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QUEST MEANS BUSINESS
EU's Transport Commissioner Says Chaos is Unacceptable; Three CEOs Look Back at 2010
Aired December 21, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It's a cold warning. EU's transport commissioner says the chaos is unacceptable and standards must be set.
Start raising interest rates now, the Bank of England loan hawk tells me tonight.
And three chief executives look back at 2010. Well, it could only be "The Boss".
I'm Richard Quest. I mean business.
Europe's busiest airports tonight continue to remain under pressure, even as some runways become open and travelers get moving again. Let me bring you fully up to date with what's happening at London's Heathrow Airport. The second runway, the southern runway open, but flight schedules ragged. Terminal 5, T5 is said to be closed as stranded passengers crowd the concourse. Eyewitnesses say they are seeing guards on the door of T1 stopping anyone else coming in. British Airways now may put travelers on buses and send them to other airports. The airline said to be losing $15 million a day.
It is not just in the U.K., in France and Paris, Frankfurt in Germany, severe disruption delays and cancellations.
And if you were going to take to the rattlers, the queues on the train for the Eurostar outside St. Pancras, the queue has gone. But Eurostar says it is planning to operate a near normal service. For anyone whose train has been canceled between Sunday and Tuesday you are out of luck, all the trains are full now until December the 26th.
Things may be easing up just a little bit and for those who are waiting at various airports and train stations that is good news because it does mean more people will get home for Christmas. Our Atika Schubert, who has spent hours in the cold at Heathrow Airport, has been speaking to stranded passengers. Here is what she told me a short while ago.
(BEGIN VIDEO CLIP)
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT (On camera): A huge improvement, but there will still be significant delays and a few cancellations tomorrow. Because remember there is that tremendous backlog of flights. So they really still having to play catch up here. So its good news, but people should still limit their expectations and definitely call ahead to find out if that flight is still confirmed.
QUEST: And as we look towards the rest of the week and the possibility of maybe more snow, what are you hearing at Heathrow about their preparedness in case things do turn nasty?
SHUBERT: Well, they have brought on a lot more staff, and so they do seem to have more of that manpower to clear whatever snow and ice comes along. The question is do they have enough equipment? Obviously they may not be able to get quite the right equipment this time around but there does seem to be an awareness that they are a little bit better prepared.
However, again, there is that tremendous backlog, so if there is more snow and ice, it does mean that passengers who are now possibly booked for Christmas, or after Christmas, may just get pushed further back. And that could be a significant problem.
QUEST: That is in the future. Tonight, at Heathrow, is there a feeling, Atika, that it is the beginning of the end of this part of the crisis?
SHUBERT: Well, there is a lot of hope, but people don't want to pin too much hope on that. Because really they just want to know-they won't really be convinced until they are actually on a flight and it takes off. There are too many cases of passengers, they say, where they have got the ticket, they have boarded the flight, and then just stayed in the plane for hours. And they say, until they've actually had the wheels off the ground, and they are in the air, they are not going to be convinced.
QUEST: Atika Shubert at Heathrow Airport.
The blame game, recriminations now well and truly underway; U.K.'s Transport Minister Philip Hammond says some of the chaos that has been seen at Heathrow could have been avoided. And he blames Heathrow operator, the BAA for being overly optimistic when the cold snap started.
(BEGIN VIDEO CLIP)
PHILLIP HAMMOND, U.K. TRANSPORT SECRETARY: This is as a result of extreme weather conditions and also, to be frank, of a bad call on Saturday by the airport operator who was, as it turned out, over optimistic about their ability to keep the airport open. And when something goes wrong at Heathrow, because it is an airport that operates very close to capacity in normal operating mode, it all backs up very quickly.
QUEST: That is the U.K.'s transport minister.
Well, politicians are certainly feeling the heat from the traveling public and they are responding. The Vice President of European Commission Siim Kallas is taking on the airport operators. He said in a statement, "I am extremely concerned about the level of disruption to travel across Europe cause by the severe snow." He said, "It is unacceptable and should not happen again."
This is the key point, though, from the European side. Airports must "get serious" about planning for these kind of severe weather conditions.
A short while ago, on the phone from Estonia, I asked Commissioner Kallas how far he was prepared to go to make sure that promise and airports live up to their game.
(BEGIN VIDEO CLIP)
SIIM KALLAS, VICE PRESIDENT, EUROPEAN COMMISSION: One idea, what we have already discussed sometimes, is to prepare some kind of, or establish some kind of set of standards. And then to create necessary regulations to follow these standards. This is my idea, of course, there always will be risks. You never can say there will be no snow, or something else. There are risks. But the question is, are these risks fair proportionally, is the responsibility proportionate. That is a question.
Why these standards? I think we probably can a little improve the situation and learn something from today and these last days' events.
QUEST: So, it is fair to say, Commissioner, you are-you are firing a broadside to the industry tonight, aren't you? You are saying get your act together or I will get it for you?
KALLAS: No, I think that it-as I said, it must be proportionate. If you decide to travel via air, then you always must be prepared that nature can bring some surprises. Also, proportionate share of risks must be shared by passengers.
QUEST: Finally, Estonia, the euro, you are in your own country, and now as the heads towards it. Any last-minute regrets on the euro question?
KALLAS: No. No, you know, that I was quite instrumental in creating our national currency, but it was from the beginning clear that we would sometime enter the bigger monetary security system. Which is functioning- we will function within a bigger system. Yes, it is a little nostalgic, of course, sadness, but it is a normal process. And we will meet this new era, also, with expectations and hope.
(END VIDEO CLIP)
QUEST: That is the EU transport commissioner (sic) Siim Kallas. For those of you not familiar perhaps, Estonia joins the euro on January the 1st on 2011. Which is why, of course, he is in his home country and we were talking about that.
So much for the travel, let's return to our normal agenda of economics. When we come back after the break, this man is the lone voice in the Bank of England Monetary Policy Committee. He's Doctor Andrew Sentance. And when we return he tells us why he's pushing for higher interest rates in Britain.
QUEST: On Wednesday morning the Bank of England will release the minutes of its December Monetary Policy Committee meeting. The MPC, of course, sets U.K. interest rates.
We know the MPC voted hold rates, excuse me, at historic lows. What we don't know is by what margin. Come and join me at-in the library.
The historic low rate is 0.5 percentage point. It has been at that level for 21 months. Now, just the same with the Fed, the ECB, and of course, with the Bank of England, the big issue is when start withdrawing the monetary stimulus. Because as half a percentage point, this is not just accommodative, this is absolutely giving away money. It is a fire sale on interest rates. The argument in favor of course, of starting to raise rates is one of inflation. The November minutes from the Monetary Policy Committee, said the following, "Monetary policy should be used to reinforce the expectation that inflation would fall back to the target through a well-communicated policy of gradually increasing bank rates."
The minutes of the meeting, here, just say one member expressed that particular view. So which member is it? Well, it is probably Andrew Sentance. Andrew Sentance has been in favor of raising rates and he's been the lone voice on the MPC calling for a rise in interest rates.
Which raises the question, why would anybody want to raise rates? First of all, we need to know about Doctor Andrew Sentance. Andrew Sentance has been on the MPC since 2006. He's formerly a chief economist for BA, British Airways, and the head of environmental affairs. For the CBI he is the former director of economic affairs. He is the lone hawk who wants to raise rates in the U.K., at this time.
A question for him, when I asked him whether he was mad, is why he wanted to raise rates. (BEGIN VIDEOTAPE)
ANDREW SENTANCE, MONETARY POLICY COMMITTEE, BANK OF ENGLAND: Well, my view is based on fact that the economy has turned around a long way over the last 12 to 18 months. In the middle of last year we put in place quite exceptional policy settlements. We cut-policy settings. We cut interest rates to 0.5 percent. We have injected 200 billion pounds worth of QE into the U.K. economy. And we did that quite rightly and I fully supported it. Because of the worries about recession and the after market financial crisis. But now the world economy is growing, the U.K. economy is growing and inflation has been above target rather than below it. So coming from a very low level I think it is quite right to begin to gradually move interest rates up.
QUEST: OK. So, one other thing, every time I hear the minutes and I've heard your votes, I always sort of put down my cup of coffee and I say, Good grief! What's the man thinking? Doesn't he realize we're not out of this yet? But now I get the chance to say, Good grief! What are you thinking?
SENTANCE: Well I believe that we can still keep monetary policy relatively supportive of the recovery, but not at such a low level of interest rates as 0.5 percent. And I think we have to recognize that we took the level of interest rates and the settings of monetary policy to some quite extreme settings. And that was quite right in the situation we finished-we faced in mid-2009. But the quid pro quo of that argument is that as the economy improves, and it has improved.
And as we get more information about how inflation is proceeding, we should be prepared to adjust the settings of policy. Not to hike interest rates, as people say, but to gradually move them, so that they are less stimulative for the economy.
QUEST: Do you think your message has got slightly lost in that regard? You are seen as somebody who would hike rates when actually what you are really calling for is nothing more than a smidgen on rates?
SENTANCE: I'm not just calling for a smidgen on rates, because I think I'm calling for us to send a signal that the policy has shifted, and is beginning, and may shift further. But I think the reason I would like to proceed gradually in terms of raising interest rates is because there are obvious sensitivities about uncertainties in the global economy and the U.K. economy. Confidence is inevitably at this stage of the cycle quite fragile. And so we don't want to deliver a big shock to interest rates. And actually it is one of the arguments I think in support of my view, is that if we leave interest rates at low levels. And then we find that inflation continues to run above target and growth continues to be OK. We may actually find ourselves having to raise interest rates more quickly than I would like in the future.
QUEST: The U.K. economy has a spectacularly poor record, doesn't it, in terms of inflation taking off quite suddenly? There are unique factors within the U.K. economy that means that inflation is always bubbling underneath, ready to explode.
SENTANCE: I think that might have been true in the `70s and the `80s. I'm not sure it has been true since the mid-1990s, where we have actually managed to anchor inflation expectations and the way they impact on wage setting and price setting, around the inflation target.
Now, what I'm concerned to do is to keep us in that mode. I think the danger that we face is that if we persistently run with inflation above target, confidence in the Bank of England's Monetary Policy Committee and the inflation target will begin to erode. When that confidence is eroding it is much, much harder to get it back.
QUEST: Ultimately, no matter how much stimulus is put into the economy, it is the private sector that will drive this recovery.
SENTANCE: That is exactly right. And that is what we saw in the last recovery in the mid-1990s, coming out of the early `90s recession. We saw a fiscal consolidation from the conservative government then. And we saw the private sector creating jobs and creating the growth that the economy needed.
QUEST: Do you get the feeling that the private sector in the U.K. is in fit enough shape to start pulling the train and to start playing its role?
SENTANCE: I think there are quite a few positive signs that the private sector can play that role through this recovery. The first positive sign is the resilience of many companies through the recession. We hadn't see the rate of company failures we have seen in previous recessions. And we have seen employment be more resilient. But also, we have got a situation where private sector demand is actually beginning to pick up. Investment intentions are turning around. And consumer spending is beginning to recover.
QUEST: It must take quite a lot of gumption to be the-as you look around the room, and the governor calls for the vote, and yours is the only hand that goes up.
SENTANCE: Well, the whole set up of the Monetary Policy Committee is to bring together people from different backgrounds. And we have four external members, of whom, I'm one. I've got a lot of experience in the business world and the business community. And I'm bringing that experience to bear in my judgments. I've not been afraid of, at any point in my career, to stick with the views that I think are correct. And I still think on the evidence that we've had over the last six months that actually the view that the economy is recovering and that inflation is running above target have been reinforced by the data that we have had over the last six months or so.
QUEST: The view of Doctor Andrew Sentance on why he wants to raise the U.K.'s interest rates at this time. We'll hear more from Doctor Sentance later in the program, on global issues, and wider issues.
When we come back in just a moment, you know them as the various bosses who feature each week, in our series. After the break we bring Richard, Sarah, and Michael together to discuss what they are expecting in 2011, in "The Boss".
QUEST: "Have a sense of humility", they are the words of one of the chief executives who has transformed a troubled company into a success story in troubled times. One of the candidates that we have on "The Boss", in this case, the CEO Richard Braddock, who is in New York. He's the head of Fresh Direct, one of the three that have been following.
We've also been following Sarah Curran, in London, who is the CEO of my Wardrobe.com. And Michael Wu, over in Hong Kong, who of course, is Maxim's Group.
Now, over the past seven weeks, each week we have been following their lives, seeing how they run their companies, and getting an insight into the problems they face being chief executives. Tonight, because it is the end of the year, as we head to the holiday season, we invited Michael in Hong Kong, Sarah in London, Richard in New York, to all come together and discuss how they run their companies and what happens next.
QUEST: Many thanks to all three of you for taking part in our series "The Boss". We are getting fascinating insights into the way in which you run companies and the challenges you face. And that is really what we want to focus on, in this discussion.
Let's start with you, Richard Braddock. Bring us up to date. How has your move into New Jersey gone?
RICHARD BRADDOCK, CEO, FRESH DIRECT: Well, we're very happy with where we are, in total, and also we are now in a position of expanding the business, and ultimately we think this business will exist nationally. And the learnings we are getting from the suburbs is how effectively we can penetrate a thinner population market with more difficulty in terms of the density of the population we serve.
QUEST: Michael, in Hong Kong, China is the big project that we are following with you, and the expansion into China. Where are we standing on that?
MICHAEL WU, CEO & MD. HK MAXIM'S GROUP: Well, Richard, we've put in several new concepts in China. We have a bakery chain. We have a sushi chain. And we just opened our first Simply Life Bakery Cafe last week. And initial sales are very encouraging. And the most important part of China is you have to have a very long-term view. The middle class in China is growing very rapidly. They are getting very wealthy. And their demanding higher quality products, higher quality food, higher quality restaurants. So it is a good opportunity for brands like us to enter the Chinese markets.
QUEST: Sarah Curran, we are at that turning point in the year, with fashion. We have been following your purchases, and you are looking now to spring and summer of next year. Are you ready?
SARAH CURRAN, FOUNDER & CEO, MY-WARDROBE.COM: Absolutely. We have already started taking delivery, actually, of our spring/summer collection. And our sales for autumn/winter have been phenomenal. Every month has exceeded the one before and every month has been a record-breaking month.
QUEST: What is your biggest risk? Is it inventory? Is it expenditure? What is your risk?
CURRAN: I mean, inventory is always going be a risk, because obviously, you have to make sure you are buyer is right. Because that is what is going to give you the sale through, and the sales. But to be honest, I think our next area, our next challenge is deciding how much, how fast are we going to grow for the next financial year. Because that is really going to set the pace for us.
BRADDOCK: I think our two major risks are that this is a very hard business, because it is fresh food, to service. There are probably 30 indicators that we have to get right every single day to get the right experience to our customers. And secondly, we have to keep up our growth rate. We set out to exceed 20 percent in growth this year, which would be very good in the market we serve. And we've don it. But we need to do that a few more years in a row in order to get to the sort of financial business model we are driving towards.
QUEST: You've got your new cakes coming out, Michael, how important is your role as the boss, in determining the priorities for the companies, over say, your senior staff?
WU: When we are expanding so quickly, as we are in China, we have to have our priorities, because obviously, we cannot do everything all at once. And our priority is very clear. We are focusing on Longtong (ph), and we are only focusing on cakes, Chinese restaurants, and our sushi chains, at the moment. But this will grow in phases.
QUEST: Richard, same question to you, and indeed to you, Sarah, afterwards. If you had to-because obviously, it takes huge bravado to be the chief exec, but what do you think you need to look at in 2011?
BRADDOCK: I've been running businesses for a long time, over 30 years, and I think one thing you have to learn from that experience is a sense of humility. That you are not going to get every decision right. And that you would need to be very cognizant of trying to involve your people in the decisions to ensure that you have a higher hit rate in terms of success.
CURRAN: Having not really come from a traditional corporate background, in a sense of you know, having been trained as a CEO, I'm mean, I forever, I'm growing as a person, as a CEO as well. I'm probably, the thing I need to work on is I'm very impatient. And I could do with sort of holding back on that. But, for me, the whole part of this experience is a matter of learning curve. So I take everything and try and learn from it and grow.
QUEST: Finally, to all three of you, Richard, when you and I talk mid next year, what do you hope will be the message that you can say about FreshDirect and about what has happened in your company?
BRADDOCK: Well, I think at this point it is simply continue progress. We are in an expansion mode, and as we go through this coming year, we will be taking more initiatives to expand our business and those will all be part of the report card we had. We are headed toward another large urban market, which will be Philadelphia, and that will be still another test for us, against what I would call our national ambitions.
But we are definitely in a growth mode now. We are a confident company. I think we got all the employees feeling their part of the success we've created. And my job is just to reinforce that, and thank them everyday.
QUEST: Michael, we saw your new chocolate take that you named, in our earlier edition.
WU: Oh, very good. The name would be Verona (ph) Chocolate Cake. I think it is good. I like it.
QUEST: We are looking forward to you sending a slice of it over here, so we can enjoy it on the program. But while we wait for that happy moment, if we were to say-when you and I next speak, mid year, what will be your message? What do you hope to have achieved?
WU: Well, you know, as we enter the close of the year, it looks like next year will be a very challenging year. The inflation, which you are hearing about in the news report, and food prices, is really a huge problem, for us. Wages are rising very quickly. So next year will be a very challenging year. But luckily for us, we have a longer term view. And in this part of the world we are used to the ups and downs and the all of the different cycles. So we are really positioned for our long-term growth in Hong Kong and China.
QUEST: And Sarah, the one item that you have bought, or that you plan for your collection for next year, that we need to keep an eye on, as a barometer for how things are doing?
CURRAN: Got so many, there are so many trends this season. But a really key trend is going to be the 1970s look. So lots of jumpsuits and, so you can see lots of those on the site. You'll know that they are not- hopefully, they will sell out really quickly.
QUEST: The 1970s look?
QUEST: All right. We will 1970s ties to Richard in New York, Michael in Hong Kong. Thank you, all three of you, for being on "The Boss".
QUEST: And you will be able to catch up with our three chief execs, as always, next week, next Tuesday on "The Boss". In fact, every day next week, we will be re-running our various reports.
In a moment after the break, from chaos at the airports, and to trouble on the trains. This was London's Eurostar terminal, earlier in the day. We will tell you if you stand a chance at getting on a train.
(DESK BELL CHIMES)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news always comes first.
So I need to tell you, London's weather weary Heathrow Airport has reopened its second southern runway. The airport is still warning travelers not to come to the airport unless their flight has been confirmed.
BAA, who is the dominant operator there, says it will aim to operate the majority of flights by Thursday. The airline says it will be days before the situation returns to normal.
It looks like President Barack Obama has secured enough votes to ratify the new START Treaty, Strategic Arms Reduction Treaty. At least 10 Republicans say they'll support the measure, which is enough for Senate approval. The deal with Russia would slash each country's nuclear stockpile and allow inspections of missile bases.
Iraq finally has a new government, after a nine month stalemate. The Iraqi parliament has voted in Prime Minister Nouri al-Maliki's cabinet. There are some remaining -- vacancies remaining, but it's huge progress. Sectarian divisions in the disputed national election had threatened to keep Iraq in political limbo.
Italian police say a suspicious device found on a train near Rome could not have exploded. Right now, it's unclear whether the device is a faulty bomb or, indeed, something else. Authorities say the black box had wires hanging from it and was hidden under a seat. The police are now trying to determine if it was meant to cause damage.
The three runways at Frankfurt Airport are now open following a short closure earlier today. Things are by no means back to normal and there is always the prospect of more snow on the way.
Robert Payne is a spokesman for Fraport, the company which owns and runs Frankfurt.
He joins me now on the line from the German city.
Robert, just bring me up to date. The airport is open. The runways are open. But, clearly, there's a backlog to get rid of.
ROBERT PAYNE: Good evening, Richard.
Yes, of course, there is a backlog that has accumulated over the last few days. The weekend was a -- a difficult period for the airports throughout Europe. Our runways were open during the weekend. We had no difficulties keeping them free of snow and ice. But we were impacted by the situation throughout the rest of Europe. As you know, it's an integrated air traffic system...
PAYNE: And when one airport has problems, it causes a reverberation effect throughout the rest of Europe.
Today, early in the morning, we were inundated with heavy snow. We had forecasts expecting a warm front and rain. That didn't happen.
PAYNE: We were hit by heavy snowfall. We had to shut our runway down -- our runway system down...
PAYNE: -- from 5:00 in the morning until 8:30. We've lost about 550 flights today. But the situation is much quieter in the terminals tonight, more relaxed. And we're hoping, in the next couple of days, to rev back up to normal flight operations...
QUEST: All right, Robert...
PAYNE: -- the -- the weather has also switched to rain now and is milder for the next few days.
QUEST: Let -- let me just interrupt there, if I may. The -- the situation, obviously, if Heathrow goes down, then that has cascading effects, the same with all airports in Europe.
But what I'm trying to really understand is why have the airports done a pretty bad job of staying open and looking after passengers in this crisis?
PAYNE: Well, this is your analysis of the situation, maybe others. But I think the airports have been doing a tremendous job trying to battle with what has really been -- today is the first day of winter. But the onslaught of winter happened over three -- three weeks ago. This is an unprecedented winter in Europe in many years. And it's been unrelenting, basically, only a few days in between, but fluctuating temperatures up and down, which causes difficulties with the de-icing...
PAYNE: -- fairly heavy snowfalls in short periods of time. And this has affected different airports at different times with -- with different levels...
PAYNE: -- of difficulty...
QUEST: But people would -- but people would agree, surely, reasonable people would agree, as the E.U. transport commissioner said on this program tonight, the situation has been unacceptable, generally speaking. And he is now calling for standards to be set.
PAYNE: Well, I think we -- we live in a very highly technological society.
PAYNE: Air traffic has doubled and is about to triple in the coming years. And this requires a lot of technology. The major hubs in Europe are all operating at fairly full capacity most of the time and this depends on quite good weather conditions. And when the conditions deteriorate, then the amount of traffic that can be moved is -- is a lot less.
And when you have major storms, such as we had in the last few weeks, then it causes a lot of difficulties in different parts of Europe.
PAYNE: So I -- I think we have to be realistic...
PAYNE: -- man -- man still has to regard and respect nature. We are not masters of nature, we are masters of technology and we're getting better and better at technology as the year -- the years go on. But nature still...
QUEST: All right, Robert.
PAYNE: -- has the upper hand.
QUEST: Robert, we'll have to leave it there.
Many thanks, indeed.
I think most people would agree with you tonight, we certainly haven't conquered the tech -- the nature question, judging by what's been happening.
Robert, many thanks.
Always a pleasure to talk to you.
Now, the winter weather chaos is not limited to airports.
And CNN's Jim Boulden is outside in the cold at London's St. Pancras International Railway Station.
Eurostar had earlier problems -- Jim, the -- we know that the crowds have now gone. The trains are expected to get back to normal. But that really masks the backlog.
JIM BOULDEN, CNN CORRESPONDENT: Well, the backlog, of course, started on Saturday, because, of course, all those people who couldn't get their trains on Saturday then got pushed into Sunday, Sunday gets pushed into Monday. The trains have had to run slower, so they've had to cancel a few trains today. They did have the vast majority of their service running.
So the backlog which, three or four hours ago, was -- was thousands of people that way, completely disappeared in about three hours time, Richard. It was quite dramatic, actually, to see it, because every time a train left here, it would leave with some 700 to 800 people. And they got two trains onto Brussels. They got a couple of trains on to Paris very quickly and the backlog disappeared.
So people are going to be able to get where they wanted to get. But during the day when we were walking this line, we did find some rather entrepreneur people. Some people came up and they were offering free coffee, companies giving free pizza, giving free food.
We also found two people from Southampton international Airport reminding people here, if you couldn't get a train, that airport is open.
Listen to this.
(BEGIN VIDEO CLIP)
BOULDEN: As we've been walking up and down this line, we found two people who work for Southampton Airport -- it's an international airport in the south of the country -- handing out schedules, because they say they're still open and they want people who may not have tickets for Eurostar and be stuck here to actually go to your airport.
Tell me what -- how they can do it and how quickly can they get there?
UNIDENTIFIED MALE: They can get there from into Victoria Station on the coach, Greyhound buses, or they can go from Waterloo. It's an hour and 15 minutes and we've got our own -- our own station there at the airport. And we fly to Paris, Amsterdam, Dussel -- Dusseldorf. We fly to Lial (ph), all over Europe we can go to Scotland, Aberdeen and (INAUDIBLE) Glasgow, Manchester.
BOULDEN: I have to say, this is pretty enterprising of you to get on a train, come up here to London and advertise your airport.
UNIDENTIFIED MALE: Yes, it is. We woke up this morning and we saw the cues on the television and we thought we -- well, we've all got friends and family. I've got a stepmother who's trying to get to North Carolina at the moment. And we wanted to help people get to be with their families and friends for Christmas.
So we come up here to give people options.
(END VIDEO TAPE)
BOULDEN: Now, I think there's an important point in all that, Richard, is one of the problems that everyone is facing -- you know, two weeks ago, it was Gatwick Airport that had a dump of snow. This time, it was Heathrow Airport, where this airport, Southampton, an hour-and-a-half from here, wasn't affected. That's also playing into the midst of all of this.
QUEST: Jim, Eurostar hasn't had a particularly good year. Last Christmas, of course, their trains got stuck. It had problems earlier in the summer.
Is there a feeling that Eurostar -- I mean I suppose -- look, let me put you on the spot. The -- the problems with the track and the speed restrictions, do they seem, to the experts, to be reasonable?
After all, this is supposed to be a 21st century train system.
BOULDEN: The trains were slowed down, they said, because of safety issues. They said they were doing this because of ice on the tracks and they had to be careful. And so by slowing trains down, by making it four hours to Paris instead of two-and-a-half hours, they had to cancel some trains in between.
But I can say that people here were quite good-natured about it. They -- they were so desperate to get home and because they were being taken care of in the cues, taken care of in -- in the line, I didn't hear anybody too upset at Eurostar. It seemed to be a very different issue at the airport.
So for -- with the experts, I've -- I talked to one of them earlier today and he was talking about this rail. And he said the problem is anything...
BOULDEN: -- that gets on the rail then becomes a problem.
QUEST: Jim Boulden at St. Pancras with the Eurostar.
Jim talked there about the issue of care and looking after passengers. And that's what we're going to turn to now, because one of the big questions -- and we saw -- we heard about this in the ash cloud earlier this year in April -- is what are your rights and re--- and your duties and your compensation and care and comfort?
If you're watching this from a foreign airport terminal, you need to know your rights of redress. And it really all comes down to this -- E.U. 261. And there are two sides to 261. One part of it is the care -- comfort and care. The other part is the compensation.
Let's start with compensation.
If you have had a flight that has been canceled, under E.U. 261, you would normally be entitled to compensation. However, there is the loophole that says extraordinary circumstances. And certainly in the volcanic ash and probably in this case, the snow would be extraordinary circumstances.
So under E.U. 261, you would not, probably, be entitled to compensation.
However, under the same bit of legislation, you are entitled to duty of care. That would be things like food, telephones, perhaps, if the flight's delayed over 24 hours into the next day, overnight accommodation, transport to the hotels and to phone calls.
So the message tonight to you is if you have been -- had a flight canceled, you probably can get some result -- some comfort and care from the airline for any of your expenses, but probably not any compensation.
And in any event, remember, depending on who you are flying, the rules are extremely complicated.
In just a moment, we'll be hearing from the Bank of England's policymaker, Andrew Sentance. And this time, we're going global. His thoughts on QE2 and stimulating the world economy.
QUEST: Earlier on this program, Andrew Sentance, a member of the Bank of England's Monetary Policy Committee, explained why he believed rates -- interest rates in the United Kingdom should go higher.
Dr. Sentance was one of those who, of course, voted for quantitative easing by the Bank of England -- printing money to get things moving again.
And as he now explains, he also supports the fact that the U.S. Fed is engaged in a second bout of printing money, because it's necessary.
ANDREW SENTANCE, MONETARY POLICY COMMITTEE, BANK OF ENGLAND: Well, it's for the Fed to decide what the right monetary policies are for the U.S. economy and that's not for us to judge. But I -- I'm conscious that we've actually provided globally quite a lot of policy stimulus to the recovery. And if you look at the global economy and indicators of how the global economy is responding to that suggest that that has actually supported growth quite strongly.
And so the IMF has to make growth this year of close to 5 percent globally and it's pushing up energy and commodity prices.
So I don't think there is a question about whether, globally, we've actually, in a sense, stimulated demand a bit too much.
QUEST: In the sense that global growth is very lop-sided toward East -- toward Asian economies and the emerging markets, you -- you can't be suggesting that too much is being done in developed economies.
Or is that what you are suggesting?
SENTANCE: Well, some developed economies have -- have bounced back quite quickly. Japan has grown by about 5 percent over the last year and Germany by nearly 4 percent. And domestic demand in the U.S. has grown by about 4 percent. The growth rate to GDP has been a bit slower than that.
So I think we do have to get a sense of perspective on what we can expect in terms of the bounce back of mature, industrialized economies that don't tend to grow at double digit growth rates.
QUEST: If you were on the ECB's governing council or the FOMC, would your vote still be for tightening on their rates?
SENTANCE: I think individual countries have to make judgments about what's right for their own national circumstances. But we don't have a global MPC. And there is no body overseeing the global economy, determining that global demand is exactly at the right level.
And what I've observed over the last year is actually we've moved from a situation where we were at, the global demand was too weak and was about to create -- was create -- in danger of creating deflationary pressures -- to one where the net balance of pressures across the global economy seems to be more inflationary now.
QUEST: I'm asking everyone who I'm interviewing who's a policymaker (INAUDIBLE). I mean you all had learned about quantitative easing. You had seen it in theory books. Japan did it in -- once before. But it, frankly, had never been done in any (INAUDIBLE) on a large scale.
QUEST: What surprised you most when you had to take the decision?
SENTANCE: Well, I thought it was the right thing to do in the context that we faced in the middle of...
QUEST: But did you doubt it was going to work?
SENTANCE: I think we were very uncertain about how it would work. And I think the -- the impact that we've seen in the U.K. economy has not purely to do with quantitative easing. It's to do with the recovery in the global economy and it's helped by conventional monetary policy and, to some extent, by some of the fiscal support that was provided.
QUEST: When you were actually faced with having to implement quantitative easing, was there a feeling of, hmmm, well, it's the only tool we've got and I'm not sure it's going to work, but it's the best thing we've got, let's see what happens, let's push the button?
SENTANCE: I think when quantitative easing first came onto the radar, I was actually quite cautious and skeptical. But as we got into the situation where we might actually deploy this as an instrument of policy. What I thought was most effective in terms of the impact that it's had -- it turned around the sentiment in financial markets and it turned around -- I think it helped turn around business and consumer confidence.
And if we had sat there at the Bank of England and said, oh, no, we've heard about this, but the economy is going into a very difficult place and we're not prepared to deploy it, I think -- I'm not sure we would have seen such a significant turnaround.
Now we've seen that turnaround, we need to begin to review the policy settings we have in place.
QUEST: And what do you think, finally, we've -- is it too soon to say we've learned anything from this crisis, do you think?
Is it too soon...
SENTANCE: Oh, I think we've learned a lot of things from this crisis. I think one of the things that we've learned is that while we can keep inflation, broadly, on the -- on track, there are still instabilities in the financial sector in the global economy that can cause economic cycles. I think we've also learned that if we pull the levers of economic policy hard enough, we can stabilize our -- our economy and get it growing again.
QUEST: That's fascinating, isn't it, because you're not powerless?
SENTANCE: I think there was a worry that -- that policymakers, say, in the middle of last year, that policymakers would not be able to arrest the decline in their economies. And the good news is that we have...
SENTANCE: -- and we've actually got back on a recovery track.
QUEST: But you haven't got -- well, I -- some would take issue with that. You've got back -- that the patient's not dead, globally, I'm talking about.
SENTANCE: We have to be realistic about the pace with which economies can come back. And I think -- I remember the -- the recovery in the early '90s. In the early years of that recovery, a lot of people were saying, oh, we're not sure the economy is recovering, things are not back to normal. That is quite normal for this -- if I can say and put it in that way. That is quite usual for this stage of the cycle.
But I think we have to allow for that in the way in which we look at the economic data.
The -- the big news, from my point of view, is the economy, both at home and abroad, has turned around a long way from where it was in the middle of last year. And policy needs to adjust to that.
(END VIDEO TAPE)
QUEST: That is Dr. Andrew Sentance of Britain's Monetary Policy Committee.
There is a scandal brewing in the U.K. tonight concerning the business secretary, Dr. Vince Cable, and the proposed take over of BSkyB by Rupert Murdoch's News Corp. News Corp already owns a minority -- a large minority stake and is now attempting to take over the entire of BSkyB.
Well, the prime minister, David Cameron, has made the decision that Vince Cable will have no part in the final decision on whether or not News Corp gets BSkyB after leaked comments from Dr. Cable regarding the deal.
Although Cable will keep his job as the business secretary, he actually made some extraordinary comments in taped comments to reporters posing as members of the public.
Have a listen.
(BEGIN VIDEO CLIP)
VINCE CABLE, U.K. BUSINESS SECRETARY: I'm thinking of my advice, some of which you might have seen and some of which you may have not seen about what's happening with the Murdoch press. And I think I've warned Mr. Murdoch (INAUDIBLE)...
UNIDENTIFIED FEMALE: (INAUDIBLE).
CABLE: -- I didn't politicize it, because it's a legal question...
UNIDENTIFIED FEMALE: Yes. Yes.
CABLE: But he is trying to take over BSkyB.
UNIDENTIFIED FEMALE: Right.
CABLE: You probably know that much (INAUDIBLE)...
UNIDENTIFIED FEMALE: I know (INAUDIBLE).
UNIDENTIFIED FEMALE: I always thought that he had BSkyB (INAUDIBLE) anyway.
CABLE: No, he has -- he has minority (INAUDIBLE)...
UNIDENTIFIED FEMALE: Right. OK.
CABLE: -- majority -- majority controlled (INAUDIBLE). I have (INAUDIBLE)...
UNIDENTIFIED FEMALE: Right.
CABLE: -- using (INAUDIBLE).
UNIDENTIFIED FEMALE: Right.
CABLE: But I'm leading (ph) now, so I -- I can't politicize it.
UNIDENTIFIED FEMALE: Right.
CABLE: But from people to know what's happening I mean this is a big -- a big thing.
UNIDENTIFIED FEMALE: Right. (INAUDIBLE).
CABLE: -- (INAUDIBLE) now under attack. So, you know, there are things like that that...
CABLE: -- all we can do in that position is protest.
(END VIDEO TAPE)
QUEST: And that was Vince Cable.
And the important point there that you may have just been able to hear is when he says that he has declared war on News Corp and Rupert Murdoch and their proposed take over of BSkyB.
David Cameron, the U.K. prime minister, says oversight of the merger will now be shifted to the Department of Culture, Media and Sport. Vince Cable keeps his job.
In a moment, the weather.
QUEST: Now, first of all, it was rain -- snow. Now it's rain. The problems and the storms this week.
Guillermo Arduino is at the CNN World Weather Center.
We need to know the next 24 hours please -- Guillermo.
GUILLERMO ARDUINO, CNN METEOROLOGIST: Well, rain, mostly. But what we are seeing right now, also, this is indicating what's going to happen with temperatures. They are now going back to normal but then they continue to dip down later in the week, which tells us that we have seen this. Temperatures the -- the reds are above average, the blue below average.
And you see in Europe the contrast. It's really, really significant. So this is extraordinary.
Now, we are going back to normal a little bit. We are seeing some snow but not -- not much -- in Britain. We're seeing mostly rain here. So for the time being, we have like a couple of days with OK conditions. I would say until Thursday. Also, the winds are dying down -- good news, good news everywhere.
Now, the temperatures are going to go back down again toward Thursday and we get humidity. So we are expecting some more snow, especially in Northern Germany, especially, also, I put out that Madrid is way below average and especially in Northern France, but to the east is -- with this front, as your guest from Germany was saying, is where we are going to get the snow. Everywhere else, things are going back to normal. But it's going to be cold -- back to you.
QUEST: We'll talk about that more tomorrow and we'll stay on top of that.
In just a moment, I will consider airports and snow in a Profitable Moment.
QUEST: Tonight's Profitable Moment.
I want to give the airport authorities at Heathrow and beyond the benefit after the doubt. After all, extremely cold weather and large snowfalls, well, it would tax the best of us as we do our jobs.
Unfortunately, even in this season of goodwill, it's not possible to be too charitable. Those in charge knew snow was on the way. They've been warned in the past they were ill-prepared. What infuriates me is to listen to ministers and chief execs saying their priority is to get people and their bags on their way. After that, they will look at what went wrong.
If they had been that concerned, then they would have had done a better job at being prepared. Organizations seem to have done wrong when it comes to communication, when it comes to reparation and when it comes to simple common sense.
Let's hope when this is over, we don't have another snow job. This time, excuses over why it's nobody's fault.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest.
Whatever you're up to in the hours ahead, I hope it's profitable.