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.