Open session viability

Foreword

In general terms viability is the ability to take a business idea which seems great in one’s head and adds real world financial acumen to ensure that the idea can last longer than it took to think it.

When it comes to Riveroak Strategic Partners they seem to have asked Dr. Sally Dixon to produce a forecast with the express aim of achieving 10000 or more ATMs and the working backwards to decide how much to spent. It business terms this is walking before you are able to crawl.

The viability of the cargo hub idea seems to have been written on the back of a fag packet as there are simply no costings.

Questions

1.      Does the ExA think it is important that depriving one company of the land they own in favour of a business idea which may or may not be viable is what the Planning Act 2008 was written for?

2.      At some stage in the future the 3^rd runway at Heathrow will be completed and any perceived shortfall in runway space in the South East will have disappeared. Without any viability in the financials from RSP it may be considered Manston would fold as it has done 3 x in the past. Is that a reason to grant them a DCO

3.      The Government have the use of the land until December 2020 how does that affect the “viability” of RSP’s plans?

4.      In view of the questioning of Dr. Dixon at Discovery Park on the 21^st March 2019 by SHP does the ExA find themselves in a difficult situation trying to understand how Dr. Dixon comes to the conclusion that her forecast is viable? Anyone can dream *appendix transcript

5.      Does the ExA understand why the Planning Statement (TR020002-002454-7.2 - Planning Statement) states at 9.35 the following? “It considers whether reopening Manston Airport in the way intended by Riveroak would be viable”

Conclusion

As an accountant at an absolute minimum I would have considered a Pinder report an essential tool to understanding the long term viability of the plan to bring back aviation. Along with Forecasted Revenue, Annual Maintenance, Repair and Overhaul, Asset Depreciation, Inflation, Funding, Competition, future trends etc little of which can be found it the offering from RSP.

Appendix DSD Transcript

Preamble

Dr. Sally Dixon of Azimuth Associates (DSD). Azimuth is DSD.

James Strawn Barrister for SHP (JS)

At any change of speaker each state who they are so for the sake of brevity I will use their initials

JS starts off by confirming he will direct his questions directly to DSD alone as the author of the Azimuth report which underpins the entire DCO

Transcript

JS “The needs case, we are told, for this DCO, is to be found in the Azimuth report. I have just read the references and paragraph 9.35 identifies that the Azimuth Report considers whether the reopening of the Manston airport in the way intended would be viable. Have you seen that document?”

Mumble

JS “Paragraph 9.35 of the planning statement tells the reader the Azimuth report considers whether reopening Manston Airport in the way intended by Riveroak is viable? That’s what it says.”

DSD “I’m not going to disagree with you”

JS “Right so. The Azimuth report tells the examining Authority and us whether or not reopening Manston Airport in the way intended is viable.”

DSD “The Azimuth Report sets out the full” (break in sound)

JS “I’ll try it a different way. You have produced a forecast for the applicant to demonstrate both a need and the viability of that need. Haven’t you?”

DSD “No I have produced a forecast and the viability was done separately”

JS “It is essential, isn’t it, for a forecast to be forecast to understand whether it is going to occur and consequently whether it’s viable? Correct?”

DSD “That is correct”

JS “Are you saying Dr. Dixon that the Azimuth Report doesn’t do that exercise?”

DSD “As I’ve said the report provides the forecast the viability was assessed separately, I wasn’t asked to come up with a forecast which showed viability or not. I was asked to produce a forecast, whether it was viable or not was not in my hands”

JS “Dr Dixon I’m struggling to understand your answers. A forecast is a prediction of what will happen at Manston Airport and therefore for you to be telling the Examining Authority that this will happen or likely to happen you must think it viable mustn’t you?”

DSD “I disagree. I was asked to produce a forecast in terms of ATMs and tonnage. Whether that was viable is not part of the Azimuth Report.”

JS “So if the Examining Authority wanted to know if your report is likely to come about they will hunt in vain for that in the Azimuth Report? Is that correct?”

DSD “That is correct”

JS “That is helpful, Dr. Dixon, in one sense because we know not to look for that material in your report. Despite what is said in the planning report. Where is that assessment of what you have predicted is viable?”

A period of discussion occurs on the applicant’s table

JS “I’m asking you Dr Dixon, because you are the one who wrote the Azimuth Report, and I’m told you are the one to explain the need for this proposal and the need to take all of my client’s land. That’s where I’m told everything is explained. In fact I’m told your report is explained as the business plan in the Environmental statement. Isn’t it?”

DSD “I’m trying very much to help you in that what I have in the Azimuth Report is quite clearly a need case in that there is a need in the SE of the UK for a capacity for dedicated freighters”

JS “That’s not helping me and particularly as I have limited time. My question to you was “Your report was described as the business plan in the environment statement. We have established that what you predicted is viable. My question to you is where do I find an assessment of whether what you are suggesting is indeed viable?”

DSD “It is not…er….The business plan….er my forecast could not be described as a business plan”

JS “We are going over things I know, can you please answer my question Dr. Dixon. You talked about how important this is in need terms. Where does anyone find an assessment of what you are predicting as a likely occurrence could occur viably?”

DSD “I suggest that is found in a different document”

JS “Where?

DSD “I have not been involved in the production of the business plan” “I cannot tell you the answer to that question”

JS “It’s clear it isn’t in the summary of the business model for the reasons we discussed yesterday. That doesn’t tell you for example how the £306M is financed, the interest on it, what you are going to charge cargo Freighters in order to come from wherever they may be. None of that is contained in that material is it?”

DSD “That material has been obviously produced. But what I’m saying it hasn’t been produced by me and my certainty is that material would be commercially sensitive”

JS “Is the short answer is that there is nothing in the material in front of us that demonstrates the viability of Manston airport?”

DSD “there is nothing in front of us at this time as we discussed yesterday”

JS “And we recognise at para 9.35 that viability is important. It clearly is Dr, Dixon, as you could produce a report with anything you like as theory but if you cannot deliver in viably it’s not going to happen. So it’s clearly vital isn’t it?

DSD “Of course that’s intrinsic to the case, and that the applicant would not be putting a non-viable proposition before the examining authority”

JS “That assertion we say aren’t viable in figures we have demonstrated it isn’t viable, if we wanted to find where you have explained to the examining authority we are going to attract 17170 cargo freighters to this airport, we are going to spend £306M the way we are going to charge them will cover our costs we aren’t going to find any of that information in the materials before us. If it does exist we need to know where it is, Will we find it is any of the material?”

DSD paraphrase “I cannot help you”

The discussion then confirms that DSD cannot confirm that the azimuth report has been costed nor that the forecast is viable.

Conclusion

Clearly Dr. Dixon has plucked figures from the ether to come up with her forecast of ATMs which was easily demonstrated when her freight forecast divided by ATMs equates to half the historic actual tonnage per ATM. It seems there are forecasts and fairy stories.

It is also clear that DSD was unable to even justify her own forecasting ability but then elsewhere she did concede she has no direct experience in airfreight.

Are RSP serious about buying

And the correspondence between parties BDB to SHP 9/2/2018

The reply from SHP to BDB 15/3/2018

BDB's reply 21/3/2018

SHP's response 9/4/2018

Then nothing until after the 17/7/2018

BDB to SHP 18/8/2018

and a reminder on the 18/9/2018

At this point GVA acting for SHP take over and reply on 3/10/2018

Then CBRE for RSP taken over and reply on the 10/10/2018

GVA reply on the 14/12/2018

Nothing further until February 2019 from CBRE

Why is Tony Freudman reinventing himself

Over the last few weeks we have seen renewed activity by the man leading the Manston DCO, Anthony Freudmann. I last wrote about him in this blog.
However this reinvention seems to have taken a strange turn with an American lawyer getting involved.

Apologies for the redacting however National Planning decided it was necessary. The letter from the lawyer was as follows

And the response from the recipient as follows

 What follows is the potted history written to explain the striking off and the full transcript of the case is on my original blog. which is found here

Why is this important? It seems the investors who may potentially put their money into the Manston DCO may be put off by "adverse" stories found on the internet.

He does seem to have a difficult time retaining Ltd Companies as the following list shows

Quoted from submission TR020002-003586-Five10Twelve - Comments on Responses to ExA WQs - Appendices on Funding and Resources
"1. Events ‘alluded to’ and relevance to this application
Regardless of the Applicant’s own concerns as to the relevance, or otherwise, of Tony
Freudmann’s (“TF”) chequered past, it is surely for the ExA to decide whether or not the
“events alluded to” concerning TF’s history as having been struck off from the solicitor’s roll for
27 counts of misappropriation of client’s funds in 1993 are indeed “relevant to this
application ”
.
1.1. With respect to the ExA, we will herewith present statements, fully backed by evidence, to
support our contention that a determining factor in whether or not the events of 25 years
ago are still relevant is the continued history of TF’s financial and organisational
mismanagement and possible involvement in financial impropriety since those events.

1.2. Contrary to the Applicant’s dismissive remarks in response to the ExAs’ question at F.1.1,
TF’s career history indicates disturbing patterns of behaviour with very specific
similarities and absolute relevance to the issues at hand. As such, it is no surprise
whatsoever that the Applicant might wish to portray “the events alluded to” in 1993 as an
isolated and historical aberration before swiftly moving on.

1.3. In the intervening 25 years since being struck off the solicitors’ roll for misappropriation of
client funds, TF has been a serving director of no less than 26 dissolved companies, primarily in the travel and/or aviation industries, many as founder and principle shareholder.

1.4. These include businesses dissolved in 1992/93, 1994, 2004, 2005, 2007, 2009, 2010, 2012, 2016 and as recently as 2017, when his previous failed airport ventures, Annax Aviation Limited and Annax Aviation Airports Limited were both voluntarily dissolved, less than 12 months after a prior compulsory strike-off action had been discontinued for both companies.

1.5. Prior to TF’s own failed travel, aviation and airport businesses, TF was Vice President at
Wiggins Group PLC for 11 years from 1994 until “he was “let go” by Wiggins in February 2005”.

1.6. A supplementary memorandum submitted by the CAA for a House of Commons (“HofC”) Transport hearing regarding Wiggins financial irregularities, mismanagement and failure of its subsidiary business, EUjet, during TF’s tenure reveals that in March 2001, Wiggins Group PLC “ received censure from the Financial Reporting Review Panel and the Financial Services Authority for overestimating its results between 1995/2000 , which on their restatement resulted in significant losses” .

1.7. Wiggins Group PLC subsequently changed its name to Planestation Group in 2004/5,
following a suspension of shares trading, asset write-down, and corporate restructure to repay mezzanine debts and attempt to turn the business around and address pre-tax losses of £12.8m, (down from losses of £27.5m in the previous year), and Group operating losses of £4.2m, (down from losses of £19.4m the previous year).

1.8. During his tenure as Managing Director of Wiggins PLC and latterly as Senior Vice President of Planestation PLC , TF held directorships of associated businesses, Kent International Business Park Ltd, Kent International Airport (Holdings) Ltd, Kent International Travel Ltd and London Manston Airport PLC, prior to these businesses being dissolved in 2005/7 .

1.9. Whilst at Planestation/Wiggins, in December 2003, TF was at the centre of a legal battle with the County of Funen, Denmark, after refusing to pay contracted lease payments at Odense Airport for more than 2 years, amounting to DKK 16 million, (c. £1.84 million). Planestation/Wiggins lost the case and was ordered to pay, with costs also awarded. Local contemporary news reports in Odense quoted TF as saying:
“we can easily pay the arbitration. But by principle and for the sake of our many shareholders, we will be first allowed to read the 50-page decision … but there must be no doubt that we should pay”

1.10. By January 2004, and with the Funen taxpayer owed DKK 18 million, (£2.08 million), and the City Council facing a DKK 6 million deficit, (£0.7 million) as a direct result , a crisis meeting was called by the municipal Odense Airport representative committee to petition for bankruptcy in order to force payment from the UK parent, Planestation/Wiggins. As for TF, doubts had apparently surfaced after all. Local contemporary media reported under its headline “The hunt for Wiggins entered ” that: “Tony Freudmann, Managing Director of Wiggins Group, did not comment on the bankruptcy petition”

1.11. Nine months later in September 2004 - and with Planestation/Wiggins having since pulled
out of Odense entirely - the bill was still unpaid, leaving the Danish taxpayer with a debt now up to DKK 23.7 million, (£2.73 million), plus NOK 900,000 (£79,000) in unpaid VAT , whilst Planestation/Wiggins remarkably - and “according to the rules” - claimed DKK 3 million, (£345,791) as a VAT refund.

1.12. Less than 12 months later, TF’s tenure as Vice President of Planestation continued with the collapse of EUjet in July 200513, a wholly-owned subsidiary of Planestation PLC , operating from the former Manston Airport .

1.12.1. The collapse of EUjet led to questions raised in the House of Commons, (“HofC”), as detailed in the CAA briefing paper of November 200514, which discussed in some detail the litany of errors leading to the collapse, including: “insufficient funds to support the commencement of scheduled operations in the summer of 2004 as originally intended”, a lack of clarity over a £30m cash injection and “what proportion of this additional funding was required to support EUjet”, passenger numbers that were “lower than expected” and a botched plan to sell “75% of the business park adjacent to Manston Airport” which “broke down and led to an eventual cash crisis ”.

1.13. The CAA briefing paper for HofC into the EUjet failure during TF’s previous Manston
Airport tenure as Senior Vice President of EUJet’s parent company, Planestation PLC, also raises concerns as regards irregular and misleading financial reporting of Planestation PLC , in similar circumstances to those which brought censure from the FSA for its previous incarnation as Wiggins PLC, and misleading information provided to the CAA . This is detailed in the briefing paper in the CAA section as follows: “Press reports and the CAA’s own industry sources suggested that EUjet and its parent Planestation were encountering financial difficulties earlier this year. However the
Regulatory Announcements that Planestation had issued to the City indicated that these problems were being comprehensively addressed. The CAA requires regular financial information to be provided by UK licensed airlines for monitoring purposes, but does not receive, nor is able to require, information from non-UK airlines such as EUjet.
The CAA was therefore unaware of the actual financial position of that carrier and, in any case, had no legal powers to act against it .”

1.14. It appears from these sections of the CAA briefing paper for HofC that Planestation PLC
and EUjet had exploited a loophole in the situs of the business and CAA registration.

1.15. As a result, it further appears from this briefing that consumers were again left out of pocket and without a means to claim compensation or recompense from either Planestation PLC or EUjet and a reported “ 5,400 passengers were stranded abroad ”.

1.16. Whilst these reports further support the relevance of the Planestation/EUjet collapse to this case and TF’s pattern of behaviour, contemporary media reports also show direct relevance with regards to the viability (or otherwise) of the current proposed development at Manston :
“Mr McGoldrick, EUjet chief executive, said in a statement that marketing a new airline operation from Manston, which had no recent history of passenger operations, had been “difficult ””; and “passenger targets had not been hit … the Kent operations had underperformed” ;
and “the group had also failed to develop its cargo business at Manston ”.

1.17. Having been “let go” by Planestation on or around the time of its collapse in 2005, TF spent the next 7 years starting, acquiring and dissolving no less than 13 different travel companies.

1.18. Whilst full details are not available for every single failed TF enterprise, some of those reports that are available from failed travel businesses, include Unpackaged Holidays (“UH”) and Travel Club of Upminster (“TCU”), which were investigated by the Department for Business, Innovation and Skills (BIS) after going into administration in 2010

1.19. Much like the Applicant’s current corporate structure, Unpackaged Holidays was anything but “unpackaged”, nestling within a convoluted structure of parents and subsidiaries for purposes unknown, including - as far as we can tell - UH, TCU, Seligo Travel Ltd23, Alpha Prospects24 and Austria Travel Limited.

1.20. The UH and TCU collapse provides evidence of a disregard for the impact on other individuals and businesses as a result of TF’s failures which is not dissimilar to the disdain show to others in the “events alluded to” of 1992/3.

1.21. These impacts include reports that TF’s collapsed businesses “had failed to pay at least 20 hotels and apartments ” , were “unable to continue trading as a result of an inability to meet guaranteed payments” 27 and that customers with future bookings were left with no guarantees of recovering their funds since “the company was not a member of ABTA and did not hold an ATOL”.

1.22. Current CAA advice regarding ATOL29 states that “U K and European law requires travel businesses to financially protect their packages holidays in the countries in which they are established. Businesses based in the UK provide their protection under the ATOL scheme”.

1.23. TF’s current public-facing biography on his own website is somewhat vague and misleading with regards to the period after the collapse of his numerous nested travel businesses in 2010 until his involvement with the Applicant sometime around 2014, talking only of pursuing ‘ his own venture” and delivering “high level consultancy services in relation to aviation and tourism development in both the public and private sectors throughout the UK, Germany and the U.S.”

1.24. Whilst some online biogs might take a similar vague and broad approach in an effort to appear casual and approachable, it is not unreasonable to assume that in this instance the lack of specificity is an effort to conceal, making it as difficult as possible for the reader to check any facts that might lead to the next round of broken promises, failed businesses and other individuals, companies and - as in Odense - entire towns left picking up the tab .

1.25. Certainly, the names of Integral, a.k.a Integeral, and Lahr Airport, a.k.a. Black Forest Airport Lahr, (“BFAL”), seem strange omissions, given their close similarities and relevance to the current Manston proposals. Although perhaps herein lies the problem and the reason for their omission.
1.26. In June 2012, local German news sites reported that the troubled Lahr airport had been taken over by Integral and relaunched as Black Forest Airport Lahr31, (“BAFL”).
Contemporary local reports at the time of the takeover announced:
“the core idea is the founding of a new airline dedicated solely to the cargo business ; and
“the flying fate of the Black Forest Airport (BFAL) is in the future firmly linked with the name Tony Freudmann”

1.27. In further startling similarities to the current Manston DCO proposal , lurking behind these familiar promises of a bright new dawn,” millions in investment and new jobs” at the former regional military airfield, the same contemporary local report somewhat prophetically continued:
“ Freudmann also remains vague when it comes to investments”

1.28. Less than 8 months later and the local news site was reporting on BFAL’s bankruptcy :
“for months, the airport has seen not a tired cent of its parent company ”; and “the employees have been working for three months without pay” ; and “many of the 25 employees have already filed labour tribunal litigation” ; and “since it is clear that BFAL cannot pay its employees, Müller, (Lahr’s Mayor), no longer relies on the promises from London ” ( i.e. TF / Integral)

1.29. 20 years after “the events alluded to” , the patterns are clear, although those 27 counts of
misappropriation of client’s funds arguably look tame in comparison to the 5,400 people
left stranded by EUjet and the misery inflicted on entire towns at Odense and Lahr .

1.30. As TF embarks on his latest “venture” at Manston, perhaps the most chilling words for the
thousands of concerned locals who have voiced their opposition to the proposed development are those of Lahr’s Mayor, Wolfgang G. Müller as he tried to find a way to hold TF accountable after he had walked away from the BFAL disaster:
“40 minutes ago he talked to Tony Freudmann , Müller reports.
‘What did he say?’, one of the journalists present wants to know.
‘Nothing new’ replies the mayor.”

Public Safety Zones

In my submission to PINS 1 I included a section on Public Safety Zones (PSZ) in section 3 and I quote

 “Our submission notwithstanding that 10000 ATM’s are unachievable RSP should have considered whether Manston Airport needs a PSZ because they state that the potential number of ATM’s is 83220 and they also state they will not cap the number of flights. The logic says that both 83220 and PSZ’s are potentially capable they should be considered together (worst case scenario)”¹

However since the submission RSP have responded to a number of questions from the ExA and the answer to questions AQ1.18 and AQ 1.19 are relevant to the point of PSZ’s and their “worst case scenario”.

In particular the answer to the number of flights is being capped at an annual 26,468 (as opposed to the potential capacity of 83220 which was an exercise in foot in mouth publicity). This however doesn’t change the dynamic of PSZs which are an absolute requirement for any airport which proposes more than 1500 Air traffic movements (ATMs) per month or 18000 annually.

“Given the concern expressed about this issue in relevant representations and the Examining Authority through its questions, and since the Applicant does not expect the number of ATMs assessed in the ES to be exceeded, it is now adding an annual limit of ATMs equivalent to the number assessed in the ES, namely, 17,170 cargo plus 9,298 passenger movements, i.e. 26,468 movements in total. This cap has been included in the revised Noise Mitigation Plan (TR020002/D3/2.4) being submitted at Deadline 3. This total includes the movements generated by the 3 recycling stands but does not include general aviation movements.”

There are several issues here however it doesn’t invalidate the original statement from my original submission as both are above the 18000 annual ATMs.

Firstly I make the point that at no time have RSP/ROIC ever consulted with the population most affected about either 83220 or 26,468 ATMs, neither have they ever made this a “worst case scenario.

 “It is not the role of the ExA to consider RSP’s consultation process. NNF understands that. However, the proposal now before the ExA is not the proposal that RSP consulted on (we deal with this in our submission NNF01 Section B). In addition, RSP’s habit of systematic misinformation during all of its consultations casts doubt on the extent to which the developer is fit and proper to own and operate an infrastructure project of national significance. In our view, this is an issue that should be considered by the ExA.”²

Secondly the point that more than 18,000 ATMs is now the cap on flights should mean a PSZ at both ends of the runway should be a major part of the Environmental Impact Assessment (EIA), and should therefore be part of any compensation offered to those residents impacted within the PSZ.

As one end (to the West) extends over relatively open countryside I have limited the area of PSZ to the East where most residents live. I have also modelled the area of Manston Green (785 houses given Planning Permission but yet to be built) onto the PSZ. The blue triangle indicates the 1:100000 risk contour and the red the 1:10000. This is modelled on the Bradford / Leeds airport but is similar to many regional airports.

³ THIRD PARTY RISK NEAR AIRPORTS AND PUBLIC SAFETY ZONE POLICY

Conclusion

It is apparent that there is a reason that RSP/ROIC have consistently refused to discuss PSZs in their consultations and in their DCO submission and that is the possibility that compensation payments would create a cash flow problem as Manston Green (Southern) falls under the 1:10000 contour where under normal circumstances no building would be allowed. Even inside the 1:100000 restrictive planning legislation would make compensation much more likely and therefore less affordable to RSP/ROIC. ⁴

^1.           https://infrastructure.planninginspectorate.gov.uk/wp-content/ipc/uploads/projects/TR020002/TR020002-002993-Barry%20James%20-%20Written%20Representation.pdf

^2.           NNF12 (available on PINS as a zip file)

^3.           Appendix 1 (THIRD PARTY RISK NEAR AIRPORTS AND PUBLIC SAFETY ZONE POLICY)

^4.           Appendix 4 (Control of planning within a PSZ)