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Representation by Kent Facilities Limited

Date submitted
8 October 2018
Submitted by
Members of the public/businesses

PINS Reference: TR020002 Relevant representation of Kent Facilities Limited (“KFL”) in relation to the DCO application made by RiverOak Strategic Partners Ltd (“RSP”).

  1. Introduction 1.1. KFL is an affected party as holder of a first legal charge over the land owned by Stone Hill Park Ltd (“SHP”) that forms the vast majority of the land to which the DCO application relates, and over which RSP is seeking compulsory acquisition powers.
    1.2. This is a unique DCO application for many reasons, including most notably; • it being the first airport DCO, but clearly not what was intended by the Planning Act 2008 with material issues regarding its compliance with the s23 criteria;
    • the lack of robustness and independence of the evidence presented to support the need case (the project is not supported by an NPS), which has been contradicted and shown as having no credibility by numerous experienced, well regarded aviation industry experts;
    • the lack of any evidence to enable the Examining Authority (“EXA”) to determine funding could be secured to complete the proposed project;
    • the lack of transparency over RSP’s beneficial owners and lack of evidence regarding the track record of the directors (and failure to disclose that record); • the scale of the compulsory acquisition powers sought by a private entity with anonymous owners; • the scale and nature of the purported “associated development”; 1.3. KFL strongly objects to the application and wishes to take part in the examination. The key subject areas that will be the subject of the written representations are summarised below.
    1.4. We apologise for exceeding the recommended length of representation, however the factors noted in paragraph 1.2 make it difficult to properly address the key issues without doing so.

  2. NSIP Justification 2.1. We understand PINS accepted the information contained in the NSIP Justification at face value in making its determination regarding satisfaction of the s23 test.
    2.2. The claim that existing capability is zero is based on inaccurate information and is contradictory (e.g. the claim the fire station has no roof is false and is contradicted in paragraph 6.7.2 of the Statement of Reasons).
    2.3. Should the EXA determine that the 4 arguments raised by RSP to justify its claims of zero capability cannot be substantiated, it follows that the project is not an NSIP, consistent with PINS’ s51 advice on the withdrawn April 2018 application.

  3. Lack of any robust evidence to support the need case or forecasts
    3.1. Without NPS support for the project’s need case, the quality, reliability and independence of the aviation evidence is of critical importance. RSP engaged [Redacted] of Azimuth Associates, who from a review of the website and LinkedIn profile had limited credentials prior to engagement by RSP. The most relevant experience appears to be from 2000-2001 when Dr Dixon worked “with colleagues to produce the Master Plan for Manston Airport”. RSP director [Redacted] was a colleague (Senior Vice President, Wiggins Group) with responsibility for Manston Airport at the time. 3.2. The DCO case is based on highly partial and deeply flawed “evidence” presented in document 7.4 (Azimuth Report). Its forecasts and conclusions have been contradicted and shown as having no credibility by numerous experienced, well regarded aviation industry experts including York Aviation, Altitude Aviation Advisory (both for Stone Hill Park Limited (“SHP”)) and AviaSolutions (acting for Thanet District Council), who have the necessary depth of expertise to dissect the misleading assertions, highly selective use of references and baseless conclusions that characterise the Azimuth report.
    3.3. For example, a high level review of the UK market shows RSP’s claim they will target daytime cargo flights to / from non-UK destinations and deliver >10,000 cargo daytime flights in the 5th year of operation lacks any credibility.
    Since 2000, the number of cargo flights in the UK has halved (as bellyhold capacity and connectivity has increased), whilst also consolidating at East Midlands and Stansted airports, where the main integrators (DHL, UPS, Fedex and TNT-ASL, who dominate the dedicated cargo flight market) have investing heavily in basing operations – there is also significant additional unutilised capacity at other UK airports.
    CAA statistics show that East Midlands and Stansted airports accounted for c.21,500 of the c.29,000 non-UK cargo flights in England & Wales in 2017 - of these, c.50% of the cargo flights using these two airports operate as night flights, meeting operational requirements of the express integrators. Therefore, despite Manston’s vastly inferior geographic location and status, the stated plans of other existing airports to increase capacity further and the consolidation of the UK’s logistics capacity in the corridor between London and Manchester, RSP claim that within 5 years of opening, a reopened Manston will secure c.50% of all non-UK daytime cargo flights in England & Wales. This is not remotely credible. 3.4. It should be noted the local plan being progressed by the local Council does not seek to protect the existing airport use, nor can it lawfully do so, as its own up-to-date evidence base (the reports prepared by AviaSolutions) confirms that the airport is very unlikely to be financially viable in the longer term. 3.5. In view of the above, the EXA must have due regard to both the independence and robustness of the evidence prepared by Azimuth. It is appreciated that there would be a cost to the EXA in appointing its own aviation industry expert (as technical assessor) to provide the panel with its own independent expert advice, however we consider the complexity of the air freight market in the UK and the far reaching consequences of the EXA’s decision in this case would support such an appointment.

  4. Lack of any evidence to demonstrate viability or that funding could be secured:
    4.1. Despite PINS advising (May 2018) that the first Funding Statement was inadequate, RSP was unable to address this in its 2nd application as noted in PINS’ s51 advice following acceptance. 4.2. RSP claims it has secured commitments for £15m for statutory CPO obligations, blight and related costs and acknowledges it has no funding secured for any construction costs. A letter from PwC stating that amounts held in two different bank accounts (of anonymous individuals) on two different dates exceeded £15m is the sum of the “evidence” provides no comfort. 4.3. RSP’s Funding Statement claims it has “obtained advice from surveyors CBRE that the total cost of acquiring the necessary land for the project at its value in the ‘no-scheme world’, the basis upon which compensation for compulsory acquisition is calculated, as no more than £7.5 million.” The wording is exactly the same as in the withdrawn April 2018 application and appears to be based on the misleading position presented in paragraph 8.106 of the Planning Statement which claimed the new local plan would protect the site for aviation use. Well before it submitted its second application, RSP were aware that aviation only policy protection could not lawfully be retained, as noted in the local plan now being advanced. Therefore, EXA can take no comfort over the relevance of the “CBRE advice” or that the £15m that is purported to have been committed is sufficient to cover the CPO costs. RSP must be required to provide written evidence confirming whether or not the CBRE “valuation advice” reflects emerging local plan and is fully consistent with the compulsory purchase valuation principles. 4.4. No case at all has been presented to either demonstrate the project’s viability or that £300m of construction costs could be funded. RSP fails to provide the requisite information that would allow any reputable, rational investor to undertake even the most basic preliminary assessment of the viability and fundability of the project. In absence of this information, the EXA will be unable to assess whether the project has any prospect of securing funding. The failure to provide any evidence (or disclose the identity of the beneficial owners / “investors”) fuels suspicions that this is no more than a speculative attempt by anonymous investors to use the DCO process to secure CPO powers over SHP’s site.

  5. Compulsory Acquisition 5.1. The DCO application seeks approval for powers to be granted to RSP (a private entity, the beneficial owners of whom are hidden behind an offshore corporate veil) to compulsorily acquire substantially all of the land to which the project relates. The land is currently owned by Stone Hill Park Ltd (“SHP”), a UK private entity pursuing its own plans for the site, which includes a heritage airport. The vast majority of this land is the subject of legal charges in favour of KFL. 5.2. We have not been able to identify any other DCO where CPO powers have been granted over as large a single land holding (732 acres held by SHP and charged to KFL) to another private entity, or where the promoter controls such a small area of the land to which their application relates.
    5.3. To accept the principle of an applicant being able to claim a project satisfies the NSIP criteria under s.23(1)(b) of the PA2008 (“the alteration of an airport”), despite it also requiring powers to compulsory acquire every part of the existing airport that is subject to the alteration, would effectively leave every other airport in the UK open to a hostile takeover by a third party via the same route taken by RSP. Based on the logic of RSP’s NSIP Justification, all they would need to do is to seek planning for 3 additional aircraft stands to increase capability by >10,000 cargo aircraft movements per annum and so satisfy the s.23(1)(b) criteria. Irrespective of the prospects of success, based on this project’s precedent, any similar application from a hostile third party relating to an existing UK airport would be able to proceed to examination, which in itself could have a blighting effect on affected parties.
    5.4. This DCO is breaking new ground and is unique for the many reasons set out in these representations. Any recommendation from the EXA to grant CPO powers would set new precedents and would be subject to intense scrutiny by experts across the UK. Accordingly, the EXA should be permitted access to both technical expertise (to assist it in understanding the complex air freight market) and sufficiently detailed information to allow it to assess viability and fundability of the project.

  6. Land required for the proposed project 6.1. The scale of the proposed project is far larger than required to accommodate the full year 20 forecasts, and any development beyond phase 1 (of 4) would be subject to market and demand suggesting land requirement would be far smaller. Indeed, its full plans show a capability that could handle over 83,000 cargo flights – per the CAA statistics, the total size of the England & Wales market (including intra UK flights) was only c.42,000 in 2017 (or c.30,000 excluding night flights). There is a strong concern that the DCO process has been hijacked to facilitate a land grab and the project has been designed to maximise land use, in direct contravention of the guidelines. 6.2. We have been unable to identify any other DCO project that includes as much “associated development”, or one where significant parts fall completely out with the relevant definition as described in the relevant guidance. The failure to provide any evidence on viability (and no granular detailed costings and revenue assumptions on a compartmentalised basis between NSIP and each element of “associate development”) also makes it impossible for the EXA to determine the extent to which elements of the proposed project are included to subsidise the purported NSIP development. 6.3. RSP’s failure to properly consider any alternative locations is evident in Chapter 2 of the Environmental Statement, with the key unique advantage of the SHP site stated as being the “an existing 2,748m paved runway”, i.e. something that would save RSP many tens of millions of pounds. The report fails to even consider the number of ex RAF airfields being sold off by Government, that are far better located for cargo operations.

  7. Track Record of Promoter and Principals:
    7.1. The promoter (RSP), its directors and owners have no demonstrable successful track record in successfully developing or operating an airport.
    7.2. RSP is a newco SPV, with no parent company with other airport interests. 90% of the shares in RSP are held by M.I.O. Investments Ltd, a Belize registered entity established as a specific funding vehicle to hold the anonymous investors’ financial interests in the Manston project. Nothing further is known about the identity of the beneficial owners of the 90% interest in RSP, who are shielded behind an offshore corporate veil.
    7.3. The investors who RSP claim to have committed £15m are unknown and it is not clear if they are the same persons as the beneficial owners of the Belize entity or not. Nothing is yet known, which is in direct conflict with previous assurances given by RSP, including in its press release from 30 March 2017 [Redacted] which included the following unfulfilled commitment; “Additional, comprehensive details of our funding partners and investment arrangements will of course be provided to PINS as part of the DCO application, providing solid evidence of our ability to meet all of the financial obligations associated with the acquisition, reopening and operation of the airport.” 7.4. The track record of the directors and their involvement in airport projects must be fully disclosed and examined. This would greatly assist the EXA in determining the credibility of the RSP team, its intentions and the prospects of RSP being able to secure funding from reputable investors/funders to develop the proposed scheme.

  8. Significant gaps in base survey data that demonstrate the application has been made prematurely:
    8.1. There are significant gaps in the base survey data and analysis that would make it impossible for the promoter to comply with procedural requirements to have the effects of its scheme considered, consulted on and assessed as part of the examination and importantly the impact on any mitigation plans/strategies that would require to be approved under DCO requirements. Arguably the most fundamental is the lack of transport strategic modelling, which further impacts the noise, air quality, health and other analysis in the ES. It is uncertain how any decision could be made on the DCO application without this fundamental work having been carried out, the impacts fully assessed and consulted on in a timeframe that would allow the position to be properly assessed in the Examination.
    8.2. Other gaps include the failure to take into account the proposed project’s impact on community facilities and housing requirements and complete failure to assess the requirement for Public Safety Zones or assess/consult on its impacts.

In conclusion, it is clear the application documents are infected with fundamental flaws and material omissions that requires it to be exposed to a rigorous examination by the EXA, covering all of the issues highlighted above and the numerous other concerns regarding how the environmental impacts have been assessed. In view of the uniqueness, complexity, level of public interest and potential for setting inappropriate precedents, we trust that EXA will give due regard to the requirement for; • a panel of examiners; • technical assessor to provide expert/independent advice on the highly complex air freight market; • RSP to provide the necessary information to address material gaps in its Application to ensure the EXA can properly assess the project, its viability and ability to secure funding.