RiverOak Seeks To Develop UK Cargo Airport

U.S.-based private equity firm RiverOak Strategic Partners announced on Oct. 4 plans to begin the process of securing approval from the U.K.'s Civil Aviation Authority (CAA) to reopen Manston Airport for short-haul and cargo operations, with initial flights slated for 2022.
In addition to needing a development consent order (DCO) to build Manston Airport, RiverOak must secure approval from the CAA for its use of airspace and procedures to enable safe and efficient operations to and from the airport.

RiverOak intends to redevelop the site, providing standing for eight freighter aircraft and three stands for passenger use. Airport improvements also would include cargo storage and handling and a new passenger terminal. RiverOak has estimated redevelopment costs of £306 million ($377 million).

In June, RiverOak indicated that the project has "attracted significant interest from a wide range of further institutional investors based in the U.K., the Far East and North America." RiverOak has not identified potential investors. RiverOak has stressed that project funding is not dependent on any public source, government subsidy or guarantee or any access to borrowing or grants from U.K. or European funds.

Manston, which is 80 miles from London and has one of the longest runways in Europe, dates back to World War I and was used as a base for Royal Air Force (RAF) squadrons during World War II. The airport and runway were featured in the James Bond film "Die Another Day" in 2001, when the airport was used to portray a North Korean airbase.

The last KLM flight left Manston in April 2014 and the airport closed in May. In spite of efforts to retain the loss-making airport for its original use, a majority stake in the 800-acre site was sold to redevelopment specialists with ambitious plans to sink £1 billion into the project over 20 years.

Property developer Stone Hill Park, which had planned to turn the site into a development of up to 4,000 houses and commercial and business space, agreed in July of this year to sell the land to a RiverOak subsidiary for £16.5 million after controversial proposals to build 2,500 houses on the site were rejected in January 2018 by the local district council.

The sale to RiverOak marked the latest chapter in the on-again, off-again story of the airport. 

In October 2013, Ann Gloag, co-founder of U.K. bus operator Stagecoach, agreed to pay a symbolic price of £1 plus accrued debts to buy the airport from infrastructure investment fund Infratil, its New Zealand-based owner. Gloag sold Manston to Stone Hill Park in 2014. Infratil had picked up Manston, its second U.K. airport, in 2005 from the administrator of the Planestation Group for £17 million, planning to expand as an operator of regional airports in Europe.

RiverOak predicts initial annual throughput at 174,000 tons of air cargo and 680,000 passengers, with both numbers expected to double after about 20 years, according to an analysis by consulting firm Azmuth Associates that was last updated in July 2018.

An analysis by consultancy Altitude Aviation Advisory Ltd. in February, commissioned for Stone Hill Park in relation to potential air cargo demand, disputes the Azimuth forecasts. The analysis was completed prior to the sale of the Marston site to RiverOak.

The Altitude analysis maintains that Manston historically has acted solely in a niche role as an air cargo airport and there is not potential for a more significant future role. The Altitude report maintains that poor location, lack of critical mass, lack of a passenger hub and night flight restrictions mitigate against Manston's becoming a viable commercial project.

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