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Manston airport: US-based RiverOak refuse to rise to comments by Ann Gloag raising 'serious concerns' about their corporation

27 August 2014
by Paul Francis

To say Thanet council is treading cautiously over whether to use planning powers to acquire Manston airport is an under-statement.

That caution is warranted. There is no precedent for a public authority to take over a commercial airport through a compulsory purchase order (CPO).

The legal technicalities are complex in any CPO, and the authority is acutely aware that it needs to build a watertight case to overcome any legal issues it may face.

The last KLM passenger flight leaving Manston airport. Picture Tony Flashman

The last KLM passenger flight leaving Manston airport. Picture: Tony Flashman

That may help explain why, when Thanet council’s Labour administration met at the end of July, a report setting out a possible way forward was hedged with caveats and qualifications.

Many were based on an assessment by consultants of Manston’s viability. The consultants’ central conclusion was that nothing less than a 20-year business plan and investment of £100m would be needed to succeed as a commercial venture.

“There are never guarantees of success,” stated the report.

“Moreover, this will require full council and national political support and is a huge undertaking.”

The council’s chief concern over a CPO is not simply the question of whether it will succeed but the potential costs.

Thanet council has confirmed its chief executive is on a leave of absence

Thanet council is considering launching a CPO for Manston airport

The same report warned that while the council would have a strong case on public interest grounds, the council would “have to be able to demonstrate the case was a compelling one to justify interference with private property/human rights”.

It is difficult to imagine that Ann Gloag, the founder of Stagecoach and Manston’s owner, would simply roll over and acquiesce meekly to a CPO.

This is especially so given the potential value of the site should it be sold for residential development.

A great deal is at stake, and the council’s immediate concern is to find a partner who is prepared to team up with it to absorb the costs.

Manston airport site owner Ann Gloag

Manston airport site owner Ann Gloag

It already has one offer: the American investment company RiverOak has set out a detailed proposal under which it would underwrite the costs incurred by the council.

The company outlined to the Airports Commission at the weekend how it believes Manston could solve the UK's growing concerns about rising air capacity needs.

However, its offer to finance a CPO is in limbo after the council decided to issue what is known as a Prior Information Notice, inviting tenders for what it described as a “soft marketing exercise”.

This would explore whether there were suitable indemnity partners to team up with the council to initiate a CPO and invest in the airport.

Connecticut-based RiverOak refused to rise to comments by Mrs Gloag that suggested she was unlikely to do business with them.

RiverOak spokesman Tony Freudmann, who was managing director of Manston Airport from 1997 to 2004

RiverOak spokesman Tony Freudmann, who was managing director of Manston Airport from 1997 to 2004

RiverOak spokesman Tony Freudman – who was manager of Manston airport from 1997 to 2004 – said the company had no comment to make in response to the comments made by Mrs Gloag in an interview in which she said she had “serious concerns” about the way the corporation “conducted their business with us”.

She also said there was a question mark about whether RiverOak was committed to maintaining Manston as an airport.

RiverOak said it would not be responding to the comments and would only make public statements “when it had something significant to say”.


Saving Manston: the key questions

When will Thanet council decide whether to pursue a CPO?

We don’t know. All that it has agreed so far is to issue a Prior Information Notice, which the council describes as a “soft marketing exercise” to test whether there would be suitable partners to effect a CPO (compulsory purchase order) and make the necessary investment in Manston.

However, this does mean that the clock is now running, and it has the advantage of shortening the timescale for evaluating responses.

A Flybe flight leaves Manston airport

A Flybe flight leaves Manston airport

What happens after this stage?

Thanet council will evaluate offers, and if it decides there is “sufficient market interest” it will press ahead with a formal tender process to find a partner to pursue a CPO.

Hasn’t the council already used consultants to assess Manston’s viability?

It has, but that report was an initial review and limited in scope.

The council says it now needs a more detailed analysis of Manston’s capacity to attract new operators, and to decide whether the “significant costs” of a CPO would be covered by a “suitably qualified partner”.

Assuming it does decide that the CPO costs would be covered, what is the timescale then?

The council would then offer a formal contract to a partner to pursue a CPO – a process that could conceivably take several months.

What will happen at that stage?

The council would need to hold a special meeting of councillors to approve a CPO.

Assuming that was supported, the council would then advertise it.

The airport owner would be able to object. If that were the case, there would have to be a public inquiry.

How long that would last is anyone’s guess, but more complex issues generally mean longer inquiries – lasting anything up to a year.

The council pursued a CPO over Dreamland, which took three years to come to a conclusion.

Who would decide whether to grant a CPO?

A planning inspector would consider the decision and send a report to the secretary of state, who would either confirm or reject the application.

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