only authorise compulsory acquisition if the Secretary of State is satisfied that: - The land is required for the development to which the consent relates, or is required to facilitate, or is incidental to, the development, or is replacement land given in exchange under s.131 or 132; and - There is a compelling case in the public interest for compulsory acquisition. The 2013 Communities and Local Government Guidance (the ‘2013 Guidance’) relating to the compulsory acquisition of land (under the 2008 Act) makes it clear that applicants must be prepared to justify their proposals for CPO powers. It is our view that the consultation material provides no such justification, which we explore further below: Extent of Land Required The consultation material does not consider reasonable alternatives nor provide a robust explanation to justify why the acquisition of the whole site is necessary to fulfil the purposes of the CPO that is to be sought. Ability to Deliver The 2013 guidance is clear that for s.122 to be satisfied, the applicant should be able to demonstrate that there is a reasonable prospect of the requisite funds for acquisition becoming available (para. 9). It goes on to state that any application must include an explanation of how it will be funded, which should provide as much information as possible about the resource implications of both acquiring the land and implementing the project (para. 17). This Funding Statement must contain sufficient information to enable the Secretary of State to be satisfied that, if it were to grant the compulsory acquisition request, the proposed development is likely to be undertaken and not be prevented due to difficulties in sourcing and securing the necessary funding. This must include details of the full funding structure to secure the full scope of the project, and the cost of acquiring the site must reflect its capitalised value as a residential development site, consistent with the alternative scheme promoted by SHP and supported by the site’s proposed allocation within the emerging Thanet Local Plan. As discussed in (1) above, the consultation material provides no evidence of RSPs ability to fund the proposed development nor the acquisition of the site. Furthermore, achieving the purposes of a CPO would be dependant on the proposed development being implemented. As discussed later in this letter, there is insufficient evidence provided in the consultation material to offer any confidence that RSP has the capability or intention to deliver their development proposal within a reasonable timescale (and therefore we question whether it would be capable of achieving the purposes of any CPO granted). Compelling Public Interest Case The 2013 Guidance explains that for the compelling public interest condition to be met, the Secretary of State will need to be persuaded that there is compelling evidence that the public benefits that would be derived from the compulsory acquisition will outweigh the private loss that would be suffered by those whose land is to be acquired. This position is backed-up by parliamentary decisions. The consultation material provides what can be reasonably described as initial indications of the likely social, economic, and environmental benefits of the proposed development. However, it fails to consider the public dis-benefits that would occur if SHP’s plans were prevented from being implemented, which would be the consequence if the land was compulsorily acquired and is a key consideration in reaching a balanced judgement on both the planning and compulsory purchase case for RSP’s proposals. The public benefits associated with SHP’s proposals for the site are set out in detail in their planning application (ref. 16/05550), however we set out headlines below. Page 5 gva.co.uk - It will deliver up to 2,500 new homes, including a range of types, sizes, and tenures (including affordable homes). This will help satisfy a chronic shortage of housing in the district and wider housing market area, fuelled by significant under-delivery of new housing over recent years and a shortage of alternative suitable deliverable housing land in the district; - It will also deliver community facilities (including two new primary schools, health centre, and community hall), sports facilities, education, and retail spaces; - It will support an estimates 2,075 full time equivalent (FTE) direct jobs, and additional indirect jobs through construction, alongside opportunities for education/training; - It will open up a site which has been closed to public access for many years, providing new pedestrian and vehicular connections (including strategic links necessary to support wider growth in the district), and substantial areas of managed high quality open space and green infrastructure, including significant contributions to biodiversity habitat; - It will deliver new regionally significant leisure facilities (including a wave garden and swimming pool) which are currently not provided in the region, and therefore help increase tourist attraction in the local area; and - It will result in direct financial benefits to Council in form of New Homes Bonus (£28.3m) and annual tax receipts (£4.7m) (estimates). The above comprise significant public benefits. These potential benefits will be lost if the site is compulsorily acquired by RSP, as proposed by this consultation. On the basis of the above, and having regard to the essentially speculative nature of RSP’s proposals, it is our view that there is no compelling public interest case Conclusion It is clear to us that there is no case to underpin the granting of compulsory purchase powers. Without such powers RSP will not be able to acquire the land. This is a significant in-principle flaw in the proposition being consulted on – it is fundamentally not deliverable without land ownership rights. 4. The Level of Detail Provided in the PEIR is Inadequate to Reach Even a Preliminary View on the Likely Environmental Effects of the Proposed Development, or the Scope of Mitigation Necessary to Make it Acceptable In our opinion, the level of detail provided in the PEIR is insufficient to reach an informed view on the likely potential environmental effects of the development. Either it is incomplete, or is lacking in scope/depth. While we recognise that it is only necessary to provide preliminary details at this stage, in the absence of more substantive information the consultation materials fail to demonstrate that the proposed development is deliverable in environmental policy terms. We enclose a detailed review of the PEIR at Enclosures 4-6 which has been undertaken by SHP’s consultants (WSP, Aecom, and Planit), however our headline comments are as follows: - It is silent on trans-boundary effects (despite this being a requirement of the Secretary of State’s Scoping Opinion); - Insufficient regard is had to the need for approvals under other consenting regimes including how these will be dealt with in the EIA; - No detail is provided on operational traffic generation nor flight paths, therefore the PEIR is not capable of providing any meaningful consideration of human health, noise, air quality, climate change, or transport impact issues; - It has not been informed by any baseline on-site species specific ecological surveys (other than a Phase1 Habitat Survey), accordingly is not able to offer any meaningful consideration of ecological matters; Page 6 gva.co.uk - It has not been informed by any baseline on-site intrusive archaeological surveys, accordingly is not able to provide any meaningful consideration of archaeological matters; - Details regarding transport matters are very limited. No consideration is given to impacts on junction capacity – it is therefore impossible to form an opinion as to whether the proposal could be accommodated on the highway network even if highway improvements are brought forward; and - The landscape and visual impact assessment is at preliminary stage only. 5. There is No Evidence to Demonstrate a Genuine Ability/Intention to Deliver the Proposed Development At the date of writing RSP have an unknown and unproven financial capacity and is 90% owned by anonymous shareholders who are registered via a Belize holding company. There is no transparency whatsoever with respect to the identities of all parties involved, and the sources and commitment of any funding available. This brings into question the Bona Fides of the intended DCO applicant in our opinion (which is particularly important due to the compulsory purchase powers are being sought). Our research into RSP indicates that it has no experience of owning, developing or operating an airport anywhere in the world. Accordingly, we have doubts over RSP’s genuine intentions for the site. We note that the known individuals affiliated with RSP were also involved with Riveroak Investment Corporation’s (ROIC) multiple attempts to demonstrate to Thanet District Council that they had sufficient financial strength and transparency to act as an indemnity partner in support of a proposed CPO process in relation to the airport. In these efforts they failed repeatedly. We consider that the continued and consistent lack of clarity on the sources and availability of the necessary funding to deliver what is proposed to be a £300m investment in the project remains as fundamental an issue now as it was for TDC in their consideration of the suitability of ROIC as an indemnity partner. Without evidenced availability of the necessary £300m investment proposed and expressed investor appetite from identified funders who have the capacity to meet long term operational losses there can be no credibility given to RSP’s proposals. The consultation docs now issued by RSP, while very carefully worded, fall a long way short of providing this evidence or any certainty of funding. Bearing this in mind, and notwithstanding our strong view, as expressed throughout this document, that there is no case to support a successful DCO application nor the proposed compulsory acquisition of the site, should RSP continue to progress a DCO application (including CPO powers) we will push for a Crichel-Down type requirement to be inserted into any Order granted. In principle, this would require RSP to offer back the site to the current landowners if it is not developed for the use proposed within a period of 3 years and/or if a planning application is submitted for any part of the site for non-aviation development. Consultation The level of consultation with the landowner and other statutory consultees in the formulation of these proposals has been inadequate. There has been no formal engagement between RiverOak Strategic Partners Limited and Stone Hill Park Limited with regard to site acquisition since RSP’s formation in July 2016. Indeed, it only became apparent to stakeholders during direct questioning by SHP’s QC at the change of use inquiry in March 2017 that the entity now pursuing a DCO application is an entirely different and unconnected entity to ROIC, the US company who had initiated discussions regarding the DCO. It has since emerged that ROIC actually withdrew from the DCO process on 15th December 2016 for reasons that remain unknown. While there is some commonality of individuals in the historic ROIC and current RSP teams there is no linkage, contractual, commercial or otherwise, between the two entities. It is now evident that RSP was Page 7 gva.co.uk initially set up as a stand-alone Special Purpose Vehicle (SPV) solely to step into ROIC’s DCO interests. With respect to consultation more generally, we note that Section 42(1) of the Act requires an applicant for a DCO to consult various statutory bodies in the preparation of its application. Section 4 of the Interim Consultation Report prepared by RSP summarises the consultation which has taken to date, which since April 2016 comprises: - Four meetings with the EA; - Two meetings with Southern Water; - Two meetings with Natural England (the most recent of which was in November 2016); - One joint meeting with Historic England and the Kent County Council Heritage Conservation Group; and - One introductory meeting with Kent Council which took place in April 2016. We are surprised that this is the extent of consultation with statutory bodies which has taken place over the course of the previous 15 months by RSP in the formulation of their proposals. We also question the deliverability or feasibility of a scheme which has not had input from any of the following bodies (all of which are absent from RSP’s Statement of Community Involvement): - Thanet District Council (the Local Authority); - Any of the multiple Parish Councils; - Civil Aviation Authority; - Gas/electricity providers; and - Police Authority. We also question what steps RSP have taken (if any) to inform local stakeholders of the change of the DCO sponsor, as any consultation undertaken in 2016 would have been undertaken by ROIC, who are no longer involved in the project. Summary and Conclusions We have reviewed the material that forms part of RSP’s July 2017 consultation. Our principal comment is that in our opinion the consultation material fails to demonstrate that the proposed development is deliverable and does nothing to allay concerns about the bona fides of RSP. SHP firmly objects to the development proposals that RSP is consulting on. This includes objection to the compulsory acquisition of the site. Yours faithfully GVA For and on behalf of GVA Grimley Limited Enclosures: 1. History of Efforts to Keep Manston Airport Open 2. History of Manston’s Commercial Performance 3. Critique of Outline Business Case and Aviation Evidence 4. Critique of PEIR (Transport) 5. Critique of PEIR (Environmental/Technical) 6. Critique of PEIR (Landscape and Visual Impact) Enclosure 1 History of Efforts to Keep Manston Airport Open July 2017 Page 1 gva.co.uk History of Efforts to Keep Manston Airport Open 1998-Present Wiggins Group/ renamed as Planestation (owner) Period: 1998-2005 Wiggins bought the airport in 1999 for £4.75 million and operate the site as a commercial civilian-only airport branded as ‘London Manston Airport’. In April 2001 Wiggins Group published a ‘Strategic Masterplan’ for Manston. This stated that the airport would double its cargo traffic from 36,000 tonnes per annum to a profitable rate of 100,000 tonnes per annum within twelve months (by April 2002). Annual CAA statistics from 2002 to 2005 (when the airport was sold) show that actual freight levels peaked in 2003, at 43,026 tonnes (less than half projected). In January 2004, Wiggins renamed itself Planestation. Later that year they bought 30% of the airline company EUJet, a budget airline. Subsequently, Planestation made a statement that the airport would break even if it were to achieve delivery of 70,000 tonnes of cargo per annum. This was not achieved, with freight in 2004 totalling 26,626 tonnes per annum. In September 2004 EUJet started to operate passenger flights from the airport to destinations across Europe and in its busiest month in early 2005 the airport carried 62,709 passengers. An application was approved for a 2000 space car park for the passenger terminal, of which 1,100 spaces were delivered. By July 2005 all EUJet operations were suspended along with all non-freight operations including MK Airlines, Manston’s main cargo customer, who left the airport for another site in Europe. Planestation went into administration in 2005, following the significant financial losses incurred during ownership. Sources: KCC Position Statement 2015. Wiggins’ company accounts (1999-2002). CAA Data on Amount of freight in tonnes delivered per annum at Manston (2000-2014) Wiggins Group “A Strategy for Success” as summarised in Rail, Airports and Ports Select Committee. Airports Interim Report (September 2002) http://www.airportwatch.org.uk/uk-airports/manston-airport-kent-international/ Transport Select Committee, 2015. Infratil Limited (owner) Period: 2005-2013 Infratil Limited acquired Manston Airport from administrators in August 2005 for £17m and re-commenced passenger and freight transport operations. Various upgrades were made to the airport, including airfield radar, high and low voltage electricity systems, back-up electricity generators, airfield ground lighting, rescue fire equipment, etc. Infratil published and consulted on a Draft Airport Master plan for the site from October to December 2008. The Vision was based on the contention that the airport has a large catchment area, that the South East has insufficient capacity to accommodate predicted growth and that the airport will provide an increasingly July 2017 Page 2 gva.co.uk attractive alternative for airlines and passengers as congestion increases. The masterplan sought growth in both freight and passenger numbers. The anticipated growth in freight was projected to grow annually starting at 107,000 tonnes in 2010 and reaching 507,000 by 2033. To achieve this, the masterplan proposed: • Additional freight aprons • Provision of general aviation/fixed base Operator operations south of the passenger terminal. • Bulk fuel installation • Fuel facility development • Improved parallel taxiway • Enlarged passenger aprons, terminal and additional parking spaces In November 2009, Infratil published the final Kent International Airport Masterplan, which sets out Infratil’s vision on how they planned to grow both passenger and freight services. The Masterplan considered that growth forecasts were realistic and achievable because: • The catchment for the airport was large; • People within the catchment travel regularly used other airports in the South East; • The South East had insufficient capacity to accommodate predicted growth over the forecast period; • The airport would provide an increasingly attractive alternative for airlines and passengers as congestion increases; • The predicted growth was similar to demonstrated patterns at other airports serving similar size regions; and • Although EU Jet was commercially unsuccessful, it provided valuable insight into the potential of the market. With respect to freight, the Masterplan forecast gradual increases in freight tonnage of around 6% per annum, combined with step changes as existing operators at other airports relocate to the airport to access available capacity. The final masterplan suggested the airport would achieve around 401,000 tonnes per annum by 2033 (a reduction from the Draft version of the same document). The Masterplan summarised the additional infrastructure that would be provided to achieve this growth (see list above). This included additional freight handling facilities and areas, which were considered to be a key component to allow the airport to receive freight dislocated from congested London airport. Despite Infratil’s plans, during their ownership of the site, the airport never achieved more than 31,000 tonnes of freight per annum, falling well short of the previously stated ‘break-even’ point of 70,000-100,000 tonnes per annum. At this time, Infratil regularly declared Manston airport as a specialised freight handler making a substantial contribution to the UK’s air-transport freight capacity. However, we understand that these statements were significantly exaggerated, and Manston actually only contributed approximately 1.3% of national freight tonnage. Likewise, actual passenger numbers experienced at the former airport were significantly lower than forecast. Passenger numbers failed to exceed 50,000 between 2006 and 2014 when the airport finally closed. Infratil’s peak passenger year was 2011 when 48,450 passengers used the airport which represented 0.02% of the UK total. Infratil incurred substantive annual losses (reported to be in excess of £3m per annum) sold the airport and associated liabilities in 2013 for £1. Sources: UK Parliament Transport Committee, Case Study 3: Manston CAA, Airport Statistics, 2016). KCC Position Statement 2015. July 2017 Page 3 gva.co.uk Manston Skyport Limited (owner) Period: Dec. 2013-May 2014 Infratil Kent Airport Limited and Infratil Kent facilities Limited were acquired from Infratil Airports Europe on 29th November 2013 by Manston Skyport Limited, changing their names, respectively, to Kent Airport Limited and Kent Facilities Limited. The companies were capitalised with £4.75m to fund the airport’s ongoing operating costs post-acquisition. At the point the acquisition became certain, an experienced turnaround management team was appointed by Manston Skyport Limited to create a business plan for the airport, based on continuing aviation operations, and to recruit their permanent successors in due course. The interim CEO appointed was considered eminently suitable for the role, having had recent direct experience in successfully turning around a loss making regional airport and had demonstrable and positive experience of working with all relevant stakeholders to achieve this. He also had strong commercial contacts with passenger and cargo airline operators. The interim CFO had extensive finance experience and was required to take a forensic view of the cash flow and internal controls at the airport. He was also required to undertake detailed analysis of the various business streams, and opportunities with a view to assessing their commercial viability and potential. The interim executive team then commenced a “root and branch” review of the airport’s potential and prepared a very detailed “base case” business plan reflecting the operations as they were found. This was subsequently adjusted to reflect the loss of the Saudi Cargo activity, with the airline advising that it would cease its twice weekly rotations at the end of March 2014. The “base case” projections revealed a “cash burn” of c. £10,000 per day on trading activities alone, with further funds being required to finance essential capital expenditure. As there was only limited capacity to reduce costs losses could only primarily be reduced by increasing revenues. Various revenue enhancing opportunities were explored. This included discussions with a number of airlines about the case for either relocation of existing services to Manston or the initiation of new services from Manston. These potential services had the potential to be significant revenue generators for the airport. Of the number of airlines approached/considered, the key prospects included the relocation of BA World Cargo from Stansted (this prospect died when BA chose to exit the dedicated freighter market); potential services by easyJet (this was not an option as Manston did not fit their business strategy) and Ryanair, who had initially been interested in the potential of Manston, chose to focus their strategy on airports better suited to business users closer to major centres of population. Additional discussions were also had with various other established and start up cargo operators about increasing their utilisation of Manston and potentially basing aircraft at the airport, leading to increased warehousing revenues. Notwithstanding that the revenue potential and indeed its delivery was materially uncertain these were assumed to be delivered in the business plan. The potential to increase income further by leasing unused land to a solar farm operator was explored as it was believed that additional revenue could be generated without impacting aviation. Discussions were had with the market leading aircraft breaker, Air Salvage International, about operating from Manston but the feedback was that they would only consider Manston if the use of a Hanger to the company free of charge. The conclusion of this work was that recycling would not deliver any meaningful revenues (generating £230k of revenue by year 4) – although the forecast was included in the plan. Consideration was given to the prospect of increased use of Manston as a training centre for both commercial and business aviation. Even with an optimistic application of revenues attaching to all these initiatives, an assumption that Saudi Cargo reinstated their services, forecast increases in warehouse rents, landing charges and £400k of July 2017 Page 4 gva.co.uk anticipated annual cost efficiencies a break-even position could not be achieved and no sustainable business model identified. Hence, in the absence of a viable business plan that could deliver a break even position, even in the medium term, the Board concluded that it had no alternative but to close the airport. Source: Greyfriars Investment Thanet District Council Period: December 2013-December 2016 Dates Actions Source December 2013- May 2014 TDC explored the possibility of using Compulsory Purchase Order (CPO) to acquire the former airfield as a means of recommencing airport use. Searches yielded a small number of interested parties (including RiverOak Investment Corporation) who expressed interest. On 11th December 2014 TDC Cabinet considered and rejected the possibility of making a CPO on the basis that the Council had not identified any suitable expressions of interest that fulfilled the requirements for a CPO indemnity partner and did not have the financial resources to pursue a CPO in its own right. Cabinet Report 11th December 2014 May 2015 TDC Cabinet agreed to review its position in relation to the potential to acquire the former airfield and authorised specialist legal and financial advice to determine whether RiverOak were a suitable indemnity partner. Cabinet Report 29th October 2015 October 2015 TDC Cabinet concluded for a second time that no further action would be taken on a potential CPO, on the basis that RiverOak did not fulfil the Council’s requirements for an indemnity partner. Cabinet Report 29th October 2015 June 2016 TDC Cabinet considered the results of further soft market testing to identify potential interest from third party indemnity partners for a potential CPO. The report concluded that “the market cannot deliver on the Council’s requirements for a CPO; there is no established market which is able to deliver, or an adequate number of operators; the market has no capacity to deliver the requirements and there is no cost or other benefits in taking this matter further” (Committee Report, paragraph 3.4). TDC Cabinet noted the results of the report and – for a third time - decided to take no further action on a potential CPO. Cabinet Report 16th June 2016 July 2017 Page 5 gva.co.uk October 2016 TDC published the results of an independent report by AviaSolutions commissioned to form part of the evidence base for the emerging Local Plan. AviaSolutions is a leading global aviation advisory firm, acquired in 2012 by GE Capital Aviation Services, the world’s leader in aviation financing and leasing and part of General Electric. The report considers whether viable airport operations could be re-instated on the former Manston airport site. It concluded that “airport operations at Manston are very unlikely to be financially viable in the longer term and almost certainly not possible in the period to 2031” (paragraph 2.5). AviaSolutions Report December 2016 TDC Cabinet approved public consultation on proposed revisions to the 2015 Preferred Options Local Plan to reflect the conclusions of the up-to-date evidence base (including the AviaSolutions Report). This included a policy to allocate the former airfield site (including the appeal sites) for mixed-use development. Consultation on the Proposed Changes to the draft Local Plan ended on 17th March 2017. Cabinet Report 8th December 2016 GVA July 2017 gva.co.uk Enclosure 2 History of Manston’s Commercial Performance July 2017 Page 1 gva.co.uk Owner Year Freight (tonnes) Passengers Operating Profit/Loss Projection Actual Difference Projection Actual Difference Wiggins (Planestation) 1995 n/a 5,073 (0.29% of UK total) - n/a 2,523 - n/a 1999 n/a 22,784 (1.03% of UK total) - n/a 1,511 - -£1.1m 2000 n/a 32,239 (1.39% of UK total) - n/a 7594 - -£3.6m 2001 n/a 35,521 (1.66% of UK total) - n/a 5921 - -£3.9m 2002 36,000 32,240 (1.47% of UK total) -3,760 (-10%) n/a 52 - Figures consolidated with other airports. In 2004 Planestation reported overall (losses) of -£73m 2003 70,000 43,026 (1.95% of UK total) -26,974 (-39%) n/a 3582 - 2004 100,000 26,626 (1.12% of UK total) -73,374 (-73%) n/a 101,233 - History of Manston Airport’s Commercial Performance (Actual vs. Projected), 1995-Present History of Manston’s Performance (Actual vs. Projected) July 2017 Page 2 gva.co.uk Owner Year Freight (tonnes) Passengers Operating Profit/Loss Projection Actual Difference Projection Actual Difference Infratil Ltd. 2005 200,000 7,612 (0.32% of UK total) -192,388 (-96%) n/a 206875 - n/a 2006 n/a 20,841 (0.9% of UK total) - n/a 10167 - -£3.4m 2007 n/a 28,371 (1.22% of UK total) - n/a 16180 - -£3.0m 2008 n/a 25,673 (1.12% of UK total) - n/a 11657 - -£4.0m 2009 n/a 30,038 (1.47% of UK total) - - 5574 - -£5.2m 2010 31,600 28,103 (1.2% of UK total) -3,497 (-11%) <50,000 25,813 - -£3.6m 2011 45,200 27,495 (1.2% of UK total) -17,705 (-39%) 50,000-100,000 48,450 -1,550 (-3%) to -51,500 (-52%) -£4.8m 2012 57,300 31,078 (1.3% of UK total) -26,222 (-46%) 206,000 8,595 -197,405 (-96%) -£4.4m 2013 62,500 29,306 (1.3% of UK total) -33,194 (-53%) 295,000 40,391 -254,609 (-86%) -£3.6m History of Manston’s Performance (Actual vs. Projected) July 2017 Page 3 gva.co.uk Owner Year Freight (tonnes) Passengers Operating Profit/Loss Projection Actual Difference Projection Actual Difference Manston Skyport 2014 107,000 12,696 (0.5% of UK total) -94,304 (-88%) 527,000 12,508 -514,492 (-98%) -£5.4m 2015 350,000-400,000 (Wiggins) - -400,000 (-100%) n/a - 138,400 - -138,400 (-100%) 1,268,000 - - 2018 167,500 - -167,500 (-100%) 2,286,000 - - - - 2033 401,200 - -401,200 (-100%) 4,752,000 - - - Sources: Projections for 2002-2005,2015: Wiggins Group “A Strategy for Success”, 2001. Projections for 2010-2033): KIA Airport Masterplan, 2009. Unless otherwise stated. Data of actual air freight and passengers: CAA. Operating profit/loss: company accounts, unless otherwise stated. GVA July 2017. gva.co.uk Enclosure 3 Critique of Outline Business Case and Aviation Evidence 1 Critique of Outline Business Case and Aviation Evidence Consultation on Riveroak Strategic Partners Proposals for Former Manston Airport July 2017 2 Exec Summary Demand • Total air volume of freight in the UK has been broadly flat since the year 2000. • Bellyhold cargo has grown at the expense of dedicated cargo aircraft. The cost and connectivity benefits of bellyhold are hard for dedicated freighters to compete with. • Global freight projections used by RSP are not relevant for UK airports. • The future growth in demand for air freighters forecast by the Government is materially lower than that assumed by RSP. • Freighter flights, outside Heathrow, Stansted and East Midlands have fallen by almost 75% between 2000 and 2016. This is not a growth market. Supply • Forecast expansion capacity at Heathrow, East Midlands and Stansted is already more than sufficient to meet expected operational needs even without any other airports being used. There appears to be more than enough capacity within the system to meet all expected demand. Comfortably. • In 2016 the three largest freighter airports had 86% of the market compared with only a 41% share in 1990. This is a trend that is repeated around the world and reflects the economics of the sector. • Globally market forces are pushing the dedicated freighter market to consolidate around fewer airports that provide better connectivity. Realistically Manston cannot supply this nor assist in this evolution. • There is already significant un-utilised capacity available in the system at airports that are minded and funded to pursue any growth in demand at minimal marginal cost. Manston • During its 15 years of operations under private ownership Manston never made a profit and cost investors over £100m. • It failed to secure any meaningful level of freighter traffic even though that was a core strategy at the airport. • No visibility has been provided by RSP as to their ability to access and commit the £300m required for investment over the term of project. • Air freight is increasingly concentrated in consolidators who already have extensive warehousing, logistic, operational and financial ties to their existing bases in Stansted and the East Midlands. There is no logical reason for them to adopt a base on the edge of the country that puts them at a competitive disadvantage. • Manston’s peripheral location and lack of existing infrastructure mean many other airports can better serve these needs of the UK’s logistics sector. 3 Introduction It is our strong view, supported by historic fact, multiple reports from various aviation consultants produced over a number of years, evidence of a failed global sales process and the advice of our current aviation consultants, that the projections submitted by RSP in support of their quest to prove that Manston can be deemed a Nationally Significant Infrastructure Project and thus qualify for a DCO are deeply flawed and are not deliverable in the real world. This is a real world where UK freighter flights outside the “big 3” of Heathrow, Stansted and East Midlands, fell by almost 75% between 2000 and 2016. More relevantly, there is no credible business plan being presented by RSP or its sponsors that has sufficient detail on the potential sources of revenues to persuade any investors of the long-term viability of Manston as an airport. It is our view that the economic and commercial analysis provided by RSP in support of the proposals does not have the pedigree or balance to convince investors to commit a potential £300m of capital to a project (2/3 of which would be required within the first 5 years to ramp up capacity in line with demand forecasts according to George Yerall’s evidence to change of use inquiry) in the hope of resurrecting a failed asset. Nor has RSP presented any evidence that they have the funding capacity to deliver on the project that they propose or access to investors who are prepared to fund ongoing and long term operating losses. This is a key and critical missing in RSP’s proposals as throughout its period of private sector ownership the airport has never made a profit and has been a serial destroyer of shareholder value. This is clearly illustrated by the table below that shows Manston’s P&L over the period of Infratil’s ownership to the last year of operations. This shows that in addition to accumulating over £37m of operating losses and losing £55m of shareholder funds in total, the airport never even came close to covering its cost of sales. Alongside the losses suffered by other owners during its period of private ownership the aggregate loss of investor’s funds at Manston is in excess of £100m. These losses fail to include the substantial public funds which were applied to support directly and indirectly the operations of the airport. Kent Airport Limited 2006 2007 2008 2009 2010 2011 2012 2013 2014 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Turnover 2,111 6,564 6,863 5,569 5,467 4,823 9,121 7,024 8,898 Cost of Sales (4,725) (9,750) (10,387) (9,312) (8,897) (9,306) (13,073) (9,991) (13,211) Gross Loss (2,614) (3,186) (3,524) (3,743) (3,430) (4,483) (3,952) (2,967) (4,313) Operating Expenses (667) (1,057) (945) (1,442) (193) (273) (430) (650) (1,075) Other Operating Income 1,286 430 Operating Loss (3,281) (2,957) (4,039) (5,185) (3,623) (4,756) (4,382) (3,617) (5,388) Interest Receivable 4 Interest Payable (76) (1) (1) (1) (3) (4) (7) (5) (18) Loss on Ordinary Activities Before Tax (3,353) (2,958) (4,040) (5,186) (3,626) (4,760) (4,389) (3,622) (5,406) Year Ended 31st March Audited 4 If Infratil (a £1bn company with significant experience of airport operations and infrastructure investments) cannot make an airport work at Manston it’s hard to see how a start-up, standalone airport on the geographic fringe of the county, with no evident competitive advantage can ever become a compelling investment in what remains a very competitive UK market. Particularly where competing airports have vested interests to protect and the means, capability and appetite to do so. It should be remembered that PWC spent 2 years marketing the airport for sale across the globe, with strong local government support including providing additional land to operators, granting financial assistance from the Regional Growth Fund and providing a Route Development Fund to support traffic. All this was ultimately to no avail and Infratil had to settle for a price of £1 on the basis that no other buyers expressed any interest in the asset. In parallel with the recent history of Manston it is also informative to consider the subsequent performance of Prestwick Airport, the other UK airport sold by Infratil at that time, post its acquisition by the Scottish Government for £1. Notwithstanding a high level of political support for the development and success of the airport the Scottish Government has now committed £40m of public money to sustain airport operations and support its increasing operating losses. Passenger throughput at the airport has fallen from 1.145m in the year of nationalisation to 673k passengers in 2016 and annual losses have risen to £7m. There is no visibility as to when or indeed if the airport can be returned to profitability. Of specific relevance to the cargo focussed business plan now pursued by RSP is this quote from Prestwick’s most recent set of annual accounts. “Air cargo movements in the UK have remained relatively stable over the last 10 years although the dedicated freighter only aircraft market that he Company has specialised in has been in global decline.” Prestwick Airports Financial Statements 2016 This Representation This representation and the attached appendices summarises SHP’s position in relation to the assertions on the project proposed by RSP’s aviation advisors (Azimuth Associates and Northpoint Aviation). These are all themes that will continue to be developed in conjunction with our aviation team if RSP decides to move forward with a DCO. Appendix A: Review of recent trends in the UK freight market Appendix B: Review of competitiveness of Manston in the UK freight market Appendix C: Discussion on potential future developments in the freight sector Appendix D: Critique of Azimuth / Northpoint documents in relation to freight viability at Manston Appendix E: Brief review of Azimuth / Northpoint documents in relation to passenger viability at Manston / Other Appendix F: Extracts From 2013 Department For Transport’s UK Aviation Forecast Airport Viability RSP’s entire case for the future viability of Manston as an airport as opposed to its historic failures as a commercial venture stems from their belief that massive demand pressures on the London system of airports (Heathrow, Gatwick, City, Stansted and Luton) will push dedicated freighters into Manston. For this to be the correct view three things would have to happen (i) freighters would have to be pushed out of the London system, (ii) if they were they would have to choose to shift 5 operations to Manston rather than anywhere else in the UK and (iii) there would have to be a massive increase in underlying demand for cargo in dedicated freighters. We feel that these views and the conclusions drawn from them are wrong and should be put in context with the current size of the UK air freighter market, its evolution since the turn of the century and the latest Department for Transport (“DfT”) projections for its growth. Freighter Demand It is well recognised that the shift of cargo from dedicated freighter to belly hold will continue to be a key factor in the industry, driven the by the increasing connectivity stemming from hub airports and real cost advantages to users. This is an element of the air freight market that Manston has never competed in and could never hope to do so. It simply does not have the necessary connectivity. Hence of the 2,384,375 tonnes of air freight in the UK in 2016 70.3% was carried in the belly hold of passenger planes and thus Manston can only ever have access to compete for a small subset of the overall freight market. In 2016 there were 51,839 dedicated cargo flights in the UK (down from 76,626 in 2000). The most recent Department for Transport forecast (2013) envisages growth in UK freighter Movements of 0.4% per year from the levels achieved in 2011 (55,238) until 2050. When compared to the implications of this forecast the actual 2016 numbers are already 4,512 lower annually than forecast by the DfT. These UK Government growth forecasts are substantially lower than the c4% p.a. growth that has been adopted by RSP to support their projections. RSP’s choice of using global growth figures, which are in no way relevant to a mature aviation market such and the UK and demand forecasts prepared for the primary purpose of selling more air freighters serve to undermine the creditability of their projections. This was previously recognised in the York Aviation report prepared for the freight Transport Association in 2015 who stated that “organisations such as Boeing and Airbus produce global freight forecasts. However, these typically present an optimistic view of the market which is not specific to the UK” The implications of RSP’s forecasts for Manston on the UK dedicated freight sector, as forecast by the Department for Transport, are shown in the table below. Prudently we have assumed that there is no growth in the usage of either Stansted or East Midlands airport from current (2016) levels over this period and all the growth forecast by the DfT is delivered outside these airports. Not a circumstance we consider likely as both have firm plans to substantially grow cargo volumes; but it highlights that RSP believe that Manston will quickly overtake Stansted and by 2040 would be supporting a greater number of freighter flights than all other airports (i.e. excluding Stansted and East Midlands) in the UK combined. 6 However, a proportion of all UK freighter flights are in no way relevant for the Manston discussion (island flights, Scottish and Northern Irish airports etc) so we believe a more relevant 2016 freighter flight number for comparison purposes should be 40,379 flights in remainder of the UK (down from 56,746 in 2000). Of these numbers, East Midlands Airport provides 48% of the freighter flight volumes with Stansted providing a further 28%. This would be Manston’s true “competitive set” from which it would have to secure business. Of these airports there are actually only 5 which have achieved any significant growth in freighter traffic, i.e. in excess of 6 ATM’s, since the turn of the century (Stansted, Birmingham, East Midlands, Doncaster/Sheffield and Newcastle) and the growth in East Midlands accounts for 67% of this. All of these airports are performing below their historic maximum freighter ATM levels. If the DFT forecasts are then applied to this more accurate subset of UK airports that Manston could realistically compete against the implications of RSP’s Manston forecasts for the UK freighter sector become even starker and serve to illustrate their underlying excessive optimism. Using the same assumptions as before (i.e. flat usage of Stansted and East Midlands) then Manston would absorb all other freighter traffic in the UK by 2035 and start to cannibalise Stansted taking 2,400 flights of them by 2040. Again, a potential circumstance that is frankly absurd. 7 Indeed, in reality the actual element of even this reduced market that could be available for Manston to compete for is materially smaller even than this as much of these flights are in fact freight consolidators ( DHL, Fedex etc) who have substantial financial and operational investments in their existing bases of operations and are thus unlikely to be willing to leave a long established and successful cargo ecosystem to rebase their existing operations, which are at the heart of the country, to a less optimal location that puts them at a competitive disadvantage. In the London system of airports there were 15,476 cargo flights in 2016 (down from 19,780 in 2000) and of these 73% were at Stansted. Tellingly during the period between 2000 to Manston’s last full year of operations in 2013, i.e. when the airport was fully open for business and aiming to increase its freight volumes as a core part of its strategy there was a decline of 2,253 freighter ATM’s at Gatwick. None of which appear to have made the decision to transfer operations to Manston. Night Flight Impact The potential market that could be targeted by RSP at Manston is even further constrained by their apparent primary focus on day time flights (given the evidence of massive local opposition to night flights at Manston). This is diametrically opposed to the demands of the freight sector which seeks untrammelled night flights to support the demands of their users. The quotes below from Stansted and East Midlands Airports make the point clearly. “As the express freight operators’ product is next-day or guaranteed delivery, in the UK packages are generally collected at the end of the business day for delivery early the following day. For this schedule to succeed, the main part of the delivery and transportation process needs to take place during the night. Night flights will always be vital to UK express freight services and this is provided at Stansted Airport.” Stanstead’s sustainable development plan 8 “There are in the region of 500 HGV movements to and from East Midlands Airport every day. However, because of the nature of the freight hubs at East Midlands Airport, with pure-freight aircraft flying overnight, the vast majority of these vehicle movements take place very late at night (normally after 9pm) and very early in the morning (between 2am and 5am) and as such have no impact on peak motorway traffic levels.” East Midlands Airport Sustainable development plan “In 2015 East Midlands had 20,500 cargo ATMs. 12,000 of these were night flights…………..Cargo ATMs account for 59% of dedicated cargo movements” No Night Flights quoting East Midlands Airport Consultative Committee from 4th March 2016 Demand In Context RSP’s forecasts for Manston envisage that it will secure of 10,144 freighter ATM’s in its sixth year of operations. For context this represents 66% of the current London freight ATM’s (90% of Stansted’s freight flights) and 25% of the UK relevant freight ATM’s. Simplistically, for this outcome to be credible one of two things has to happen: 1. Stansted would have to shut its doors to dedicated air freight and all existing freight users would then have to migrate to Manston; or 2. In the short term, the demand from the air freight industry for dedicated flights in the UK would have to increase by 40% in the London area with all that additional demand only being ever satisfied by Manston. While the above statements are designed to be simplistic and for effect they conveniently ignore any supply side issues at other airports they do serve to illustrate how fundamentally unlikely RSP’s projections are in a competitive landscape where the parent company of Stansted also owns East Midlands Airport and would be unlikely to cede any customers to Manston willingly. Freight consolidators will not move from locations at the heart of the country and the overall air freighter volumes in the UK are in long term decline. Supply Side Issues Absent any compelling drivers or evidence that sustained increasing demand for freighter use would support RSP’s projections, it is appropriate to review the supply side of the equation in case that would provide convincing evidence that an airport such as that which is proposed at Manston is needed to satisfy displaced demand. However, the facts simply do not bear out RSP’s thesis. In contradiction to RSP’s expressed view that freight will get pushed out of the South East by rising passenger demand both Stansted and Heathrow have retained freight at the heart of their long term development plans. Stansted has a stated ambition to double its dedicated freighter capacity to 400,000 tonnes and Heathrow has an ambition to grow its cargo throughput, both belly hold and dedicated freighter to 3m tonnes annually. With East Midlands also aiming to increase its throughput to 700,000 tonnes by 2040 the aspirations of these 3 airports alone would collectively have capacity to ship 4.1m tonnes of freight annually which is significantly more than the 2.384m tonnes of air freight that was shipped across the UK as a whole in 2016. All that capacity is without tapping into the additional potential, that is 9 available at Birmingham, Gatwick, Manchester and even Bournemouth. Amongst many other airfields in the UK. The following quotes extracted from the strategic plans for each of the 3 key freight airports in the UK highlights that they all have cargo/freight at the core of their strategic plans and see it as a focused area of their growth. “There is also potential for the cargo goods volume at the airport to increase, potentially doubling the current throughput of cargo on dedicated aircraft to around 400,000 tonnes per annum.” Stanstead’s sustainable development plan. “A review of the airport’s cargo forecasts has also been carried out. This assumes growth in the UK’s total air freight demand, doubling from 2012 levels (2.3 million tonnes) to 4.4 million tonnes by 2040 (combined annual growth rate of 2.3%). It also assumes that East Midlands Airport’s cargo throughput is continued to be carried on dedicated freight aircraft, and also that the integrated freight market will grow at a faster rate than the traditional freight market. The forecast for future cargo tonnage is for some 618,000 tonnes in 2035 and some 700,000 tonnes in 2040.” East Midlands Airport Sustainable development plan Indeed, in his response to the Airports Commission final report, Andy Cliffe, East Midlands Airport’s Managing Director went even further than this when he commented on 1st July 2015 “East Midlands Airport, as the largest pure freight airport in the UK, has been recognised by Sir Howard Davies as a national strategic asset for freight ……. Our ambitious plans, as set out in our Sustainable Development Plan, show the potential for East Midlands Airport and how we intend to grow the airport to … 1 million tonnes of freight within the next 10 – 15 years, which clearly demonstrates the available capacity right here in the heart of the UK.” “Our cargo strategy will lift freight volumes to three million tonnes a year by 2040” Heathrow Cargo Strategy May 2017 Conclusion RSP’s freighter projections for Manston are predicated on the combination of long term, above trend growth in freighter demand, coupled with a restriction of both runway capacity and the normal rules of economic competition between other airports. Frankly we can see no compelling evidence nor underlying logic to support these projections. We think Parsons Brinkoff summarised Manston’s position accurately in their 2012 report in relation to potential Night Flights at the airport. “MIA, whilst only 50 minutes from the M25 at junction 2, is not strategically positioned for freight to be dispatched anywhere other than the far South East of England”. Markets can and do change but geographies do not. It may be possible to operate an airport at Manston but has proven impossible, for anybody to make any money from doing so. Ever. 10 Appendix A. Review of recent trends in the UK freight market 1. Freight tonnes at UK airports reached 2.38m tonnes in 2016. This was the first year the previous peak (from 2007) has been exceeded, with freight traffic negatively impacted by the global financial crisis. Freight tonnes grew by CAGR 6.9% from 1990-2000, but have been broadly flat since (CAGR 2000-16 0.2%). 2. The percentage of freight carried on cargo aircraft has fluctuated but was not significantly different in 2016 compared to 1990 (30% in 2016 compared to 27% in 1990, with peak of 37% in 2003). 11 3. The growth in freight carried on cargo aircraft has differed significantly by UK region. Freight on all cargo aircraft has grown massively in the Midlands region, driven by the development of East Midlands Airport as a major hub for cargo only operations (in particular, express cargo). In contrast, freight on all cargo aircraft has fallen in recent years in both the South East & East of England and the rest of the UK. While the reduction in South East & East freight on all cargo aircraft is sometimes attributed to shortage of suitable airport capacity, this does not explain the similar decline for the rest of the UK. 4. Focussing on the South East & East, Stansted has developed to become the main airport for freight on all cargo aircraft. Despite severe capacity constraints at Heathrow, it has retained a significant volume of freight on cargo aircraft. 12 5. However, in the South East and East, a clear majority of freight is carried in passenger aircraft. Heathrow dominates this segment, as a result of its extensive long-haul network, operated by wide body aircraft with significant cargo capacity. Cargo on passenger aircraft has continued to grow at Heathrow despite the airport effectively operating at full runway capacity (CAGR 2006- 16 2.0%). 6. There has been a very clear trend to consolidation of freight carried on cargo aircraft. In 2016, the three largest airports for freight (on cargo aircraft) accounted for 86% of the UK market. The same three airports handed only 41% of the market in 1990. Similar trends have been observed in other countries. 13 7. This trend towards consolidation of freight at a small number of airports is driven by cost efficiencies. The trend has resulted in airports which previously had significant freight volumes on cargo aircraft seeing the market shrink or almost disappear. 8. The following four airports have all been highly ranked in the UK for freight on cargo aircraft (Liverpool #5 in 1996, Belfast International #4 in 2015, Prestwick #4 in 1999, Manston #4 in 2013). However, by 2016, total freight on cargo aircraft across the three airports that remained open was less than 20,000 tonnes. Note: none of these airports has material capacity constraints. 9. In fact, of the 16 airports with more than 1,000 tonnes of freight on cargo aircraft in 1990, only 3 had higher equivalent freight volumes by 2016 (East Midlands +290,000 tonnes, Stansted +191,000, Luton +4,000 tonnes, Other 13 airports combined – 134,000 tonnes). 10. A similar trend can be seen when analysing cargo aircraft flights, with a sharp reduction in flights from airports outside the “big three” of Heathrow, Stansted and East Midlands. Total freighter flights from other airports fell by almost 75% between 2000 and 2016. 14 Appendix B. Review of competitiveness of Manston in the UK freight market 11. Freight at Manston has accounted for an average of 0.8% of the UK total in the period 1990- 2014 (prior to closure). Its peak share of the UK market occurred in 2003, when it reached 2%. 12. The total number of cargo air transport movements at Manston averaged ca. 550 per year in the period 2000-14. This is equivalent to less than one aircraft rotation per day on average (peak year in 2003 was 1.5 rotations per day). 15 13. The hypothesis has been put forward that Manston previously was unsuccessful due to its inability to handle additional flights due to lack of infrastructure. It seems likely that higher numbers of flights per day could have been handled if the demand existed. 16 15. Manston has also been described as benefiting from a favourable location. However, its location on a peninsula effectively limits its catchment. Within 3 hour drive times, the airport is limited to the South East & East of England and a small part of the Midlands. 16. In contrast, East Midlands Airport can also serve the vast majority of England and Wales within 3 hours drive time (the main exception being the South West). Its excellent coverage of England due to its central reason has been a key factor in the growth of East Midlands Airport for freight on cargo services, at the expense of other airports. It also benefits from 24-hour operation and a long runway, while supporting distribution warehouse infrastructure has been able to develop in the surroundings of the airport. Appendix C. Discussion on potential future developments in the freight sector 17 17. While Airbus and Boeing forecast strong growth in freight tonne KMs in future years, it should be noted that only limited growth in freighter aircraft is envisaged for European based airlines. Airbus forecasts 276 freighters in European fleets by 2036, compared to 234 in 2016 (Source: Airbus GMF 2017). Note that Boeing does not appear to provide equivalent freighter forecasts. 18. New long haul aircraft types (with the notable exception of the A380) tend to have more space for cargo than previous common models. The B787 family offers substantial cargo capacity on its passenger aircraft (ca. 155m3 on the B787-900 model). For example, American Airlines has commented "The introduction of the 787-9 brings another more fuel-efficient aircraft type with even greater cargo capacity into the American Airlines fleet…. On routes where we operate the aircraft, our cargo customers will see notable capacity improvements”. (source: David Vance, American's vice president of cargo operations, Air Cargo News, 2016). 19. Some leading airlines are cautious about the prospects for the freighter segment: • “Air France-KLM continued to restructure its cargo activity in 2016, resulting in a "Gradual turnaround". The company stated the restructuring continues to address weak global trading environments and industry overcapacity. The group reported… full freighter capacity: -24% year-on-year”. Source: CAPA Aviation 16th February 2017. • “Air France-KLM said freighters would become a “niche product” as cargo markets face continued overcapacity. Air France-KLM executive VP Erik Varwijk said slowing demand and greater belly capacity on scheduled passenger services made exclusive freighters redundant….. AF-KLM is scheduled to ground two freighters in 2014 and another two in 2014, reducing their freighter fleet to 10 aircraft”. Source: CAPA Aviation 23rd April 2014. • “Singapore Airlines Group subsidiary SIA Cargo faces another challenging year as conditions in the cargo market remain unfavourable. SIA Cargo has been unprofitable for seven of the past eight years, with losses further widening in recent quarters. Cargo capacity has been relatively flat since 2009, with additional belly space from passenger aircraft offsetting freighter reductions.… SIA Cargo is cutting its 747-400 freighter fleet in 1QCY2017, to only seven aircraft. At its peak in 2007 SIA Cargo operated 16 747-400 freighters. SIA will need to decide within the next few years whether to cut its freighter operation entirely or start investing in 747 replacements”. Source: CAPA Aviation 3rd February 2017. • “Emirates VP cargo commercial operations Duncan Watson said the airline does not plan to add more freighter aircraft in the foreseeable future”. Source: CAPA Aviation 29th February 2016. 20. Another development is the introduction of cargo into the business model of some low-cost carriers. Southwest Airlines in the USA has been carrying cargo for a number of years, while Norwegian and Eurowings also handle cargo on flights from Europe. Norwegian has a cargo subsidiary and “offers freight capacity to all destinations in Scandinavia and a range of European destinations in addition to Bangkok, New York, Orlando, Oakland, Los Angeles and Fort Lauderdale” (source: CAPA Aviation, 1st December 2015). 18 Appendix D. Critique of Azimuth / Northpoint documents in relation to freight viability at Manston 21. Azimuth Report, Vol III, Para 1.1.1 • “Pent up demand for freight carrier slots in the South East makes forecasts based on extrapolation of past activity potentially inaccurate”. • No relevant evidence is presented that freight traffic in the South East is impacted by airport constraints. There is no acknowledgement that cargo flights have reduced in other parts of the UK where airport capacity is not a material issue (see para 3 above) or any reference to the trends for market consolidation (see paras 6-10). • More generally, no exploration is made of other factors that could be contributing to the limited growth in freight experienced in recent years. These could include the changing nature of the UK economy (with more emphasis on services) and the developing business model of the cargo industry to fly imports from the East into mainland European hubs for distribution across Europe by surface modes. 22. Azimuth Report, Vol III, Para 2.2.6 • “As such, and also based on market knowledge and confidential discussions with airlines, airports, and organisations involved in the freight forward and integrator markets, a short and medium-term forecast was produced. The freight movements shown in the forecast relate, where possible, to particular carriers identified through the qualitative research. The identity of these carriers is necessarily confidential for commercial reasons”. • While Azimuth highlights the difficulties with conventional forecasting techniques, no meaningful detail is provided of the assumptions that form the forecasts for the short-term future cargo at Manston. This makes it impossible for the reader to judge the credibility of the forecasts. – Is the forecast cargo based on existing operations that might switch to Manston or does the forecast represent new flights to the UK? – What proportion of the forecasts is based on comments from interviewees which are in a position to deliver the planned growth, versus based on speculative opinion? – How firm is the commitment to add the cargo? Are all possible opportunities that were identified included in the forecasts, or were only a proportion of potential opportunities selected? – Why are airlines or freight forwarders unwilling to be quoted on future plans for Manston? As part of the Airports Commission process, there was wide spread and visible support from the freight sector for a new runway at Heathrow – indeed meeting future freight demand was one of the main reasons stated by the Airports Commission for selecting Heathrow over Gatwick. 23. Azimuth Report, Vol III, Table 1 • There is very little discussion on why Manston failed to grow beyond 43,000 tonnes in the period 1990-2014 (before closure). Despite the apparent lack of airport capacity in the South East, Manston captured less than 1% of the UK market on average (peak value 2%, see para 11). 19 • In comparison, in Year 2 after reopening (and the first year of traffic capture), the airport is forecast to achieve almost 100,000 tonnes. This is a similar volume to the cumulative freight handled by Manston from 2011-14. It is also higher than what is being achieved by longestablished cargo airports such as Frankfurt Hahn or significant passenger hubs such as Dusseldorf which are well located on the European mainland to benefit from demand consolidation. • By Year 4 (2 further years of growth), freight is predicted at ca. 167,000 tonnes. This is equivalent to almost 25% of total UK freight on cargo aircraft in 2016. In the period 1997- 2016, total freight growth in the UK (on cargo aircraft) was only ca. 140,000 tonnes. • Much more convincing supporting evidence is required before the forecasts can be considered as credible. 24. Azimuth Report, Vol III, Para 2.3.2 and Para 2.3.3. • “In the long-term, forecasts generally have less reliance on qualitative methods…. Therefore, from Years 11 to 20 an annual percentage growth has been applied to the figures derived for Year 10… After a period of stagnation that followed the global economic slowdown, which Boeing describe as a “temporary situation”, they say: “As global GDP and world-trade growth accelerate, air cargo traffic, as measured in revenue tonne-kilometers, is projected to grow an average 4.2 percent per year over the next 20 years… However, to be conservative, and in line with the Airbus forecast, a 4% uplift on the Year 10 figures has been applied to extrapolate the long-term forecast for Manston Airport. “ • The application of a global growth figure to an individual airport is very suspect, especially given that stronger growth in cargo is expected from emerging markets. As noted in para 17, Airbus assumes only modest growth in the freighter fleets of European airlines. • Furthermore, the Boeing / Airbus figures being applied relate to revenue-tonne KM, which is a different measure to tonnes at an airport. The revenue-tonne KM metric is influenced by changes in average stage length. • Finally, applying a market based growth figure (even if it was appropriate) does not acknowledge the consolidation trends in the freight segment. As noted in para 9, of the leading 16 UK airports for freight on cargo aircraft in 1990, only 2 had recorded meaningful growth by 2016. There is a heavy reliance on the assumption that Manston will be a “winner” in future consolidation. 25. Northpoint report, Para 1.1 • “Thanet District Council (TDC) has placed far too much reliance on a deeply flawed report from Avia Solutions, that has been neither peer reviewed, discussed with relevant stakeholders or indeed subjected to any kind of public scrutiny, in coming to a hasty and therefore injudicious decision about the future of Manston Airport. This submission offers a high-level critique of the Avia report, which was demonstrably rushed, adopted a flawed methodology, employed poorly judged assumptions and adopted myopic view of the potential of the airport.” • There is no evidence put forward for these assertions, and we are unaware of any meaningful peer review of the Azimuth forecasts by an independent body. 26. Northpoint report, Para 1.2 • “… These proposals are in line with the business models of successful benchmark airports such as: Alliance Fort Worth in Texas, USA; Hamilton Airport in Ontario, Canada; Bergamo in 20 Italy; Liege in Belgium; and Leipzig in Germany; none of which rely on a passenger focused business model of the kind set out in the Avia Solutions report commissioned by TDC, which is therefore at best misguided and at worst a deliberate misrepresentation of RiverOak’s plans.” • No guidance is provided on what Manston has in common with these airports, or what differentiates Manston from a range of airports that have made significant investments in cargo facilities without any tangible return. Some of the examples are also surprising e.g. Bergamo Airport had 11.2m passengers in 2016 (3rd largest in Italy) and 118,000 tonnes of cargo. 27. Northpoint report, Para 1.5 • “In part they envisage freight traffic being displaced from congested airports elsewhere in the South East, in part growth in underling traffic volumes in line with Boeing World Cargo forecasts. But also of material significance, will be RSP’s plans to target the hundreds of thousands, possibly millions of tonnes of air cargo being trucked from the UK to the continent to be flown out of European airports” • There is no recognition of the ability of East Midlands Airport (or other airports e.g. Birmingham) to serve this market (see para 15 and 16). East Midlands has similar accessibility to the South East as Manston plus the benefit of being able to serve most of the rest of England and Wales. – In response to the Airports Commission final report, Andy Cliffe, East Midlands Airport Managing Director commented on 1st July 2015: – “East Midlands Airport, as the largest pure freight airport in the UK, has been recognised by Sir Howard Davies as a national strategic asset for freight and we’re pleased that the commission identifies our important strategic role in the global freight network”. – “Being ideally located in the centre of the UK and at the heart of the motorway network … Our ambitious plans, as set out in our Sustainable Development Plan, show the potential for East Midlands Airport and how we intend to grow the airport to … 1 million tonnes of freight within the next 10 – 15 years, which clearly demonstrates the available capacity right here in the heart of the UK.” • Furthermore, there is an assumption that cargo slots will be squeezed out from Stansted. This may not necessarily be the case, as Stansted’s passenger growth is currently capped. Furthermore, a very congested Heathrow has been able to maintain cargo slots, so cargo at Stansted may be sustained – despite rapid passenger growth at the same time, the number of cargo movements at Stansted grew by almost 20% from 2014 to 2016. Indeed, Stansted’s 2015 sustainable Development Plan Summary states: – “There is also potential for the cargo goods volume at the airport to increase, potentially doubling the current throughput of cargo on dedicated aircraft to around 400,000 tonnes per annum.” • Finally, there is no consideration that cross-channel trucking trends may be because of cost efficiencies being exploited by the cargo industry rather than being driven by lack of airport capacity. In any case, the level of cross channel truck activity is not quantified, nor any rationale given as to why the economics of trucking cargo would be different in the future. 28. Northpoint report, Para 2.1.5 • “Avia have tried to argue that such a low CAGR is in part justified by the fact the bellies of passenger aircraft are standing empty at Heathrow waiting to absorb any additional demand 21 that may come forward during the next three quinquennia. Unfortunately this is not true now and certainly won’t be in the future because the cargo capacity of principal aircraft types at Heathrow is set to diminish over time as B787s, A350s and new narrow-bodied aircraft enter into service. “ • We disagree with this view. The passenger B787 in particular is a very effective aircraft for cargo, and it is likely that passenger aircraft belly hold capacity for cargo will continue to increase based on current fleet orders and trends towards more long-haul flights at Heathrow (see para 18 to 19). 29. Northpoint report, para 2.26, first bullet • “First, just under 50% global air cargo is shipped bellyhold; the comparative figure in the UK is 70%. Since the economies of the UK’s main EU competitors are not materially different from our own, there is no logical explanation for this difference other than the shortage of slots available to integrator aircraft or dedicated freighters at the the South of England’s two main freight airports - Heathrow and Stansted – caused by high levels of daytime runway demand and capacity at saturation levels in peak and shoulder periods, and in Heathrow’s case in off-peak periods too.” • As shown in para 2, the percentage of freight carried on all cargo aircraft was actually lower in 2016 than in 1990. In 1990, any airport capacity issues in the South East were much milder, so the Northpoint assertion is not supported by evidence. • No consideration is given for an alternative explanation - that Heathrow is the largest longhaul hub in Europe by some margin, and has very high volumes of cargo capacity available on widebody aircraft across a wide range of routes. This makes cargo on passenger belly hold aircraft very competitive and able to directly serve key markets. 30. Northpoint report, para 2.26, third bullet • “Third, Heathrow’s principal attraction for freight forwarders, namely the range of international destinations it serves directly, is also its potential Achilles heel, because that network may not be sufficiently concentrated on certain ‘thick’ freight routes to be able to cope with the underlying demand – in other words the more complex the passenger network, the greater the likelihood it may not match the required pattern of freight distribution flows.” • This appears to be conjecture rather than supported by evidence or analysis. 31. Northpoint report, para 2.26, fourth bullet • “Fourth, new aircraft tend to have less bellyhold capacity than older ones and Heathrow and Stansted are the two airports where these new aircraft are most likely to be introduced.” • As noted in para 28, this assertion is dubious. 32. Northpoint report, para 2.26, fifth bullet • “And finally, it is very likely that a sizeable chunk of the available runway capacity at both airports will be taken up by Low Cost Carriers (i.e. Ryanair at Stansted and easyJet at Heathrow), and as with most Low-Cost Carriers, carrying freight does not form part of their business model.” • There are some signs of growing development of cargo by low cost carriers (see para 20) as part of their evolving operating models. 22 Appendix E. Brief review of Azimuth / Northpoint in relation to passenger viability / Other 33. Azimuth Report, Vol III, Table 1 • We have not at this stage undertaken a detailed review of the passenger forecast methodology adopted by Azimuth. However, we note that as with cargo, passenger forecasts are far in excess of previous performance. Traffic in the Year 3 (the first year of passenger flights) is forecast at ca. 660,000, which is higher than total passenger traffic handled by the airport since 1990. It is also higher than Bournemouth traffic in 2016, a long established South East airport. • In its report, Avia Solutions note that the catchment of Manston Airport is significantly smaller than Southend’s catchment. Traffic at Southend was ca. 874,000 passengers in 2016, which Manston is forecast to surpass by Year 6 (the 4th year of passenger flights). 34. Northpoint report, para 1.3, fifth bullet • This will be supported by… a range of other aeronautical activities, for which capacity is either already heavily constrained (e.g. business aviation, military and diverted flights), or non-existent (e.g. emergency service, aircraft servicing and commissioning flights, air shows, commercial training and flight testing, general aviation and flying schools) at the south east’s larger and more congested airports; and aircraft MRO, manufacture, conversion, re-spray, dismantling, part storage and recycling. • It is estimated that the UK has a total of 271 paved runways as at July 2016 (CIA World Factbook). Most of the activities highlighted above could be carried out at a wide range of other airports, and geographic location is not a key factor (e.g. aircraft can be flown to any part of the UK for respraying, dismantling, etc.). 23 Appendix F: Extracts From 2013 Department For Transport’s UK Aviation Forecast 24 25 gva.co.uk Enclosure 4 Critique of PEIR (Transport) Technical Note AECOM Limited Aldgate Tower 2 Leman Street London E1 8FA aecom.com Project name: Stone Hill Park Project ref: 60430453 From: Justin Sherlock Date: 21st July 2017 Technical Note Subject: Preliminary Environmental Information Report (PEIR) for the Manston Airport Development Consent Order (June 2017) Transport Review Prepared and Checked by: Verified by: Approved by: Justin Sherlock Roy Kong Nicholas Anderson 21st July 2017 21st July 2017 21st July 2017 Introduction AECOM has been commissioned by Stone Hill Park Ltd to provide transport advice for the redevelopment of the former Manston Airport, renamed as Stone Hill Park (SHP), the Site. This Technical Note (TN) provides a review of Chapter 14, Traffic and Transport of the Preliminary Environmental Information Report (PEIR) for the Manston Airport Development Consent Order (June 2017). Review of Chapter The Chapter commences by describing how the site has good access to the surrounding highway network. The current highway network connections to the site are provided on Manston Road and Spitfire Way. Whilst both of these links provide two-way single carriageway roads with one lane running in each direction they are relatively constrained by their width, alignment and poor systems of drainage. The wider highway network, particularly to the north of the site is also constrained and may be unsuitable to accommodate a significant volume of additional traffic. Increased permeability to the site would therefore be essential coupled with improvements to junctions and appropriate routing of traffic to avoid less appropriate routes to the site from the north. At present these measures are not proposed. At this stage no Transport Assessment (TA) has been prepared to assess the impacts of the proposed development on the surrounding transport network. Whilst the PEIR provides a preliminary assessment of highway link capacity this is insufficient to conclude whether the development proposals can be accommodated on the transport network. Until such a time as the TA has been prepared no conclusions can be drawn on the acceptability of this development proposal from a transport perspective. The PEIR seeks to provide a preliminary highway network assessment. Whilst a preliminary construction traffic trip generation is presented in the Chapter no trip generation for the operational phase of the development is presented. Through interpretation of the traffic flow information it is possible to extract potential development traffic flows. AECOM estimates that the full operational trip generation could be in the region of 25,000 vehicle movements per day. However, as the link flows provided are incomplete and do not cover the entire road network any estimate made of the trip generation is likely to underestimate the operational trip generation proposed. In its current state the PEIR is incomplete and therefore no conclusions about the likely impacts of the proposed development on the highway network can currently be made. Technical Note No reference is made within the policy review section of the Chapter to emerging planning policy and the Proposed Revisions to Draft Local Plan (Preferred Options) January 2017 consultation that proposes to allocate the Former Manston Airport as a mixed use settlement with the capacity to deliver 2500 new dwellings and up to 85,000sqm of employment and leisure floorspace. In addition, no reference is made to the emerging Thanet Transport Strategy. This Transport Strategy seeks to deliver an improved highway connection between Westwood Cross and the A299. The current proposals being promoted by Riveroak do not demonstrate how the development would be compatible with these improvements. The study area of the traffic surveys undertaken to inform the PEIR appears to be quite small given the scale of development proposed and AECOM’s estimate of traffic volumes arising from the site with numerous gaps in terms of both junction and link counts. A more comprehensive data collection exercise would be expected to have been undertaken for a development of this scale. Despite the Chapter stating that traffic counts were undertaken in March 2017 several key highway links including the A299, A256 and Manston Court Road are missing traffic flow information within the preliminary assessment. This traffic data will be essential to inform the assessment of the development. As it stands the PEIR does not present a complete picture of potential transport impacts arising from the development. The PEIR relies upon assessment of the development utilising what appears to be a manual assignment technique for the distribution of development traffic. Given the scale of development proposed the use of a strategic transport model with dynamic traffic assignment would be expected to understand potential reassignment effects resulting from the large volume of traffic that these proposals would generate. No detailed accident data analysis has been provided at this stage. However, it should be noted that the accident data study area excludes roads within Minster and towards Canterbury. Considering these links are included within the traffic data study area a consistent study area for the accident analysis would have been expected to have been utilised. At this stage no consideration has been made of committed developments or committed transport infrastructure in the local area. Instead the assessment relies upon applying generic growth factors derived from TEMPRO to the baseline traffic data to inform future traffic flows. The assessment presented is therefore not considered to be robust as it relies upon the use of a standard growth factor applied to all links when in reality committed development will impact some links more than others. The Chapter is therefore likely to underestimate traffic volumes on some highway links surrounding the site and overestimate on others. A more refined approach would be expected given the scale of development proposed. The highway links proposed to be assessed are categorised by their sensitivity in accordance with the ‘Institute of Environmental Assessment (IEA) Guidelines for the Environmental Assessment of Road Traffic’ (1993). A number of these links are defined within the Chapter as ‘Not Applicable’ and therefore not taken forwards to assessment because no sensitive receptors are identified along them. This approach is incorrect because it fails to appreciate that criteria such as driver delay are witnessed by the users of the link itself and not just receptors adjacent to them. Instead these links should be included within the assessment and assessed in terms of magnitude of impact with their sensitivity classified as low (if there are no receptors identified). The assessment methodology proposed suggests that driver delay will be measured with reference to the percentage increase in traffic flow along a link. The majority of driver delay witnessed on the highway network occurs at junctions. It is therefore considered inappropriate to assess the impacts of driver delay in terms of link capacity and a junction based assessment approach should be utilised. This is supported by the IEA Guidelines which states that values for delay can be determined by the use of the Department for Transport’s computerised junction assessment packages or other suitable programs. The preliminary highway assessment presented indicates significant increases in traffic volumes along a number of highway links such as Spitfire Way where a 111% increase in traffic is anticipated and more than a 50% increase in traffic flow on Manston Road. These links are currently single carriageway roads with poor alignment and drainage. The Design Manual for Roads and Bridges (DMRB) TA46/97 ‘Economic Assessment and Recommended Flow Ranges for New Rural Road Links’ indicates that a standard 7.3m single carriageway road has a maximum Annual Average Daily Traffic Flow (AADT) capacity of 13,000. This figure is exceeded on a number of the links suggesting that significant improvements to the existing highway link infrastructure will be required to facilitate this quantum of development. No acknowledgement is made of this within the PEIR and no improvements to these links have been proposed. Technical Note Whilst reference is made within the Chapter to link capacity and the need for additional assessment no account is made of junction capacity which, as previously highlighted is potentially a greater constraint to development than link capacity. The PEIR is therefore inadequate by failing to assess this criteria and therefore it is not possible to conclude from the PEIR whether this level of development could be accommodated on the highway network even if highway improvements were brought forwards. The site layout proposed within Figure 3.5 of the PEIR appears to show the site boundary including sections of publically adopted highway such as Spitfire Way. It is unclear whether this is a drawing error or whether such land is required to facilitate the operation of the development. This should be clarified. The Chapter concludes that through the production of a TA and development of a package of mitigation measures the effects of the development as assessed in the PEIR can be reduced to ‘not significant’. Based upon the current assessment it is not possible to draw this conclusion as the methodology adopted is incorrect, is missing assessment of a number of links and does not consider impacts at a junction level. The PEIR is therefore incomplete. Conclusion AECOM has undertaken a review of Chapter 14, Traffic and Transport of the Preliminary Environmental Information Report (PEIR) for the Manston Airport Development Consent Order (June 2017). The review has identified that the transport chapter in its current form has a deficient methodology, is missing information and is incomplete. It is therefore not possible to draw any conclusions at this stage regarding the likely impacts of the development on the transport network. gva.co.uk Enclosure 5 Critique of PEIR (Environmental/Technical) Manston Project Ref 70009799 July 2017 4th Floor 6 Devonshire Square London EC2M 4YE Tel.: +44 020 7337 1700 Fax: +44 20 7337 1701 www.wsp.com WSP REVIEW OF THE MANSTON AIRPORT DEVELOPMENT CONSENT ORDER PRELIMINARY ENVIRONMENTAL INFORMATION REPORT (PEIR) JUNE 2017. INTRODUCTION WSP has been commissioned by Stone Hill Park Ltd to lead and coordinate the preparation of the Environmental Impact Assessment and Environmental Statement and to provide various technical assessments (Air Quality, Archaeology and Cultural Heritage; Artificial Lighting; Ecology & Biodiversity; Ground Conditions and Contamination; Flood Risk and Drainage; Noise, Energy & Sustainability; Socio Economics and Population, and Waste Management) to support the current hybrid application (Ref OL/TH/16/0550 ) for the redevelopment of the former Manston Airport. In that capacity we have been requested to review Sections 5, 6, 7, 8, 9, 10, 12 and 13 of the Preliminary Environmental Information Report (PEIR) dated June 2017 for the Manston Airport Development as set out below. SECTION 5: APPROACH The PEIR has been prepared in the context of the PINS Advice Note Seven: Environmental Impact Assessment: Preliminary Environmental Information, Screening and Scoping (March 2015) and confirms that it is preliminary information which will be provided in full and final form in the ES The Scoping Report acknowledged that Applicants are advised to undertake consultation giving consideration to any potential issues and concerns, and to seek to resolve any transboundary effects, before the application for development consent is submitted in order to ensure that they do not become an issue during examination. Therefore in accordance with the advice, it was confirmed at the scoping stage that the Applicant would give consideration to any potential transboundary effects arising from the development of Manston Airport within the EIA in order to enable PINS, in fulfilling their obligations under Regulation 8 of the EIA Regulations, to reach a view as to whether the development is likely to have significant transboundary effects on other EEA The Scoping Opinion from the Secretary of State recommended that the ES should identify whether the proposed development has the potential for significant transboundary impacts and if so, what these are and which EEA States would be affected. The PEIR appears to be silent on providing any indication on this matter. The approach Report refers to the various different consenting regimes to be applied for in due course. For example the exact airspace options and aircraft flight paths will be formalised following or in parallel with the DCO through an Airspace Change Proposal (ACP), which is a separate consenting regime. The ACP will be submitted through the Civil Aviation Authority’s (CAA) airspace change process and the potential noise effects will be assessed following the CAA guidance 1. However there is little reference on timings to such regimes, although it is acknowledged that the assessment approach for modelling air noise needs to be agreed with PINS and CAA and a preliminary meeting with the CAA was held on 15th May 2017. It would be expected that despite the need for approvals under such regimes, there is a need for at least some robust assumptions to be set out as the basis for PEIR and the basis for the assessment of the likely significant effects to be reported in the ES. Page 2 July 2017 SECTION 6: AIR QUALITY The PINS Scoping Opinion confirms that it is a matter for the Applicant to decide whether or not to submit a stand-alone Health Impact Assessment (HIA) in the context of the relevant consultee responses regarding health, and in particular the comments from Public Health England, including in relation to electric and magnetic fields. The PEIR does not provide a Health Impact Assessment but confirms that the potential for significant effects of the Proposed Development on public health is considered within the air quality and noise technical chapters. However in the absence of traffic assessments and flight path details at this time, the effects on public health remains an issue that would need to be considered further. The Scoping Opinion also advises the Applicant to give consideration to the carbon footprint of the proposed development during construction and operation, demonstrating how the development will contribute to achieving the objective of reducing global greenhouse gas emissions set out in the Aviation Policy Framework (Department for Transport, 2013). Table 6.3 confirms that in response to comments from TDC, a quantitative assessment of changes in emissions of carbon dioxide arising from the Proposed Development will be made and a comparison with national UK emissions will be made, together with an evaluation in relation to the proposed (CCC) cap on aviation emissions of 37.5 Mt by 2050. Again though in the absence of traffic assessments and flight path details at this time such issues would need to be considered further. Section 6.6 and Table 6.2.1 sets out a summary of the environmental measures to avoid, reduce or compensate for potential adverse air quality effects either during the demolition and construction phase or operational. Such measures include the planning of aircraft arrival and departure scheduling to avoid, where possible, over-long idling, taxiing and hold times. For the purpose of the PEIR assessment, and as a worst case, the working assumption is that there might be a maximum of eight (8) aircraft movements at night between the hours of 23.00 and 07.00. The remaining air traffic movements are spread evenly across the daytime period. However the absence of any details of the flights paths proves difficult to determine how any mitigation measures can be controlled. The subsequent proposals for flightpaths and airspace are identified as being subject to a separate round of consultation once the DCO application has been made. Table 6.42 summarises the position and para 6.10.2 readily accepts that no transport data available upon which to base assessment for the operational phase effects. Consequently many of the reported significance levels in the table may become significant and consequently need further mitigation. It is also evident there is no consideration at this point of expected flight paths and the effects on air quality. SECTION 7: ECOLOGY The Section confirms the intention is to produce an Evidence Plan (in ongoing consultation with Natural England), supported by evidence gathered from desk studies, field surveys, and air quality and noise modelling to meet the requirement under The Conservation of Habitats and Species Regulations 2010 (SI 2010 No. 490) (the ‘Habitats Regulations’) to determine whether any of these sites is likely to be significantly affected by the proposed development, either alone or in combination with other plans and projects. Confirmation is also given that there is ongoing consultation with Natural England (NE), who concluded that the ES is to be based upon information available in the public domain from other planning applications for the Manston Airport site, to be supplemented, if required, with targeted ecological surveys off-site and on-site to cover any identified gaps. Ref is made to the existing extended Phase 1 habitat survey undertaken in February 2017 for the SHP application and concludes that the work provides an appropriate basis upon which to proceed. At the time of the PEI assessment it is evident that sufficient data on receptors is not yet available, and consequently, any evaluation of effects on the receptors reported in the PEIR is considered following a generic approach to the delivery of construction works and operation for the proposed development. As a result the intention is that a full assessment will be provided within the ES, although off-Site non-breeding (over-wintering) bird surveys for 2016/17 have been completed. A survey programme is planned with agreement to be sought with Natural England where the survey programme exceeds the DCO application programme to ensure that assessment based upon a full baseline data for the examination. However until such information is available the indicated effects on the ecology of the site and surrounding area is unknown. Page 3 July 2017 It is also evident that due to the nature of the proposals, with limited opportunity for on-Site measures, off-Site restoration and enhancement works will be required that are proportional and in response to the predicted effects. Study areas associated with the impacts associated with changes in noise (Chapter 12) and air quality (Chapter 6) during the operational phase will need to be informed by the outcome of ongoing modelling based upon the location of the flight paths, and based upon worst-case (Year 20) assessments. As a result the evaluation of effects and significance for all receptors will need to be examined and reassessed in full in the ES, once precise effects and mitigation measures specific to the relevant receptor are available and in the context of detailed information on aircraft flight paths and noise levels along with collation of survey data from the winter period 2016/2017, and in light of any more recent desk study data. The summary of significance of effects concludes that on all matters the effects would not be significant. However such conclusions appear premature in the absence of the traffic assessment and details of flight paths, particularly related to conclusions which suggest no significant effects are anticipated due to the distance (lateral and/or vertical) of the flight paths from the designated sites. SECTION 8: FRESHWATER ENVIRONMENT Southern Water has confirmed they would prefer that the current runway area was left undisturbed due to turbidity concerns at their source. Both Southern Water and the Environment Agency would not want to see intrusive works near the adit or within SPZ1, and it is acknowledged that the desire of Southern Water is for the minimum level of intrusive work so as to avoid mobilising contaminants and creating pathways through the unsaturated zone. However some boreholes (in target areas) would be needed to see if any pollution or contamination is reaching the water table. If any piling is to be used methods must be used to minimise ground disturbance and Southern Water requested that any site investigation works are co-ordinated with the other potential applications for the site to result in the minimum of ground disturbance. SECTION 9: HISTORIC ENVIRONMENT The limitations of the PEIR are acknowledged and confirm the assessment is based solely on desk-based research and the results of any known previous archaeological investigations within the site and study area. As a result it cannot necessarily be taken as a definitive statement of the potential presence and significance of archaeological remains within the site boundary and further survey will be required to refine the current assessments which are made on the basis of existing knowledge and to allow an informed assessment of the potential effects of the Proposed Development. No intrusive survey has been undertaken by the Applicant to date, although evident that site walkover surveys were conducted on 7th and 8th March 2017 to support the Assessment and comprised a visual inspection of the current site infrastructure and land uses at which time the Archaeological trial trenching in support of SHP planning application OL/TH/16/0550 was in progress. Discussion with Historic England and Kent County Council is intended to continue ref the need for intrusive investigations and the historic building study which will be needed to inform the assessment in the Environmental Statement and to inform the significance of effects which at this point as reported are not yet established. SECTION 10: LAND QUALITY The Environment Agency confirmed that Environmental Impact Assessment will need to provide information on potential contamination of the site, and would also expect a preliminary risk assessment and site investigation to accompany the DCO application. A Phase 1 LQA (Manston Airport, Kent, Draft Geo-environmental Desk Study, Amec Foster Wheeler, March 2017) was carried (Appendix 10.1) and includes recommendations for a staged intrusive investigation to be undertaken post consent. A Preliminary UXO Risk Assessment has been undertaken and included in Appendix B of the Phase 1 LQA and identifies that there is a medium to high probability of UXO encounter on the site (probability rating of 4, on a scale up to 5). Page 4 July 2017 It is evident that a number of site investigations have been undertaken at the Jentex site, and a number of old tanks have already been decommissioned, although further site investigations would be undertaken to inform the detailed design of the fuel farm facility in consultation with the Environment Agency and Southern Water and on the scope of any site investigations and remediation that may be required, all of which should be considered in the scope of other intrusive investigations that maybe required. The significance of effects will need to be reviewed further in the context of these investigations and updated desk based data. SECTION 12: NOISE AND VIBRATION Forecast future road traffic flows from the proposed development are not available and as a result the operational road traffic/Surface access noise is not assessed within the PEIR. For the purposes of the PEIR, the future baseline level of noise is considered to be the same as today. The assessment of air noise within the PEIR is based on a design swathe and it suggests that the ES will assess prototype airspace route options within that design swathe which are considered likely to be ‘worst case’ and ‘best-case’ in noise terms and most ‘likely’ to be operated. It is then expected that the ACP will finalise airspace routes within those prototype routes. For the purposes of the PEIR therefore, a qualitative assessment has been undertaken, but only of those locations expected to be significantly affected by noise, which in turn are affected by the final stages of aircraft approach and early stages of aircraft departure, where for the Proposed Development the airspace procedures have little effect. In the absence of precise details regarding the design and layout of the Proposed Development including its airspace, the conclusions accept that it is not possible to set out the specific extents of the project study area, or undertake a detailed assessment with respect to noise and vibration. The receptor groups that have been identified within the study areas of the assessment scenarios are considered as having the potential to be significantly adversely affected as a result of the proposed development. A Noise Mitigation Strategy is being prepared which is expected to be consistent with the proposer’s business plan, the aims of the NPSE and the ICAO’s Balanced Approach to Aircraft Noise Management and will also recognise the previous airports Section 106 (s106) agreement with TDC and as a minimum include the s106 requirements, and update where appropriate. The PEIR confirms that proposals for these restrictions will be presented alongside the assessments within the ES. However we understand that at meetings with PINS RiverOak confirmed that noise control and mitigation would be a key part of their environmental study and consultation process. Table 12.12 sets out the rationale for the incorporation of environmental measures, but is light on the detail and for example confirms that measures to mitigate operational road traffic noise include restricting road traffic from travelling on certain routes (e.g. through Manston or Acol villages). In the absence of any traffic assessment (other than a preliminary highway network assessment), or trip generation for the operational phase of the development which is incomplete, any conclusions about the likely effects of the proposed development on the highway network or noise effects from such traffic are largely unknown with results being subject to change and currently all operational elements are expected to result in significant adverse effects on a range of receptors. SECTION 13: SOCIO-ECONOMICS The information as presented is limited by the fact that the effects are dependent on so many factors and likely predicted negative effects are likely to be centred on potential pressures on the local road network and aircraft movements (and the relationship with noise generation)resulting from an increase in business-related traffic, impacting on employee and customer access; the effects from aircraft noise and associated emissions which could impact on employees, customers and residents, depending on the chosen flight paths. The magnitude of effect on socio-economic and population therefore is highly likely to be subject to change until such factors are known. CONCLUSION The information and effects as presented is limited by the absence of sufficient survey information and are dependent on so many unknowns and factors at this time, including the controls of other consenting regimes. As a result any likely predicted negative effects are expected to be centred on potential pressures on the local and wider road network and aircraft movements Page 5 July 2017 (and the effects on noise, air quality and biodiversity) resulting from an increase in related traffic and activities, impacting on both the local environment and much wider area, irrespective of the impact and effects on the site itself. gva.co.uk Enclosure 6 Critique of PEIR (Landscape and Visual Impact) 17.07.17 Introduction Planit-IE LLP has been commissioned by Stone Hill Park Ltd to provide Landscape and Visual Impact Assessment advice for the redevelopment of the former Manston Airport, renamed as Stone Hill Park (SHP), the Site. This Technical Note (TN) provides a review of Chapter 11, LVIA of the Preliminary Environmental Information Report (PEIR) for the Manston Airport Development Consent Order (June 2017). Approach The assessment has been undertaken in accordance with the relevant national guidance ‘Guidelines for Landscape and Visual Impact Assessment – Third Edition’ (hereafter referred to as GLVIA 3). Review of Chapter Overall The assessment submitted with the DCO application is currently incomplete. At the time of assessment, information relating to the design and layout of the scheme lack maturity – this is acknowledged at numerous points within the report: ‘As outlined in Section 1.3, the PEIR provides preliminary information based on the design of the Proposed Development to date and data gathered at this point, that will subsequently be provided in full and final form within the ES.’ Given the immaturity of the available information at this stage and until the design and layout is resolved in detail, the assessment cannot fully assess the likely impacts, and significance of those impacts with any certainty. No reference to confidence levels within the assessment are provided that would reflect this uncertainty. Visual Impact Assessment Baseline Viewpoint Selection The viewpoint selection methodology presents a clear rationale for each viewpoint chosen. However, in addition to residential properties, there are only two locations selected that are near the site. Whilst there may be limited sensitive receptors, greater emphasis should be given to this zone, as visual impacts at close range from such large new buildings and infrastructure could possibly be significant. We would suggest the following should be part of the assessment: • Receptors on the local and strategic road networks particularly on Manston Road and Spitfire Way. These represent local level views and are important cross Thanet links to the major settlement areas. • Views from the on-site Heritage and Spitfire Museums. Whilst heritage considerations should be addressed separately, the setting and environment of this important tourist attractions should be part of the assessment. • On-site Public Rights of Way to the eastern boundary, where views into the site would be part of the experience of the user. Viewpoint Photography The supporting viewpoint photography and photomontages provided within the assessment are incomplete. Figure 11.2 identifies fourteen views with thirteen views included for reference in subsequent figures. View 10 is not included. With regards to the images provided, no information is shown in relation to exact position, field of view, focal length or if the view has been surveyed and verified. Given the size and nature of the application, verified views would be expected. The views provided are clearly several images ‘stitched’ together to form a wider panoramic image. Whilst this allows the site’s wider context to be generally appreciated, it is not an accurate representation of the visibility of the site or field of view. The methodology does not state how these images have been produced, or if any part of the image can be verified. Photomontages Only two photomontages are provided within the assessment, and are identified as views 1 & 2. View 2 appears to correspond with location of viewpoint 2, whilst view 1 does not correspond with any viewpoint position. Whilst technical information relating to these views is provided, no commentary is provided on verification of the views, or the methodology used to prepare them. Both images appear to be ‘stitched’ panoramic images, which draws the technical robustness of the images into question, and this should be acknowledged with a lower confidence level assigned to assessments based on them. No justification is included within the assessment as to why only these two views have been produced, or if these have been used to inform the assessment. The tables provided at the end of the document makes initial judgements on the significance of likely visual impacts on receptor groups. Whilst a detailed justification is provided, it is unclear what these conclusions are based on in the absence of a robust and complete visual evidence base. Conclusions Whilst the assessment sets out a clear methodology and has completed a partial baseline, by its own admission, it is incomplete at this stage. Significant omissions, particularly within the visual sections, prevent accurate conclusions to be drawn, and as such should not be relied on at this stage to assess the full landscape and visual impacts of the proposed development. Because of these omissions, it in no way represents a sufficient body of work to support the current consultation and decision making process.