A personal view by Peter Forbes,
Director, Alan Stratford and Associates Ltd
The long-running saga of the proposed freight hub at Manston Airport continues despite the Government’s decision to grant the Development Consent Order (DCO) against the recommendations of the Planning Inspectorate. Riveroak Strategic Partners (RSP) is planning to invest some £300m in the development which it claims will create over 23,000 jobs in East Kent and the wider economy by its 20th year of operation.
Will it ever be commercially viable ?
But despite the go-ahead, there are fundamental question marks about Manston’s commercial viability, which was not assessed or taken into account either in the Government’s decision nor in the Planning Inspectorate’s analysis. The key disadvantage of Manston is its remote location in the far south east of the UK, which increases the time and cost of onward trucking within the country. This is particularly important for perishable items and it is not surprising that many of the larger supermarket chains have their main distribution centres in the ‘Golden Triangle’ within the East Midlands.
The scale of the project is ambitious, but this was necessary in order to warrant consideration for a DCO. As an aviation economist, I can safely say that Manston, irrespective of the level of investment funding, will never attain the cargo throughput to make the hub financially viable, which RSP say is between 150,000 – 200,000 tonnes per annum.
This would represent nearly a quarter of all dedicated freighter traffic in the UK in 2019. Growth in this market in the UK has been virtually static over the past decade (an increase of just 0.8% pa between 2010 and 2019) and, whilst there has been some improvement in dedicated freighter traffic during the Covid-19 pandemic, this growth is likely to be short-term once the passenger market recovers. The reality is that air freight is often carried more cost-effectively as bellyhold cargo on passenger aircraft rather than in dedicated freighters. Furthermore, the future demand for air freight will be constrained by increasing costs as the aviation sector endeavours to meet its climate change commitments.
Over 84% of the UK’s dedicated freighter traffic is focused on three hubs at Heathrow, East Midlands and Stansted airports, where the main freight consolidators, Fedex, UPS and DHL, have their main bases. There is no reason to suppose that they would abandon these in favour of Manston. Whilst it is recognised that there can be slot constraints at these airports at certain times , there are other centrally-located airports such as Birmingham and Doncaster Sheffield which would be preferable to Manston. Furthermore, and of crucial importance, these airports have no night flight constraints, whereas RSP has committed to no night flights at the proposed Manston hub. Night flights represent nearly one half of all dedicated cargo flights and are particularly important for perishables and other fast-moving consumer goods (FMCGs).
It is difficult to see how Manston will now suddenly be able to attract cargo airlines to the airport when its previous owner, Infratil, were unable to do so. Whilst some investment will be necessary to make the airport operational, this would not dramatically change this position. Other airports handling freight traffic already have up-to-date facilities with available capacity in place. Any investment in Manston would be unlikely to give it any competitive advantage.
Similar considerations apply for possible passenger flights at Manston, although these would be on a smaller scale than dedicated freighter traffic. There was an attempt to introduce passenger flights in the 1990s, when the then-owner, Planestation, established its own home-based airline, EUJet, at the airport, although this was short-lived. A new rail station at Thanet Parkway has recently been given the go-ahead by Kent County Council but although this is relatively close, passengers would still need to be bussed to the airport. The reality is that nearly all smaller regional airports in the UK were losing money even before the Covid-19 pandemic, so it is difficult to see how Manston might be any different.