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QUEST MEANS BUSINESS
U.S. And Europe Officially Unveil Free Trade Plans At G-8; Corporate American Needs A Woman's Touch, Says Warren Buffett; Airbus vs. Boeing At The Paris Air Show
Aired June 17, 2013 - 14:01:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: Call it a once-in-a-generation prize; the U.S. and Europe officially unveil their free trade plans.
(BEGIN VIDEO CLIP)
QUEST (voice-over): It's the battle of Le Bourget Airbus orders beat Boeing's and it's only day one in Paris.
And in a CNN exclusive, Warren Buffett says corporate America needs a woman's touch.
(END VIDEO CLIP)
QUEST: I'm Richard Quest live in Paris where, of course, I mean business.
QUEST: Good evening. We are live tonight in Paris as two major events in the political and economic calendar get underway.
In Northern Ireland, it's the Group of Eight industrialized nations; the summit has started and the U.S. and European Union have already announced a landmark free trade deal.
Whilst here in the French capital, the aviation event of the year is underway. The Paris Air Show will see billions of dollars change hands and several new planes are unveiled. Over the course of the next hour, you'll hear from all the major chief execs of all the major manufacturers.
But we start our coverage tonight with the G8 and Northern Ireland. And the main talking point has been the European Union, the E.U. and the United States have now officially launched their talks to help create a free trade agreement.
The prospective benefits of this agreement are staggering. It could be the biggest two-way deal in history. The potential, tens of billions of dollars a year to the global economy.
Together, they already account for half global economic output, a third of all trade and nobody is under any doubt that this deal is big bananas.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are going to be sensitivities on both sides.
There are going to be politics on both sides. But if we can look beyond the narrow concerns to stay focused on the big picture, the economic and strategic importance of this partnership, I'm hopeful we can achieve the kind of high standard comprehensive agreement that the global trading system is looking to us to develop.
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: The current economic climate requires us to join forces and to do more with less. More importantly, in doing so, we'll remain strong global players who set the standards for the 21st century.
DAVID CAMERON, PRIME MINISTER, GREAT BRITAIN: And we should be clear about what these numbers could really mean, 2 million extra jobs, more choice and lower prices in our shops. We're talking about could be the biggest bilateral trade deal in history.
(END VIDEO CLIP)
QUEST: There was already one hiccup when the French objected to arts and culture being part of the negotiation, and you'll hear from the French finance minister Pierre Moscovici later in this program.
First, though, to the summit's host, David Cameron, who set the three T's as his goal: trade, tax and transparency.
I sat down with the prime minister in London over the weekend. And I asked him, looking at this vast trade agenda, with all the complications of the French and everybody else, wanting their slice of the pie, why was he so optimistic that a deal could be done?
CAMERON: Of course, I would prefer trade negotiations to stop with absolutely nothing excluded. But let's be frank about this. In all the trade deals, Europe, the European Union has done in other parts of the world, there's always been this audiovisual exception, which is very much a French priority.
But we should look at the big picture, which is we need to get an E.U.-U.S. trade deal, it is worth tens of billions of pounds to both sides. It's worth probably 10 million to the U.K.
QUEST: Can you get that deal?
CAMERON: I think we can. I think there is now a significant, sufficient recognition on both sides that what some of us have been saying, frankly, for years, as free trade, as an enthusiast for this, look, if you don't have a lot of fiscal space to spend more and to tax less, and if you don't have a lot more space to cut interest rates, what's left to the world to stimulate growth is trade, is those measures on the supply side.
So what some of us have been saying for years -- I think now is accepted on the European Union side more generally -- and I sense enthusiasm from the U.S. as well.
So I think it can be done.
QUEST: The tax question, tax havens, you're very keen on this at the G8. And I wonder why.
CAMERON: Very simple reason, which is that Britain has kept our promises on the aid agenda and we're very proud of that. But frankly, if we want to tackle global poverty, if we want to see greater world growth that benefits all of us, the new agenda is tax, transparency and trade. Now we've discussed trade.
Tax matters, because the poorest countries in the world miss out and, frankly, we miss out, too, if companies don't pay their taxes properly.
Now we've got a global international Internet based economy, but we've got rather national tax systems. And we need change.
QUEST: Well, that's where I was going. You're talking now -- you're getting the bit between the teeth on the companies as well as the individuals using tax havens.
CAMERON: I think it's across the piece. I mean, the thing that is as important is obviously if you have real transparency, if we get a proper registers of beneficial ownerships, such as the one we're going to establish here in the U.K., we're going to hit the corruption that affects so many countries and holds back so many countries because corrupt payments are often made through shady nominee companies.
But it also links to the tax agenda, where we need greater sharing of information, greater transparency so we can make sure -- I don't -- I'm a low tax conservative. I believe in free enterprise. I'm even low tax rates. But having set low tax rates, I think companies should pay them.
QUEST: CEOs have to set the moral agenda on this, don't they? And that means CEOs saying we will pay tax even -- and we will not take the route of least resistance. Or am I being naive?
CAMERON: I think you can't ask CEOs on their own to take the -- a moral stance. It's got to be for everyone. You need to governments to set clear rules. You need governments internationally to agree clear processes.
And, yes, you do need companies, CEOs to recognize that tax evasion is illegal and you should go to prison. Tax -- aggressive tax avoidance does, in my view, raise some serious moral issues.
And I think in the board rooms around the world now, that is recognized. And I think that's a good thing. But it requires action right across the board. Everyone needs to play their part.
QUEST: (Inaudible), this is -- Ms. Merkel said to me yesterday, when I asked that these things weren't easy, she says, "We need politicians for the difficult times. That's when politicians have to come up with the solution."
CAMERON: Well, that's true. I mean, you don't get anywhere unless you're prepared to give a lead and sometimes to make a few enemies along the way and in setting this G8 agenda around trade, tax and transparency, yes, you are taking on some vested interests; you're taking on some difficult decisions.
But actually will it help both the developing world and us in the West? I believe it can.
QUEST: The British Prime Minister David Cameron talking to me.
Now the trade deal simply can't be overstated. But those talks, as anyone who's covered Doha, Uruguay, NAFTA or anything in between knows that they will be difficult, contentious and complex.
Already there have been problems here in France. The government is insisting that any talks exclude its radio, film and TV industries. It's known as the cultural exception. It wants to protect those sectors from what believes is a U.S. cultural invasion.
After 13 hours of talks, France finally got its way, at least for the time being. The E.U. may come back and try and put the cultural exception to bed. It's unlikely to do so as I heard this afternoon from France's finance minister, Pierre Moscovici, who was quite clear the cultural exception stays.
PIERRE MOSCOVICI, FRENCH FINANCE MINISTER: I'm surprised that you're surprised, because it was always the case in the past, each time we had to discuss trade, whether it is on the GAT (ph) agreements or now in WTO.
We always said that we wanted an exclusion for audiovisual, because we have a cultural exception, a cultural identity and it was always accepted before. And now we discuss with our European friends and in the mandate of the commission is obviously said and exclusively said that audiovisual is not in negotiation. That must not create a problem because audiovisual is not called a trade.
QUEST: But, of course, one -- I can see the French position, but once you start this "this is in, this is not; I don't want this in, this is not, "you end up with a negotiation where everybody wants something --
QUEST: -- (inaudible). And that, of course, has been the problem with the Doha round.
MOSCOVICI: No, no, that's not the case at all, because now the ministers in charge of trade discussed that on Friday, Friday night and they gave the commission a mandate with what is in and what is out.
So things are very precise. And for American friends, they've got to stick to the mandate. They've got to look at the mandate and they will see what is in the discussion and what cannot be involved in this discussion. It is always the way it functions. I had the occasion to talk, for example, with Jack Lew twice about that. He was really informed.
I don't think that the Americans really want audiovisual to be inside of the mandate. So it does not create a huge problem.
QUEST: Is it off the table as far as the French are concerned?
It's not a question of waiting to see what the final result looks like.
MOSCOVICI: No. It's out of question for us to sign any discussion, to conclude any discussion, to sign a negotiation.
QUEST: That's the French finance minister, Pierre Moscovici, talking about the negotiations for the trade deal, which of course comes into for -- or at least the talks have now begun.
Tomorrow night on the program Mr. Moscovici talks about the austerity in France and says two years is enough.
When we come back, live from Paris, Le Bourget and the Air Show, who got the best of the orders on day one? QUEST MEANS BUSINESS in the French capital, good evening.
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QUEST (voice-over): Welcome back to Paris at the start of the Paris Air Show 2013. What an extraordinary day it was, and I don't mean as it relates to the aircraft or the planes flying.
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QUEST: The weather in Paris was bizarre to say the very least. And you'll see what I mean in the course of the next few moments. Beautiful now, appalling earlier. I'll explain more in a second.
There's only one contest that matters in Paris and it's Airbus against Boeing. And it's all about wide-bodied planes. In the past, it's been the narrow bodies the 320s versus the 737s. Not this year. Today, it's about the wide bodies.
So for instance the Airbus A350, which completed its maiden flight on Friday. The French giant is hoping to stage a flyby at the air show possibly on Thursday when the French president is here.
The A350 is positioned to lure customers away from Boeing's 777 and 787. It promises better fuel economy. But Boeing is not being left out. It plans two updates to its planes, a stretch version of the Dreamliner called the 787-10 or 1 and an updated 777.
Incidentally, that updated or wider, longer 787 is very likely to be launched tomorrow or at least this work. But this week, I'm guessing probably tomorrow.
So we can keep across the numbers and the orders, we've got our QUEST MEANS BUSINESS scorecard.
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QUEST (voice-over): It's a bit of fun, millions and millions of dollars, billions of dollars and thousands of jobs. The numbers for both Boeing and Airbus, the tally, some orders and options today Boeing 23, Airbus 170. We'll follow their progress throughout the week.
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QUEST: Let's start, though, with Airbus, which although it took the -- it basically took the air show by storm when it announced an order for 20 Airbus A380 super jumbos. The super jumbo has been short of sales lately. The plane is still some way off from breaking even.
But to get 20 planes on order from a leasing company was a major achievement, so much so that John Leahy, the chief commercial officer for customers, was happy to stand in the absolute pouring rain. I don't mean a bit. I mean floods of rain to tell me why this order was significant.
JOHN LEAHY, CHIEF OPERATING OFFICER, AIRBUS: We've got this order for 20 A380s. It's from a leasing company, Dorick (ph), which happens to be the third largest wide-body lessor in the world, 11th largest leasing company. And this is going to offer us a new way of marketing the aircraft. You can actually lease the aircraft, have it for 10-12 years, and then give it back to the lessor.
So it's a new marketing tool.
QUEST: The leasing companies initially were in them, then they were out. So breaking back in again to the leasing companies is very significant for this vast aircraft.
LEAHY: It's an expensive aircraft, as you well know. What we're looking for is a turnkey approach.
So really, if you're running an airline I can tell you with certainty how much you're going to pay a month, the lease rental, how much you're going to pay a month for the airframe maintenance, how much you'll pay a month for the engine maintenance. Then all you have to do is add your fuel, your pilots, your flight attendants and the food for the passengers (ph).
QUEST: Even with these more new orders, you're heading towards operational profitability on the 380.
LEAHY: Oh, yes, 2015.
QUEST: But you're not at full breakeven profitability on it.
LEAHY: Well, the one important thing is that we're not really amortizing the development costs the way our colleagues do in the U.S., where you might spend $15 billion on a program. I mean, you amortize it over the sales for the next 1,200-1,500 aircraft. We write it off as it was incurred.
So, yes, for an academic study about all the money we've put into the 380, it might be interesting at Harvard (ph) one day to figure out whether or not we ever got our return. But it will be profitable for us, starting in 2015.
QUEST: I'll let you get back into the air dry in a second, but the big fighting point we here is the mid- to large size, the A350 versus the 777 and the 787. That's going to be your big fighting point in the future.
LEAHY: Absolutely. This is a market for about 6,500 aircraft there. And the 350, 800, 900 category, about 4,500 and about 2,000 and 51,000 777 category. That is worth fighting for, Richard.
QUEST: You're going to fight?
QUEST: Every order?
LEAHY: Every order. I'm outselling them 5:1 in the last five years. Now they're going to probably launch their 787-10 today and they'll have some orders. But right now I'm outselling them 5:1.
QUEST: "I'm outselling them 5:1," says John Leahy of Airbus, Boeing's Ray Conner's having none of it. The president of the Boeing commercial airplanes division says when you look at wide-bodied jets, and that may be the semantics of this particular battle, the wide-bodied versus narrow- bodied, Ray Conner says when you look at that, he's winning.
RAY CONNER, PRESIDENT/CEO, BOEING: Since the A350 was launched, we have sold 538 777-300 ERs. And to the A350, 110. And the 777X is really about making a great airplane ever better.
On the 787 side, the 10X, a very compelling story and hopefully we'll be launching that airplane here very soon.
I'm not going to tell you when.
QUEST: Now that's Ray Conner of Boeing. You'll hear more from Boeing's senior executives. We are even-handed on this program, one from Airbus, one from Boeing. You'll hear coming up shortly the -- you'll hear from Shep Hill of (inaudible) Boeing International.
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QUEST (voice-over): But (inaudible) our "Currency Conundrum" from Paris, this is the 1988 10-franc coin. Our question to you, which famous aviator appears on it, Louis Bleriot, Henry Lafont, Roland Garros? I'll have the answer for you later in the program.
As for the rate tonight, well, look at the way the dollar has traded. The euro and the pound both feeling the pressure; the yen is there, too. Those are the rates. This is the break.
QUEST: Welcome back to Paris. We'll be here tomorrow night as well; Paris Air Show goes all week. So Monday and Tuesday. By the way, if you have a question, of course, something you've always wanted to know about aviation, we'll put to the experts. The Twitter address as always, @RichardQuest. That way you and I can continue our dialogue on matters of importance putting the world to right.
Boeing versus Airbus. This is the perennial battle, and of course that doesn't always include Amber Air (ph), Bombardier and all the other aircraft manufacturers.
But now let's hear from the Boeing side of the story.
We are in France, which is the home of Airbus. So Boeing always perhaps starts somewhat, some would say, a little bit on the back foot. It's something that Boeing is very acutely aware. Shep Hill is head of Boeing International.
SHEP HILL, PRESIDENT, BOEING INTERNATIONAL: I can confirm to you that the speculation is that we are going to announce something this week indeed.
QUEST: I guess that's the best I'm going to get --
HILL: That is the best you're going to get.
QUEST: That's the best I'm going to get.
QUEST: On the order front, I mean, there's always this bit of a battle between the two of you.
But the 350's now flying. And it positions itself some say in the sweet spot because it can attract from the Dreamliner and it can attract from the 777.
HILL: We, of course, wouldn't agree. We have (inaudible) our colleagues at Airbus in terms of their initial flight, something we experienced in December of 2009, when we kicked off the 787, as you know. We don't think the 1000 positions us badly. We have a 777 that is very vibrant right now with plans to refresh that.
We have a 787-8, -9 and as speculation would have it, a larger 787 coming. So we're perfectly positioned in the marketplace. Don't feel cornered at all; indeed, we feel that we have bracketed the competition.
QUEST: So what is your challenge?
HILL: Our challenge is to execute on our outstanding backlog that we have, to deliver for our customers those which have already bought from us, to return service to 787-8 in a seamless fashion and to allow it to enjoy and the public to enjoy the benefits that it brings.
QUEST: The 747-8 Intercontinental?
QUEST: I mean, one's tempted to say the poor 787-8 Intercontinental, when do you hope to get more orders for that plane?
HILL: Imminent. We're in discussion -- we're in discussion with a number of airplanes, and we would never say that that is not the lady of the skies; it continues to be a very vibrant plane for both intercontinental and for freight. Freight's a little flat, as you know, but you can stand by; there will be additional orders coming for the Intercontinental.
QUEST: And finally, if we look now at the aviation industry, and the retooling of the fleet renewal programs, the -- it's almost as if the single aisle has happened and now it's the big twins, the medium to large long-range jet.
That's going to be the fighting ground for the next three years.
HILL: Well, I think so. If you look at the world, the world's growing up. Middle class around the world is growing. They desire and need a growing demand to travel cargo and passengers. Twin aisles in Asia, the Middle East and Europe will be the battleground going forward. And we're confident, with our product mix, that we're well situated.
QUEST: So, finally, what has Boeing learned, not only from the delays of the 787 program, the Dreamliner, but then of course from the battery incident? What have you learned from it all?
HILL: Well, we've learned that when you innovate, you can be challenged. When you innovate at multiple levels. So the tough news is it was delayed. The good news is that we have a product in the field that is peerless in terms of efficiency and in terms of passenger comfort. And for that we paid a heavy price. But it is worth the price that we paid, Richard.
QUEST: That's Shep Hill, who is the head of Boeing International.
I just want to clarify something. The order race between Boeing and Airbus is one fraught with difficulties, because you have memoranda of understanding; you have firm orders and you have options. And quite often at an air show, something will appear as a firm order that has been a previous option and has already appeared in the numbers.
So, for example, the Lufthansa 100 A320s, some of those, we believe, have already appeared in another number. It's all very complicated, and I promise you trying to keep it straight and narrow ain't easy.
When we come back after the break, we will hear exclusively from Warren Buffett, who is quite blunt and says every good company needs women at the helm. QUEST MEANS BUSINESS, we're live in Paris.
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN, where the news, on this network, always comes first.
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QUEST (voice-over): The U.S. and Europe will begin talks next month on creating their vast free trade zone. Leaders announced the talks before the G8 summit began in Northern Ireland. The two-day meeting is expected be dominated by the Syrian crisis.
The French finance minister Pierre Moscovici has told QUEST MEANS BUSINESS it's out of the question to sign any agreement on audiovisual as part of a trade deal with the E.U. and U.S. The government is insisting on excluding its film, music and TV industries from the deal under what's known as the cultural exception.
Iran's president-elect says his country has no intention of ending its nuclear program, but says he will make it more transparent. It was Hassan Rouhani's first news conference since the election victory at the weekend. He said that repairing Iran's economy was his main priority.
The Turkish government has threatened to bring in the army to end three weeks of unrest caused by protesters. Demonstrations continue today in Istanbul, although they were smaller than they had been seen in recent days.
New revelations from Edward Snowden, the U.S. intelligence telltale, he told "The Guardian" newspaper that the British government had tried to monitor the phone calls and emails of world leaders attending the G20 meetings in London back in 2009.
Snowden is believed to be in hiding in Hong Kong. The revelation is likely to be embarrassing for the British government, which is currently hosting the G8 in Northern Ireland.
(END VIDEO CLIP)
QUEST: The sage of Omaha, Berkshire Hathaway's Warren Buffett, he has a message for corporate America and probably a message that could be taken globally: invest in women.
The Berkshire Hathaway boss says helping women achieve their full potential is in everyone's interest. It's not positive discrimination. It simply makes good business sense.
Poppy Harlow joins me now from New York.
Poppy, invest in women: why now?
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: It's interesting, that's exactly what I asked Warren Buffett. You're 82 years old, why are you coming out now publicly speaking about this?
And he said, you know, I have been talking to student groups that come visit me in Omaha at Berkshire Hathaway headquarters about this for years and years.
But interestingly, Richard, he read Facebook COO Sheryl Sandburg's book, all about women and work called "Lean In," and that prompted him to come out more publicly. He wrote an essay for "Fortune" magazine about women and why he's so bullish on women and America's future because of women.
So I went to Omaha to sit down with him for an exclusive interview to find out what throughout his life has shaped his thinking.
WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: ... it shows how strong a message can be, the message my sisters heard, that -- they didn't hear it verbally, they just heard it through all kinds of actions of people that they didn't have the same future I had.
HARLOW: So it's interesting because you saw this play out in your own family. You had two sisters who you say that your floor was their ceiling.
Was that parenting? Was that society?
BUFFETT: Yes, it was -- it was society, but it came through parenting and it came through their teachers. In every way, they were told that the best thing was if they married well, and I was told that everything in the world was available to me.
If I had been -- I was born in 1930. If I had exactly the same wiring I have, but I had been a female, my life would have been entirely different.
HARLOW: I wonder if your message is more for women or more for men?
BUFFETT: It's for both. It's for both. Men should realize, if they had male workers and those workers could accomplish more if they had more education or whatever it might be, they would jump on that in a second.
And to take half the people and not recognize that they have just as much potential as the others and use them is a big mistake.
HARLOW: So what about in American business? Because if you look at the Fortune 500 companies, less than 20 have female CEOs.
BUFFETT: Well, it's a mistake not to use all the talent. We have one woman at Berkshire Hathaway that is now chairman of four companies, but that's all new. And she is doing a terrific job.
It comes slowly, and partly that's just a mindset that is different.
HARLOW: So as you have been more outspoken about women and the workforce, there are some that have come back at you and said, what about Berkshire Hathaway, you have got 70-plus companies and you have five female CEOs and only three of your 13 board members are women. They think should change be happening at Berkshire? Should you be doing this?
BUFFETT: Change is happening at Berkshire, and in the last directors that have been appointed, three are women. And in terms of CEOs, I have probably only appointed maybe six or seven CEOs because they come with the businesses and they stay.
HARLOW: When there is a new CEO needed or a new board member do you look specifically more at women to see if there a woman of equal caliber to take the job, to have that diversity?
BUFFETT: Probably I'm going to pick the best person in the end. But if there are two that are 9 on a scale of 10 and one is a woman, she's probably going to get the job.
HARLOW: I think one really important part of this discussion is there have been some that say the rise of women means the downfall of men.
BUFFETT: That's crazy. That's like saying if you educate more people it hurts the ones that are already educated, or something of the sort. It is just crazy to let any human operate below their potential when, just by changing the rules a little, you could give them a better chance to meet their potential.
KOSIK: Now, Richard, I also asked Warren Buffett what about all the other fellow CEOs of big companies around the world that you talk to? Are they on board with you in this?
And he said, "Frankly, some are; some aren't."
And I said, "Well, are they opposed to having more women in leadership positions? Or are they just not thinking about it?"
And he said, "I think it's the latter, that the status quo has been working for so long in their minds, why change it?"
QUEST: And that famous line that follows shortly thereafter, Poppy, some of my best friends are women.
Poppy Harlow joining us from New York with that interesting insight from Warren Buffett.
You heard Poppy talk about -- and Warren -- about the changing of the mindset so that women's talents can be fully recognized.
A new CNN film, "Girl Rising," takes a look at the stories of girls around the world and their fighting to be educated. It's a special presentation of "Girl Rising," CNN Films on Saturday night, June the 22nd at 8:00 pm in London, 9:00 pm Central Europe. It is, of course, only on CNN.
The markets that are open and doing business, let's go to New York, the Dow Jones industrials having a strong session, the Dow up 100 points, 112 points now I'm being told. So it's a very strong session once again for the blue chips.
All of this, of course, not so much uncertainty as the Fed is about to meet, over 15,000, three-quarters of a percent. To the European bosses and you can see the numbers on the screen, they were also up as well. You wouldn't think that there were worries about quantitative easing. The European recession, at least not looking at the way the numbers are at the moment.
When we come back in a moment, to Paris, so the air goings by the planes, but what do we think about the airlines? The heads of Skytrax joins us (inaudible) that into perspective, in a moment, QUEST MEANS BUSINESS, good evening.
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QUEST (voice-over): The answer to tonight's "Currency Conundrum," which French aviator appeared on the 1988 10-franc coin?
And the answer was Roland Garros, which of course everybody knew.
I wish I could tell you a little more about what Roland Garros did, and no doubt some of you will let me know and excoriate me for not knowing exactly why he was on the (inaudible). Yes, we know he was an aviator, but what did he do? Everybody knows that fact.
QUEST: Let's talk more about aviation, one of my favorite subjects.
The question -- never mind the conundrum. The question which is the world's best airline will finally be answered on Tuesday. The World Airline Awards takes place here in Paris and Skytrax chief exec Edward Plaisted joins me.
I always -- (Inaudible) the awards, and I'm not just being pleasant and polite to you.
It's the Skytrax awards that most people quote as being the most authoritative.
Why is that?
EDWARD PLAISTED, CEO, SKYTRAX: We've put a lot of -- place a lot of importance on the independence of the actual project. And the word go, we actually set the survey, the entire awards process up, to -- well, to guarantee an independent format, to guarantee an independent survey, no sponsorship, no third-party --
QUEST: Right, and you break it down, don't you, by region and also the world's best airline.
So who's the world's best airline?
PLAISTED: The world's best airline you will discover in 24 hours.
PLAISTED: Not -- you know, we see a change most years. The top 20 airlines generally they shuffle around a bit. We see a few coming (inaudible).
QUEST: Right. So we're looking at the biggies. You're looking at the Singapores, the (inaudible), the BAs, the Lufthansas --I'm trying to think who else.
Who else tends to sort of walk off in that top category?
PLAISTED: We have Asians, of course, apart from Singapore, we've got Cathay, now coming in at the top, Asiana, ANA.
QUEST: And then the Europeans again, you break it down.
What do passengers tell you they want from airlines?
PLAISTED: Well, one of the problems they still -- they want cheap flights. I mean, that still comes number one. So the airlines, you know, they're battling against the fact that fares really haven't risen in real terms in the way they should have done.
QUEST: (Inaudible) expensive when you look at fuel surcharges and the like.
PLAISTED: They feel expensive, they look expensive, but at the same time, the low-cost carriers have brought in the fact that now the pressure on BA, Lufthansa, all of the other carriers, if a customer goes (inaudible), they expect five-star service. They're paying for a legacy airline.
QUEST: We know the Asian carriers always seem to rank supreme when it comes to service quality. And the European maker carriers are not far behind.
What about the U.S. carriers? Are we seeing that we've seen investment in flat beds, but are we seeing it reflected yet, do you think?
PLAISTED: We're seeing the return on the product. We're not seeing much of a return on the service. We've seen some improvements, some months, a few of them. I think probably the one we've seen, Delta is certainly achieving better customer service levels. But they have their own issues in terms of how you improve it.
QUEST: And when we look at something like the new American, the American and US Airways merging, from your point of view, do you think that sort of consolidation, however economically necessary, is good for the consumer, is good for those of us who like flat beds and the quality of service?
PLAISTED: It probably benefits in terms of the product. But the service itself, any of those, especially in the U.S., the mergers bring with them certain skeletons in the cupboard, which means that the service standards don't go up very easily.
QUEST: And when we look at tomorrow's results, any surprises? Of course, I'm having another hedge. I'm doing my best to get him to -- a little something away.
PLAISTED: We always have a -- I mean, within the industry, it's always a surprise. Yes, we have some different carriers there this year. We have a great turnout coming tomorrow.
QUEST: And tomorrow night, I have to declare conflict of interest. I think I'm actually handing out one of the awards.
PLAISTED: You will indeed (inaudible) handing out one or two of them.
QUEST: I'm handing out one or two of the awards. So we'll show some pictures on tomorrow night's program. I'll even tweet them @RichardQuest as we're going through it.
And the Skytrax, always wonderful to see you. Thank you so much for joining us this evening.
Now the order book continues and this time, of course, it's Bombardier that has got the question of trying to get new customers.
The new C series plane has still yet to fly. But at the Paris Air Show, the Canadian's company's hoping it will destruct the Boeing-Airbus duopoly and Airjets (ph). European startup Odyssey (ph) Airlines is buying 10 of them worth 628 million. The total number of firm orders is 177.
As I heard from the chief executive of Bombardier, Pierre Beaudoin, he said he's hoping for 300 by the middle of next year when the plane enters into service. This is Bombardier's CEO.
PIERRE BEAUDOIN, CEO, BOMBARDIER: From the start of the program, we said we would have about 300 orders before the entry into service. We're at 177 firm today. And if we look at the option, 380, so I think we're very well positioned. Another year flight pass, another year to go over for entry into service. I think we'll in on target.
QUEST: Are you talking to airlines about the C series with a perspective, a realistic view of orders?
BEAUDOIN: Yes, there's a lot of airlines that are -- have been looking at the product for a long time. Some of them have said let's see the airplane fly; let's really look at the performance once it's flying. You know, some question the ability for manufacturers to deliver airplane on time in a development program.
We've demonstrated that we do that very well. So they're very encouraged and we're going to the first flight after five years of development. Essentially on the schedule, we had given the airlines. So in the end, they're encouraged what they see. But they want to see progress. Because they've been burned with some of our competitors' programs.
QUEST: That's the chief executive of Bombardier.
Tom Sater's at the World Weather Center.
Tom, look, I really have to understand what happened today as we saw in our program, during the interview with John Leahy, it is absolutely teeming down, bucketing down with rain, I mean thunderstorms and lightning. At the time Shep Hill and I are talking, we're boiling in the sun.
TOM SATER, AMS METEOROLOGIST: Yes.
QUEST: Explain that, and tomorrow.
SATER: Oh, thank you for the 24-hour notice. I appreciate that, Richard. No, just hang in there. I mean, this is -- it's summer temperatures. I mean, it's extremes here and there. And that's what we're dealing with, extremes.
But in this story, right now, the focus is in India, quite extraordinary. What has been going on for this entire country, notice the rainfall. We could use some rain to the east. This is the time of year, the progression of the much-needed monsoon.
It's more than the economy; it's more about agriculture. It's their livelihood. They need the rain. They've been baking in 40-47 degree heat. The rains cool them down. But it's their drinking water.
Notice from around New Delhi, Jodhpur, from Chandigarh, which is in Punjab State, Punjab, Haryana, Rajasthan, Gujarat, typically the last states, even into Pakistan, to receive the rainfall. So the progression is so watched and it is really down to a science as we watch the needed rains make their way from the southeast to the northwest.
However, something extraordinary happened over the weekend. The line -- and the white line which was well back from Mumbai all the way toward Calcutta, still missing the northern quarter of the country jumped within two days. Now this line just means in the atmosphere, there's some instability. It gives you the chance of rain.
But for the first time in recorded history, the monsoon, the progression, is the fastest to the north, sweeping across the entire country that has ever been seen before. This could be good news for those that not only need the rainfall, but want to see the crops grow and provide a healthy harvest. But it could also be damaging if we have too much rain too early.
This is what we see -- and the -- India's meteorological department, each one of these green lines is a daily mean of rainfall. What we want to see is it close enough to the average in this red line as possible.
Notice the early and heavy start of rainfall. Now too much rainfall washes away the early seeds; too little and, of course, and it's drought. You just don't provide that healthy yield at the end of the year.
If you're going to err on one side or the other, it's good to have too much. The farmers may have to work a little harder, but it's drinking water.
Notice what is happening now, just from the last 24 hours. This is Dehradun, up to the north, 455 millimeters on 18 inches of rain, and that's in a 24-hour period. Let me show you what happened when you get this much rainfall.
(BEGIN VIDEO CLIP)
SATER (voice-over): The flooding pictures are just tremendous. Now this is on the Gonda (ph) River here to the north. Now typically you can see the construction equipment getting ready for some of the rains. But it's destroying hotels. It's destroying homes. Thousands have been evacuated. This is what we mean by too much too early.
Now to Mumbai, take a look at this number, 24-hour period, 154 millimeters. They're still in an area of concern where they're going to continue to see more rainfall. Now this is Maharashtra State. They've seen in the worst drought in the 40-50 years.
But if you compare the monsoon seasons, the first 16 days of this year to last year, they're already up to 12 rainy days, 756 millimeters compared to 83 last year. So the progression of the monsoon is needed. And it's good to get the rain early.
But we're seeing a little too much too soon, Richard. Hopefully we'll start to see the water faucets get turned down a little bit. They'll be able to handle this.
QUEST: Absolutely. And that, of course, puts it into perspective that no matter what the weather is like or the rain in Paris, and there's some terrible floods of course throughout Europe, there's one seen of course, in two A differently.
Tom Sater at the World Weather Center, let me just update you.
We've now got the economic communique, from the Group of Eight. In a statement issued after their discussions on the global economy, the G8 said Japan needed to address the challenge of defining a credible medium-term fiscal plan. That's one in the eye for Abenomics.
Downside risks in the euro area have abated, but it remains in recession, said the G8. Did they really need to travel to Northern Ireland to say that?
The U.S. recovery is continuing and the deficit's declining, but more needs to be done, fiscal policy should allow for near-term flexibility. We will interpret that in the days and hours ahead. When we come back, after the break, we'll be in Northern Ireland to see how that part of the world has dressed itself up for G8 glory.
QUEST: And the town where the G8 summit is taking place has undergone a bit of a spruce-up. In Enniskillen, there is a fresh coat of paint. The roads have been swept and, well, you'd be tempted to think everything was doing rather well economically.
Think again. As Jim Boulden now explains, in Enniskillen, with the G8 on their doorstep, it's really simple: everything is not as it seems.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): If any of the G8 leaders happen down this road in County Fermanagh, they'll see out their window a growing trend in this part of Northern Ireland: false storefronts. Pictures of bounty and business in the windows of closed shops in towns like Enniskillen.
ARLENE FOSTER, ECONOMY MINISTER OF NORTHERN IRELAND: It's a difficult economy right across the world. And I think what we wanted to do was to make sure that when our visitors were coming that we had tidied our place up, that it looked as well as it possibly could. And that's exactly what was done.
BOULDEN: Because of the sectarian violence that once scarred this province for decades and still occasionally flares up, Northern Ireland has been the focus of a great deal of subsidies and funding from the central government and from the European Union.
BOULDEN (voice-over): That has kept unemployment here in the north much lower than in the Republic of Ireland and it's now falling. But like the Republic of Ireland and Spain, Northern Ireland saw a housing boom and then bust during the economic crisis.
ANGELA MCGOWAN, CHIEF ECONOMIST, DANSKE BANK: There's quite a large public sector. So at the beginning of the crisis, we had a level of protection in terms of local employment. But then the things with regards to construction job losses, we probably lost 55 percent (ph) jobs. And (inaudible) the prices of gas mostly in construction and in retail.
BOULDEN (voice-over): So the G8 visit this week is very welcomed by some local towns and apparently some painters who have been kept busy.
ALEX BAIRD, CHAIRMAN, FERMANAGH COUNCIL: There hasn't been an unemployed painter for probably 100 miles for the last month. It's part of an all over scheme, it complements G8 and it makes the place look better.
BOULDEN (voice-over): A small price to pay, perhaps, to put Northern Ireland on its best foot, which is one of the reasons why Prime Minister David Cameron wanted the summit here in the first place, a move that would have been unthinkable for decades -- Jim Boulden, CNN, Belfast, Northern Ireland.
QUEST: All is not as it may seem. But I do promise you that really is the Arc de Triomphe, and we really are in Paris.
And we really were at the Paris Air Show and we'll be there again tomorrow.
A "Profitable Moment" with some thoughts on trade after the break. QUEST MEANS BUSINESS, good evening to you.
QUEST: Tonight's "Profitable Moment," so the E.U. and U.S. have launched their free trade talks. I promise you, this is not going to be easy. Oh, I'm not being cynical or skeptical. I've just seen it before.
The France have already said that they will be a cultural exception. And I guarantee you before this is finished, every other country in the union will have had their tuppence worth, too. No one who has been a student of the Uruguay round or the Doha round -- ha! -- the Doha round could fail. And would think that this is going to be anything but painful.
The best that we can hope for is that eventually common good trumps national interests. It's a long way to go. But the rewards, if they do it, will be worth it.
And that's QUEST MEANS BUSINESS for this Monday night. I'm Richard Quest in Paris. Whatever you're up to in the hours ahead, I hope it's profitable.
Where did that come from?
(BEGIN VIDEO CLIP)
QUEST (voice-over): The headlines at the top of the hour: world economic prospects remain weak according to G8 leaders. In a statement from the two-day summit in Northern Ireland, the leaders said downside risks have lessened partly due to the policy actions of the United States. It also announced that the U.S. and Europe will begin talks next month on creating a vast free trade zone.
The French finance minister Pierre Moscovici told this program any agreement on audiovisual industries is out as part of the trade deal. France is insisting on excluding film, music and TV under what's known as the cultural exception.
Iran's president-elect says his country has no intention of ending its nuclear program, but says he will make it more transparent. It was Hassan Rouhani's first news conference since his election victory at the weekend. He said repairing Iran's economy was his main priority.
The Turkish government has threatened to bring in the army to end three weeks of unrest caused by protesters. Demonstrations continue today in Istanbul, although they were smaller than they had been seen in recent weeks.
(END VIDEO CLIP)
QUEST: You are up to date with the news headlines. Now to New York, and "AMANPOUR" is live.