Return to Transcripts main page

QUEST MEANS BUSINESS

IATA: Airports Need Smarter Security; Air France CEO: Security Has Improved; Delta Blocks Qatar Flight from Reaching Gate; U.S.-Gulf Dispute Over Open Skies Drags On; Three U.S. Carriers Unveil New Products; Cheap Oil Boosts Airline Profits; French Air Traffic Strikes Unprecedented; OPEC Fails to Agree Oil Production Cap; Output Freeze Must Include Iran; ECB Ready for Any Outcome of Brexit Vote; Aer Lingus CEO: Brexit Could Boost Irish Aviation

Aired June 2, 2016 - 16:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[16:16:07] RICHARD QUEST, CNN ANCHOR: And a very good evening to you and a warm welcome. QUEST MEANS BUSINESS which comes to you tonight from a most

unusual place. Over the years we have come from some unusual places, but we are at the Guinness storehouse in Dublin. We are in the Irish capital

because IATA, the International Airline Transport Association, IATA the lobbying group, if you like, the industry representative body, is having

the annual general meeting in Ireland in Dublin. And over the course of the program, you're going to hear some of the top names in aviation giving

you their opinions on exactly when's happening in the industry that's making money for the first time in years, good money for the first time in

years. And which has some serious problems.

We are going to start by looking at the question of security. You have just heard the former Secretary of State and possibly, likely Democratic

nominee Hillary Clinton. In a major foreign policy speech talking about the needs of keeping Americans secure. If there's one industry that's felt

the full frontal thrust of that lately it is the aviation and airline industry. An attack on MetroJet last year, the potential for EgyptAir 804,

and a variety of -- the Paris attacks and the Brussels attack, at Brussels airport, it's all led people to question what more needs to be done to

protect the traveling public. I talked to Alexandre de Juniac, the Chief Executive of Air France-KLM. And the man who is soon to be the new head of

IATA. He gave me a robust position on the question of security.

(BEGIN VIDEOTAPE)

ALEXANDRE DE JUNIAC, CEO, AIR FRANCE-KLM: Security is an issue that we manage in the airlines, but not alone. We manage that totally in a

complete transparency and a complete confidence with governments, intelligence services, airports, police, all the people involved in the

security issues. Since the "Charlie Hebdo" then the Paris attacks, Brussel attacks, I speak for France, the French authorities, but also the Dutch

authorities. They have signatures that we can enhance the level of security in "Charlie Hebdo" and various airports in which we operate. I

think it's a day-to-day work to do that successfully. We had enormous work. It's a day-to-day work. We have to learn from each experience. We

have done differently some things since Brussels.

QUEST: You'd agree that there's no room for complacency on this issue?

DE JUNIAC: Nope, nope.

QUEST: So it --

DE JUNIAC: Never. Never. Because we talk about security of people, about life of passengers, life of our crews. So it's -- there is no complacency

there.

QUEST: Are you satisfied with the current situation?

DE JUNIAC: No. You know, for the moment, I have to say that regarding, you know, the difficulty that is attached to protecting all this

infrastructure, all these aircraft, everything, things are not too bad. And the authorities are doing their best. Frankly, their best because it's

also a concern for them.

QUEST: Do you worry?

DE JUNIAC: We'll still have to work on every point, every element of the chain. It's a chain. You have to work closely every piece.

QUEST: Do you worry that visitors may stay away from Europe this year? I mean, you obviously -- whether it be the State Department warning or

whatever it might be. Do you worry that there is a perception?

DE JUNIAC: We have -- after the Paris attack, we have had a drop in traffic of people coming to Paris from America, from Japan, from China.

Even from Europe. We have recovered. But we are not at the level we should be. So there are less choice coming, coming to Europe and to

France. I think they're wrong. They are wrong because European governments, European authorities, airports, airline, intelligence service,

police, are cooperating very closely to avoid any incident, accident, attack. And it can happen everywhere. You know? And not more in Europe

than in other areas.

(END VIDEOTAPE)

[16:20:00] The chief executive of Air France KLM who is to be the new director general of IATA, Alexandre de Juniac, in an exclusive interview

talking to me.

Any idea that somehow the row, the battle between the big three, the big U.S. airlines and the Gulf three, would be completed and over, concern and

being be put to rest. Here at IATA both sides made quite clear they're not giving up. Certainty Delta Airlines said that they would not go quietly.

Meanwhile, it appears that another punch has been thrown in the spat between the three U.S. large carriers. United, American, and Delta. And

Etihad, Emirates and Qatar. This time it relates to Qatar Airways and its flight to Atlanta. The first-ever Qatar Airways flight wasn't permitted to

reach a gate. More than 500 passengers were forced to deplane on the tarmac after Delta said it couldn't make the gate available.

Now, the international dispute over open skies agreements between American, Delta and United, lobbying the Obama administration to re-evaluate the open

skies treaty. They accuse Emirates, Etihad and Qatar of taking billions of dollars in state aid.

There's a new chief executive at Delta Airways. He's not a new man to the carrier. He was the former president, Ed Bastian. There had been some

thought that maybe he wouldn't follow the policy of his predecessor Richard Anderson. That maybe Ed Bastian would make a more qualified line in the

battle against the Gulf three. Apparently, not as he told me in this interview.

(BEGIN VIDEOTAPE)

ED BASTIAN, CEO, DELTA AIR LINES: No. No. Why should we?

QUEST: It doesn't look like it's going anywhere. I will concede we have not heard yet from the administration.

BASTIAN: Yes.

QUEST: But those whom I speak to say it's not going anywhere.

BASTIAN: Well, we have reason to believe that the administration has taken our concerns seriously and there is work being done and we will not go

quietly.

QUEST: Is it time for a rapprochement?

BASTIAN: I don't think so. I don't think so. I think right now the approach through the governments are in the right place, and until such

time as we know from the government as to where they come out, we're full force ahead in terms of making certain that the subsidies are addressed and

there's some transparency provided.

QUEST: The battleground is really now set in the United States, isn't it? I mean, you have got American and the Doug Parker renewed, merged, new

products coming. You have got yourselves. New products coming. You got United under Oscar Munoz, new products coming. This is going to be quite a

battle between the three of you.

BASTIAN: It's a great battle. And it's a battle that needs to be fought. It's a battle around the customers rather than around who can outlast each

other financially. And I think consolidation has been a factor in terms of given us greater strength. That we can invest in what matters which is

customers. For Delta it is about people. And continuing to invest in people and that's first and foremost. But it's also around reliability.

Our reliability is second to none and that's what customers need.

QUEST: Do you perceive a new trading environment for the airlines in the U.S.?

BASTIAN: Trading? When you say trading --

QUEST: Competition between yourselves.

Yes.

QUEST: Do you feel it's different now?

BASTIAN: I do feel it's different. I think customers' expectations are improving. We see it in our scores. We see our net promoter scores

continuing to rise. And I think it's good thing. I think it's healthy. We enjoy that.

QUEST: The world is fascinated at the moment by the U.S. political process, particularly Donald Trump. I'm guessing wherever you go and

whichever partner you talk to in the world they ask you about it.

BASTIAN: They're curious. They're curious. They don't quite understand it.

QUEST: you?

BASTIAN: I understand a part of it. I don't understand it fully. Of course, the election has another five months to go and we'll see where that

ferrets. There's no question that he's touched a chord with the U.S. voter. Just as Bernie Sanders has touched a chord on the other side of the

aisle. And I think those voices need to be heard.

QUEST: Are you worried of what you see in the political process at the moment?

[16:25:00] BASTIAN: I'm not worried. I think it's not been constructive as we like to see. But I'm not worried. I think there is a -- the

economic outlook in the U.S. is still pretty strong. When you talk to any of these international airlines that we're here with gathered, this is the

U.S. marketplace is the market they want to continue to grow into. So I'm not worried. When I see people avoiding the U.S., that's when I'll start

to worry.

QUEST: There's no evidence of that?

BASTIAN: There's no evidence of at all.

(END VIDEOTAPE)

QUEST: That's Ed Bastian, the Chief Executive of Delta being just as feisty as ever.

There's change just about everywhere in the airline industry. Traditional alliances are being broken. New arrangements, new ventures being put

together. Just take, for example, in Europe where all -- or many of the airlines decided to abandon their traditional lobbying group and start a

new one. It's called Airlines for Europe. And the head of Airlines for Europe, Chief Exec, Tom Reynaert, is with me. Good to see you, sir.

Good evening, how are you?

QUEST: Airlines for Europe, it's modeled on the Airlines for America name. But it grew out of a dissatisfaction by the airline industry at the way

lobbying was done, particularly in many cases over issues like the Gulf three.

THOMAS REYNAERT, MANAGING DIRECTOR, AIRLINES FOR EUROPE: Well it certainly grew out of dissatisfaction of the way we do lobbying in Brussels, the

airlines that is. So last summer, the CEOs of our five founding member companies got together and decided there were a number of common issues

where they should work on together. The interesting thing about AEs is first on the focus.

QUEST: What is the focus?

REYNAERT: Well, the focus is on operational issues. So this is quite special with this association. This is not just an association that was

established by lobbyists but by the CEOs.

QUEST: Right. But the real problem that you've got is getting agreement. Because you don't have to scratch the European airlines very deep before

they'll disagree violently with each other. Lufthansa won't agree with IAG. IAG won't agree with Ryanair. EasyJet won't agree with IAG.

REYNAERT: This is exactly what we have agreed not to do. We agreed to focus on a number of issues, which we have in common. So what is really

keeping the CEOs awake at night? That's the question. Whether you are a low cost or legacy carrier. Things like, you know, airport charges.

QUEST: Right. Last question for you, though. How miserable do you think the summer is going to be in Europe for strikes? France or Germany. Are

we looking at a summer of discontent?

REYNAERT: Well, I surely hope not, Richard, but, you know, with Euro 2016 coming up very soon, as a football fan, I truly hope we won't see too many

ATC strikes, air traffic control strikes. Because that's very disruptive. We really want to limit the negative impact of these ATC strikes. You

know, cancellation of flights, delays of flights and is hugely disruptive. It's annoying for everyone. It's costing the airlines a lot of money, but

more and foremost, it's very worrying for the passengers.

QUEST: Good do see you, sir.

REYNAERT: Thank you very much.

QUEST: I'll allow you to head over there and did a Guinness. Thank you very much indeed.

You may wonder where we are and why we're here. This is the Boeing party and if you thought that airline chief execs were all rather miserable

serious bunch, well over there I can tell you they are making hay over in the Guinness academy, where I'm guessing a drink or three is being poured.

QUEST MEANS BUSINESS, we're going to talk about OPEC and we're going to discuss how a failure to agree could have very bad effect on the price.

And you're going to hear an exclusive interview with the new Saudi oil ministry. It's QUEST MEANS BUSINESS, we're in Dublin. That's where we

are. Let's grab another Guinness.

(COMMERCIAL BREAK)

[16:31:24] QUEST: Hello. Welcome back. I'm Richard Quest. There is more QUEST MEANS BUSINESS for you in just a moment.

When the leader of the Irish opposition ____ will be telling us that he sees a nightmare scenario if the U.K. votes to leave the European Union.

I'll be the chief executive of Aer Lingus. He is the host the IATA -- the 72nd IATA here in Dublin. Will assume we'll find the CEO somewhere around

the Guinness academy. All of that still to come. But, of course, this is CNN. And on this network, the news also comes first.

Hillary Clinton says Donald Trump is temperamentally unfit to be U.S. president. Short time ago, the Democratic front runner delivered a fiery

speech focused on foreign policy. Hillary Clinton called Trump's national security ideas a series of incoherent rants, personal attacks and outright

lies.

French president Hollande will declare a state of natural disaster because of heavy floods affecting Paris and other parts of the country. The Louver

Museum is moving some of its work of art to keep them safe from rising waters after the river Seine lost its banks.

Toxicology tests have concluded that the musician, Prince, died an accidental overdose of the opioid fentanyl. According to the medical

examiner's report, the drug was self-administered. Prince was found dead in April at the age of 57.

Police in Los Angeles say the gunman responsible for murder-suicide at UCLA, University of California at Los Angeles, left a kill list at his home

in Minnesota. University professor shot dead on Wednesday was on the list. A woman whose name appeared on the list has been found dead in Minnesota.

Lionel Messi says he knew nothing about the tax arrangements. As he appeared in court in Spain to answer charges of fraud. The Barcelona star

is accused of trying to hide more than $4.5 million by using fake companies. He could face almost two years in prison if he's found guilty.

Arguably the news that OPEC has failed to reach a production cap would be welcome to many airlines CEOs here at IATA because the likelihood is that

fuel remains cheap for the foreseeable future. But for OPEC, indeed, the failure to agree to this cap is nothing short of disastrous and calls into

question once again the cartel's ability to manage the oil industry. So far this year, take a look at the price of brent. It's up slightly, it's

fetching around $50 a barrel. CNN Money's John Defterios, asked the Saudi minister -- the new Saudi oil minister, if he was optimistic that a deal

could have been done, or, indeed, should be done.

(BEGIN VIDEOTAPE)

KHALID AL-FALIH, SAUDI MINISTER OF PETROLEUM: We came into the meeting feeling very good about the trend of the market, supply and demand market

rebalancing, and we think that the right thing to do is for OPEC to monitor the market and to let that trend continue to bring rebalancing into place.

[16:35:00] JOHN DEFTERIOS, CNN MONEY EMERGING MARKETS EDITOR: Some sources I speak to within the Gulf countries are suggesting they don't want to go

rapidly above $50 a barrel. So just leave well enough alone. Don't do anything at all. Do you share that opinion?

AL-FALIH: I do not share that opinion that we should have a price target per se. I think we need to let prices come to a level where supply and

demand will balance. And investment flows go back to where it needs to be to meet the mid to long-term demands on oil, and I don't think $50 is

achieving this today.

DEFTERIOS: OK, could we get to $60 by the end of the year? Looking at the demand holding up and the non-OPEC production, which would be the U.S.

production dropping off.

AL-FALIH: I think that's indeed very possible, yes.

DEFTERIOS: And even higher in 2017 looking at the trend line?

AL-FALIH: Yes, yes. I think demand and supply certainly have converged. I think we will be looking at inventory drawdowns. We have seen that

fortunate disruptions in various regions. If these continue and others commence, certainly that will drive prices up. And I am looking for a

higher price to bring investment in. But at the same time, as I look and the mid to long-term, I get concerned there's a shortage then we will have

a price spike, which will have a counterproductive impact on the long-term stability of oil.

DEFTERIOS: Now in mid-April at the Doha meeting with OPEC and non-OPEC players, Saudi Arabia blocked a deal for freeze, and even threatened to

flood the market in six months with a million barrels a day if Iran did not come on board. You sound like a different man than what we heard from the

last minister in April and the instructions of Riyadh. What is going on?

AL-FALIH: There is no truth to any threat of floods. Saudi Arabia, of course, has the excess capacity that we would use to meet market demand and

that continues to be our policy and strategy is to balance markets to the maximum extent possible. Preferably, a very strong preference for doing

that in concert with the fellow OPEC producers and also in coordination with non-OPEC. That remains to be our position.

DEFTERIOS: Can you coexist within OPEC with Iran because of the geopolitical tensions in the region and the proxy wars we see today in they

want a pre-sanction level of over 4 million barrels by March 2017? Let's get it on the record. How do you feel about it?

AL-FALIH: What Iran does or any other country, it is -- its sole purpose. But if there is an interest in putting a ceiling on the organization, then

Iran will have to participate in that ceiling. And will have to accept that it will need -- if everybody freezes, Iran will freeze like everybody

else.

(END VIDEOTAPE)

QUEST: The Saudi oil minister talking to John Defterios.

The European Central Bank says it's ready for any outcome when Britain goes to the polls on June 23rd in the Euro referendum. The bank has decided to

keep interest rates unchanged at its meeting on Thursday. However, the ECB President, Mario Draghi, said he thinks it's in everyone's interest for

Britain to say in the European Union.

(BEGIN VIDEO CLIP)

MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: U.K. and Europe and the Eurozone, are mutually beneficial. So the ECB has a view whereby the U.K.

should remain in the European Union. Because the European Union will benefit from its permanence and we believe that U.K., too, would benefit

from staying in the European Union. The ECB is ready to work on contingencies.

(END VIDEO CLIP)

QUEST: Now it's fortuitous we are in Ireland. We're here for IATA, but it's a perfect opportunity for us to gauge exactly what's been happening,

of course, with the Brexit vote. Because no country outside the U.K. has perhaps more of a vested interest in how the U.K. votes than the Irish

Republic. Just look at the relationship between the two and you will see how close, how deep.

First of all, you have free trade. The U.K. is Ireland's most important single market. Irish exports to the U.K. are at the highest ever levels.

And then you have following the Good Friday Agreement, you have the common travel area, passports are not required to pass between the two countries.

In fact, it's a border not even in name only maybe as you go to Northern Ireland and the Republic. And then you've got the British-Irish council.

Again, established after Good Friday Agreement.

[16:40:00] It's a forum to cooperate and to exchange information. Ian Talbot is with me. He's the chief executive of Chambers Ireland, the

country's largest business network. How worried are you about a Brexit vote in the U.K.?

IAN TALBOT, CHIEF EXECUTIVE, CHAMBERS IRELAND: We're concerned about it. By the same token, as a business organization, we are going to say life

will go on. We have been very flexible in the past few years, we've adapted. We'll continue to adapt if there's a Brexit. But we would,

obviously, prefer a Britain stayed in.

QUEST: Now, what preparations can or indeed are being made towards this end?

TALBOT: It's very difficult to know what a Brexit will actually mean. We know that, for example, if there's a Brexit, there's a two-year

consultation period for the EU to work out how somebody exits.

QUEST: But for instance, almost immediately on the 24th, there's a result, do you think a border has to go up between the north and the south

overnight? Do you think exports business suddenly flows out overnight?

TALBOT: No. It won't stop overnight. I think what will happen is there'll be a period of uncertainty. We have that two-year negotiation

period. That will be critical. During that time, we fear investment may drop off and uncertainty, as we all know, leads to slowdown in growth. So

I think those things are vitally important.

QUEST: Irish business. Do you believe that there could be the specter of a recession in this country? Now, you'll be familiar, of course, with the

Bank of England's comments of a recession in the U.K. if there's a Brexit. At the very best, the recovery here is -- it's not tenuous, but fragile.

It wouldn't take much to knock it over.

TALBOT: On the other hand, GDP last year growth was 7.8 percent. This year we're predicting 5 percent. So we can take a couple of knocks. But

we have things like tourism, for example, up 11 percent. And these are markets that are dependent on, for example, the Americas, as well as the

U.K. So there are other things that we can use to counter.

QUEST: But there's no question, it's an issue on your mind and it's -- I mean, if it's not exactly giving you sleepless nights, there's the

potential for a very serious hiccup.

TALBOT: We are not at sleepless nights yet, but the hiccup could be there. There's no question about it. There are worries, like for example, as you

say, the border. The border's a huge issue. It's a 500-kilometer border, 200 roads. It's impossible to manage that border.

QUEST: But you did once before?

TALBOT: We did once before, but we only managed about ten of those roads. So there are another 190 on which trade can take place. So we feel that

there will be issues. I think it will be a big stretch that the border would be re-imposed. I think will have to find other ways to allow free

movement of people between the two countries, Ireland and Northern Ireland.

QUEST: It just shows you however it goes, it's going to be difficult all around. Good to see you, sir.

TALBOT: Thank you very much.

QUEST: This is a magnificent place, isn't it?

TALBOT: It is. I've been standing in an old Guinness vat for the last half hour.

QUEST: This gentleman has been standing in an old Guinness vat. There's no Guinness in it. So go and have a drink.

TALBOT: Thank you very much.

QUEST: And send the bill to IATA. Thank you very much.

QUEST MEANS BUSINESS. we are in the Guinness storehouse, which has to be one of the liveliest places in Ireland. They don't actually brew much here

at the moment. That's not stopping a good bit of sopping as you can imagine. QUEST MEANS BUSINESS in Dublin.

(COMMERCIAL BREAK)

[16:45:31] QUEST: Belgium's Deputy Prime Minister is asking tourists not to panic over this forthcoming summer. Meanwhile, of course, as we told

you earlier in the week the U.S. State Department, I'll give you the exact words, has issued a travel alert. Talking about major continent's events,

including European football championships. It's all creating an environment, could something happen here in Europe? Are these travel

warnings necessary? David Scowsill with me. Good to see you, sir.

DAVID SCOWSILL, CEO, WORLD TRAVEL AND TOURISM COUNCIL: Nice to see you, Richard.

QUEST: When these warnings come out, people get frightened. The U.S. State Department put exactly this warning out. What are you saying?

SCOWSILL: Well, the same warning went out in March and governments have to react in these situations. They have to warn people there is a risk. And

what they have done two days ago, was talk about specific events as being a potential terrorist threat. But when we look at the bookings, we look at

the behavior of people, nobody seems to be canceling at this point.

QUEST: At this point but the risk must clearly be that they will. Earlier on this program, Alexandre de Juniac, you know, talks about following

Paris, following Brussels, bookings are obviously down. What can the industry do?

SCOWSILL: I think there's two things. Let's talk about two different types of terror attacks. Because Paris, Brussels, London and Madrid in the

past, city center bombings. Not aimed specifically at tourists. In that case those cities returned very quickly within about six months. Other

things like Tunisia, Egypt, those are specifically aimed at tourists and take longer to return. What can the industry do about it? The industry's

got to communicate about what it's doing with security. It's got to think about data provision in the future. Make the data flow between various

systems.

QUEST: Would you agree it's not doing a particularly good or coordinated job at the moment? Take Egypt, for example. And the problems, of course,

following the latest EgyptAir crash.

SCOWSILL: Yes. Well, Egypt suffered from a number of different instances on the years and the Arab Spring. And they are very good at coordinating

the response. Difficulty they have right now is that some of the governments are not letting the airlines fly back into Sharm el-Sheikh, the

British government, for example. But when that situation settles, the British and the Germans will return, so will the Russians. Then Egypt will

bounce back to normal. But this summer people aren't going. They're not going to Egypt, not going to Tunisia, they're not going to Turkey. They're

going to Spain, Portugal, Italy instead.

QUEST: Which comes back to my point as to how the industry can work in a more coordinated fashion because it's not just enough to say these are

isolated incidents. You are still safe. It's rare and few and far between.

SCOWSILL: Yes.

QUEST: Or even the whole bromide, don't worry.

SCOWSILL: The industry has to work very closely with governments, with all of these incidents. They have to communicate very clearly, what's

happened, what's been done about it and then start to market the destination again with the tour operators. Put packages together to entice

people back. It's all about communication, giving people confidence and customers are much more resilient now than 20 or 30 years ago. They're not

going to let these incidents spoil their family vacations.

QUEST: Good to see you David.

SCOWSILL: Very nice to see you, Richard.

QUEST: Thank you very much indeed. I think there is a Guinness over there awaiting your attention.

SCOWSILL: I'll go and look for it.

Thank you very much indeed. Right. As we continue at the Guinness storehouse, at the IATA annual general meeting. When we come back the host

airline is Aer Lingus. The chief executive of Aer Lingus, which is now a part of IAG, which is Willie Walsh, who used to be the CEO of Aer Lingus.

To all of that after the break. QUEST MEANS BUSINESS in Dublin.

(COMMERCIAL BREAK)

[16:51:16] QUEST: The host airline at IATA this year, because we are in Dublin, is Aer Lingus. Stephen Kavanagh is the Chief Executive. Aer

Lingus is now part, of course, of IAG. Willie Walsh's empire that includes British Airways, Iberia, Vueling and yourselves. Good to see you. Being

host, what does it mean? You pay the bill?

STEPHEN KAVANAGH, CEO, AER LINGUS: No. We get the opportunity to welcome both yourself and our colleagues from the industry globally. We get to

showcase Aer Lingus Dublin, and all that's good about Ireland and the role in the global aviation world.

QUEST: Aer Lingus is a fascinating -- it's a national carrier, now owned by another group. But still to some extent working out what its major role

is.

KAVANAGH: Oh no, we're very sure as to what our major role is. For 80 years we're connecting Ireland to the world. Increasingly, however,

combining the opportunities to connect Europe to North America via our Dublin gateway. So we're very clear on the opportunities. We are very

clear on the mission and it's been successful.

QUEST: Right. But you have Michael O'Leary and Ryanair which is the largest airline in Europe. Not just on your doorstep, but sitting in the

living room.

KAVANAGH: And I'm grateful for it. Because it kept us keen and relevant. We've been competing with Ryanair for longer than anyone else, for 30 years

and we've been competing successfully. We have a profitable short haul business and a profitable long haul business and it keeps us on our toes.

QUEST: Right, but you did sort of hybridize you, so it went low cost. You lost the full service. And now part of IAG. Are you now sort of counting

yourselves as a full-service carrier again?

KAVANAGH: We are a demand led airline.

QUEST: What does that mean?

KAVANAGH: We produce what people want. In the case of short haul travel, it's value based on price. But we give the consumer the ability to build

their own products. We focus on cost. Everything we produce, we produce high quality service, but we do it at the lowest possible cost. So we are

truly a low-cost airline, but we are delivering high quality service.

QUEST: Talking about Ireland and the economy of Ireland, if -- because, you know, if Ireland -- if the U.K. votes for Brexit, do you see a problem?

Do you see a difficulty?

KAVANAGH: I see a threats and opportunities from an Aer Lingus perspective, from an IAG perspective. We are neutral on the impact for the

business. Personally, I would have a preference for Britain to remain within the Union. But ultimately from an Aer Lingus perspective, it

creates as many opportunities, particularly to continue to flow traffic from the U.K. and Europe through Dublin across the Atlantic.

QUEST: This is Willie Walsh's sort of new toy in some sense. New theory, isn't it? He's got a hub in Madrid. He can build up a hub in Dublin. It

can pick up the slack from a Heathrow that's constrained and is never going to get a third runway.

KAVANAGH: I think for the last five years Aer Lingus has been the fastest growing carrier across the Atlantic. So we have proven the opportunity I

think within IAG. We can now accelerate and leverage all of those opportunities to great complementary hub within the IAG system and to make

Dublin really relevant in trans-Atlantic travel.

QUEST: Good to see you, sir. Thank you for hosting us this evening.

KAVANAGH: It's our pleasure.

QUEST: I'm told it might be a Guinness over there for you. Thank you very much, indeed.

KAVANAGH: Thank you.

QUEST: Thank you very much.

Now, as we continue tonight. So the IATA annual general meeting is continuing. In just a moment, we'll have a Profitable Moment. But this is

the Guinness storehouse. It's been here since the start of the 1900s. It was built by Arthur Guinness himself. It was used as a fermentation house

or storehouse. And now, of course, it's a roaring party where people are getting drunk.

[16:55:00] QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment from the Guinness storehouse in Dublin. Whenever the IATA airline CEOs get together you always wonder who it's all

about? What's the big issue? This year, there's no sense of crisis. There's no sense of disaster. But each individual airline is very much

working out what their role is in the future.

Will it be a full-service carrier? A British Airway, an Air France? Are they going for a low-cost model Like Jetstar? Do they need to get into bed

with one of the Gulf three? Evil though that might be to others. That's why this year's IATA is particularly important and going rather well.

Because the airlines are making money. They're spending money on product. As you have heard on tonight's program. But I just wonder how long is it

going to last? This is an industry that's very experienced at snatching defeat from the jaws of victory and shooting itself in the foot.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. In Dublin. Whatever you're up to in the hours ahead, I hope it's profitable.

I'll see you in London tomorrow.

END