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Quest Means Business
PM Modi Wins Third Term But Fall Short Of Supermajority; Biden Unveils New Immigration Policies Severely Limiting Asylum-Seeker Crossings; End Of YOLO Economy; AI Employees Call For New Whistleblower Protections; SAP CEO On New AI Partnership; British Airways CEO On Upcoming U.K. Elections; Fiji Airways CEO On The Island's Economy. Aired 4-5p ET
Aired June 04, 2024 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:27]
RICHARD QUEST, CNN INTERNATIONAL HOST: The markets just closed in New York. There is the gavel. Oh, beat that gavel with gusto on a day when the market
is up 140 points. Those are the markets, a busy hour and the main events that you and I will be talking about.
A shock result in India's election, as stocks in India fall sharply as Narendra Modi's party fails to secure a supermajority.
Delta's chief executive says don't expect the airfares to come down anytime soon. He can't get you enough planes to meet demand.
(BEGIN VIDEO CLIP)
ED BASTIAN, CEO, DELTA AIR LINES: I think everyone wishes they had more aircraft, more engines, and the supply chain in our industry is still
pretty constrained so what it is doing is keeping pricing at a pretty, pretty firm level.
(END VIDEO CLIP)
QUEST: An insider at OpenAI pen an open letter that warns of serious risks if the technology isn't reined in.
Live tonight from Dubai on Tuesday, it is June the 4th. I'm Richard Quest, and I mean business.
Good evening.
We begin tonight with voters in India that have delivered a stunning blow to the Prime Minister Narendra Modi and shocked investors in the world's
fifth largest economy.
Prime Minister Modi is set to get a historic third term, but his party fell far short of the supermajority that he had hoped for. It is a stunning
setback for the leader who had steamrolled opposition in the last two elections.
Now the polls have made clear that Modi was headed for another easy win. A few hours ago, he declared victory and glossed over the surprisingly
lackluster support.
(BEGIN VIDEO CLIP)
NARENDRA MODI, INDIAN PRIME MINISTER (through translator): This victory is a win for the world's largest democracy.
This is a win of the country's loyalty to the Constitution. This is a win for a developed India, a win for India's 1.4 billion people.
(END VIDEO CLIP)
QUEST: India has become the fastest growing major economy during Modi's 10 years in power. A possible change in the country's direction and that is
what sent the markets lower. The Nifty 50 as it is known closed down almost six percent and the 10 worst performing stocks in Asia across the continent
were all from India.
Ivan Watson is in New Delhi with the details.
Ivan, so if we look at what happened and the reasons why.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Right, this is not what people were expecting. This is certainly not what Narendra Modi
himself has expecting. He was predicting that his alliance of parties would win some 400 out of the 534 seats. Instead, his own party didn't even break
the halfway mark in the seats.
So he doesn't have his own party controlling the majority of seats. It has fallen under that, and his alliance does luck look like it is poised to
help him form a coalition government that would be the first time in a decade that Modi would have to govern with coalition partners.
Nobody knows how he would do that and how it would function and presumably because of those surprise results, that's why you had such a devastating
day on the Indian stock market, after all, on Monday, the Indian stock markets, they recorded record gains when the exit polls were suggesting a
landslide win for Modi and his BJP.
QUEST: If we take a look at how he will now govern, that will be the core issue in terms of whether there is renewed confidence in his ability to get
things done.
WATSON: Yes, and it is uncharted territory for Modi himself because as I pointed out, he has been in power at the national level for a decade, and
he enjoyed huge electoral mandates from the 2014 and the 2019 elections.
His party on its own control the majority of the seats in Parliament, and then it had allies as well, and he has lost that mandate.
[16:05:01]
So the question is, can he wheel and deal? Can he engage in Parliamentary politics, which he has not had to do to date, even when he was the top
official in his home state, he didn't really have to do that, and that's a big question, perhaps that is part of why you saw these results in the
stock market.
The opposition, they're claiming that they have really struck a blow against Modi and they poised themselves, positioned themselves as defenders
of the Constitution.
They were arguing that Modi was eroding democratic freedoms of press, of expression, of religion in this country and they say that these results are
a sign that people wanted to defend those freedoms.
We will have to see what will happen now in the weeks ahead. They are already threatening to try to peel away some of the coalition partners from
Modi's alliance.
QUEST: Ivan Watson in Delhi this evening, thank you.
Ravi Agrawal is the editor-in-chief of "Foreign Policy." Ravi is with me from New York.
What do you attribute the fall in the market to? Is it a worry that he won't be able to get things done, if you like, business friendly policies
will not continue?
RAVI AGRAWAL, EDITOR-IN-CHIEF, "FOREIGN POLICY": It will certainly be much harder. I mean, Modi as a leader has been quite business friendly, but it
is not just his policies alone. I think it is also certainty.
When you have a single party in power with a leader who is very familiar to India's top businessmen, several of whom are billionaires who know him
personally, when you take that personally equation away, when you add in coalition allies who may have their own demands of Modi, they might demand
a particular ministry that one of them wants to run.
Modi is just going to be a little bit more constrained than he has been before. He is going to have to be much more democratic and much more
consultative than he was before. All of that means direct decision-making will slow down.
I think the market is just a little bit shocked. This is not what they were expecting at all, and that's why we've seen them pare back pretty much all
of the gains they've had this entire year on the stock market.
QUEST: Are we at risk of overstating the, if you will, the effect? At the end of the day, he is still a prime minister with vast experience, even if
he ends up with a few truculent coalition partners, he is still, if you will, the big beast on the block.
AGRAWAL: Yes, you took the words out of my mouth there, Richard. A win is a win is a win. And I think part of the reason why the headlines today are
sounding as surprised and shocked as they are is because just 72 hours ago, the exit polls from India suggested a massive landslide win for Modi.
If you take a step back and look at this from a more historical lens, it is not unusual for Indian governments to be coalition governments. Since the
1980s, the trend in India has been for parties to cobble together majorities and rule and Modi was the one exception in 2014 and 2019.
And many analysts will now say that this couldn't have continued forever. This is a return to the norm. This is a return also to more democracy in
India, which could have other kind of results that could be good for decision-making in India that could also boost investor confidence.
I will point to one business statistic here, Richard. Foreign direct investment in India has actually declined in the last three years. That
could go up if people are actually more confident that Narendra Modi will be a more democratic prime minister.
QUEST: And the sheer impressiveness, if you will, of the election. Nearly 700 million voters. I mean, the whole takes weeks, but they do -- I was
reading the detail of how it is electronic voting, but there is a paper trail back track of which is tested on a model basis, so that they can make
sure that it is all working.
By all accounts. Ravi, this has gone swimmingly well.
AGRAWAL: It has with a few caveats. I mean, it is a remarkable thing when India heads to the polls. It is always the biggest election in the history
of the world and India should be commended for that by and large free and fair, but it has been constrained.
I mean, the BJP and Modi have made it much harder for the opposition to compete. They had jailed at least one prominent opposition politician.
Campaign financing was very opaque. The Supreme Court itself said that a particular campaign electoral bond was unconstitutional.
[16:10:09]
So there have been problems along the way and the opposition will say that their results have come despite the system, not because of it.
All of that said, the opposition still has lost and we shouldn't lose sight of that. Modi has most likely won in that his party has won the most number
of seats, most likely to now form a government. Just the nature of that government is a little bit new as Ivan was pointing out, we don't know how
well Modi can juggle in Parliament.
He is going to have to be a lot more consultative, collaborative. He is going to have to show up in Parliament for Prime Minister's Questions, for
example, which he hasn't always done. He would have to change.
QUEST: Ravi, I am grateful for you tonight. Thank you very much.
Now, shares in the Indian Airline, IndiGo were hit sharply, down almost five percent. It barely puts a dent in the performance of the carrier
overall, which is up nearly 37 percent year-to-date.
Incidentally, India is where we will be for next year's IATA Conference. I spoke to the IndiGo chief executive, Pieter Elbers here at the IATA in
Dubai. You'll recognize him as the former CEO of KLM.
He started his career in Schiphol and now, he told me how he has tailor- made IndiGo for the growing Indian market.
(BEGIN VIDEOTAPE)
PIETER ELBERS, CEO, INDIGO: We welcomed last year a little over 100 million customers. The year prior, it was 78. We recently started new flights into
Delhi -- from Delhi to Baku, Tbilisi, Almaty, Tashkent, and all these places are filled now with Indian travelers.
QUEST: But what do you want IndiGo to be? Because you're going to start putting in long-haul, you're going to be putting in a premium product.
Are you a JetBlue that has mint at the front?
ELBERS: You know, if home is the largest country of the world in terms of population and as diverse as India, I don't bother too much what label
anyone would like to put on us.
We are having a product which is tailor-made to the Indian market and that Indian market is today and tomorrow, super competitive. But at the same
time, indeed that middle-class is rising, indeed more and more businesses are going to be done. So we will be serving both segments on board of our
aircrafts.
QUEST: Does it work? Does it work to try and do both?
I mean, can you be Ryanair and full-service carrier at the same time?
ELBERS: I would invite you to fly with us and then to see how our product is today. Actually IndiGo has created a basis where we have a courteous and
hassle-free service, affordable fairs, and on-time performance as the very foundations of the company. That service is appreciated a lot by our
customers.
Yes, we are introducing now a business product on the nation's busiest business routes, we need to fly 20 a day between Delhi and Mumbai. We fly
15 a day between Delhi and Bangalore. Those numbers will only further growth.
QUEST: So, what is the need for the business product?
ELBERS: Well, again, India is changing and we -- actually, it is changing on both -- on two ends. One, there are millions and millions of people who
used to travel by train will now fly by air. We keep their choice of affordable fare for them.
The other part which is changing is that middle-class. There is an credible entrepreneurial spirit in India, so we see new businesses arising
everywhere. GDP growth is one of the fastest in the world.
QUEST: I guess what I am hearing is coming from the traditional aviation world, in a sense, what you're experiencing with IndiGo is something that
is different.
ELBERS: Well, it is totally different.
QUEST: And people like me try and take you and put you into that. Now, it is that.
ELBERS: I would say India is unique. It is unique as a country. Again, its home to the world's largest population, it is incredibly diverse. It has
the world's largest diaspora. The economy is growing at a massive base.
Against that backdrop, we developing an aviation model, which is fit for purpose, fit for the Indian market. So indeed, if you would like to put
this in a certain box --
QUEST: Yes.
ELBERS -- and I get that and it is for sure very different than where I came from two years ago. But I think we can build something which is
totally different.
QUEST: Do you look forward to the day when you're IndiGo widebody touches down at Schiphol?
ELBERS: Of course. Of course.
QUEST: Will you be on board?
ELBERS: Of course. I mean, it is not per se Schiphol, of course, I look forward to that.
QUEST: Oh, you know what I mean. You know what I mean.
ELBERS: I had a wonderful, wonderful stint and to be able to work there 30 year, serve 30 years as the CEO, so it was great. But bringing IndiGo
international, you know, if we disconnect from Schiphol for a moment, last August, we touched for the first time in Africa.
We inaugurated our flight from Nairobi -- from Mumbai to Nairobi. For the first time in history, IndiGo was touching African soil, which is great. If
you see how these flights now start to develop, I am very encouraged by all of these things we've done over the last two years and how the results are
firming up.
That is giving a lot of confidence on our side to continue to build on that.
(END VIDEOTAPE)
[16:15:10]
QUEST: And we are going to hear more from chief executives across the world over the course of the hour. You'll have from the CEO of British Airways,
Delta Air Lines, and Fiji Airways, all to give us their views on what is happening.
The significance of course is the geographical spread across the world.
President Biden announced new sweeping measures to slow immigration into the United States. The president will be able to bar migrants who cross
illegally from seeking asylum once a daily threshold of crossings is met.
The president is expected to vote the authority immediately. The president sharply criticized Republicans for not working with him on this issue.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: Today, I am moving past Republican obstruction using executive authorities available to me as
president to do what I can on my own to address the border.
Frankly, I would have preferred to address this issue through bipartisan legislation because that is the only way to actually get the kind of system
we have now that is broken, fixed.
(END VIDEO CLIP)
QUEST: Priscilla Alvarez is the White House for us this evening.
Good to see you. Grateful. Thank you.
The reason why now, is it politics pure and simple?
PRISCILLA ALVAREZ, CNN WHITE HOUSE REPORTER: It sure seems that way. I mean, this is something that the president is essentially taking from
Donald Trump's playbook, and he is doing it only weeks before the presidential debate.
Just to remind our viewers, former President Trump tried to use this exact same authority in 2018, but was blocked by the courts. President Biden may
face a very similar fate.
Now, this is a sweeping measure that essentially makes it far more difficult for migrants to seek asylum at the US-Mexico border. The reason
for that is because its shuts off asylum access for migrants crossing the border illegally if the daily threshold of 2,500 is met. We are already
there.
That means that authorities can start to turn my migrants away back to Mexico or back to their origin countries, starting at midnight tonight.
Now there are some exemptions for unaccompanied children as well as the most vulnerable, including, for example, victims of severe human
trafficking that according to the administration, but they are facing fierce backlash from progressives who say this is far too similar to what
Donald Trump tried to do and they are also hearing from Republicans who say this is too little, too late.
Now President Biden addressed that criticism during his remarks today and he said to be patient and he noted that Americans patience was already
wearing thin, and that has been a reality for this White House, which over the last three years has had to deal with multiple border crisis and has
had to face that criticism from American voters who are putting this as one of their top issues going into the November election.
So this is a significant policy shift for this White House. They're trying to blunt those Republican attacks going into November, and the president
also calling back to when Republicans walked away from a failed bipartisan border deal. All of those things coming together in these remarks, making
quite clear the president is aware, this is a top issue going into remember.
QUEST: Priscilla, I am grateful for you tonight at the White House in Washington.
Coming up on QUEST MEANS BUSINESS, new signs of strain on the US economy. At the same time, the Delta chief executive tells me he is not seeing any
slowdown in sight.
(BEGIN VIDEO CLIP)
BASTIAN: The most important for us is the demand for travel is stronger than we've ever seen.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:21:08]
QUEST: The Delta Air Lines chief executive tells me, demand is as robust as ever. It has been a strong year for his company, winning their largest
transatlantic schedule in history, and the stock is up more than 20 percent to date.
Still, Ed Bastian says Boeing's woes are preventing them from taking full advantage.
It is waiting on an order of 77 Max 10s that are set to start delivery late next year. I asked Ed Bastian, what is having the biggest impact?
(BEGIN VIDEOTAPE)
BASTIAN: The most important for us is the demand for travel is stronger than we've ever seen. The reality is, people are just going and they
continue to go and I think that force of nature, that continued drive to travel and to experience life, rather than stay home and have life come to
them and buy things is changed, particularly on the international setting anything that we've ever seen.
QUEST: Have you got the capacity and ability to take advantage of it?
BASTIAN: Well, we wish we had more. I think everyone wishes they had more aircraft, more engines, and the supply chain in our industry is still
pretty constrained. So what it is doing is keeping pricing at a pretty, pretty firm level.
QUEST: So if you had more planes, you'd be able to fill them on more international routes.
BASTIAN: No question.
QUEST: This issue of aircraft, you are quoted as saying you basically -- the industry needs Boeing and Airbus.
BASTIAN: Absolutely.
QUEST: It needs both and that's obviously for competitive reasons, but it also gives an underpinning in a sense for the airlines to be able to play
off each other.
BASTIAN: Well, Boeing is, first of all, the technology, the innovation, the quality that Boeing has provided, they are the backbone of our industry,
let's not forget.
Delta, the majority of planes we fly are Boeing and while currently we are moving pretty actively forward with Airbus because they've been able to
supply us, we need them both to be healthy because our economies on a global scale require that lift and neither Boeing or Airbus have the
capacity candidly to independently serve what the world needs.
QUEST: If we look at your current fleet composition and your orders. Now you're not affected by Max yet, your deliveries don't start until later on,
but you will be affected by it unless this situation improves, which it is unlikely, too.
BASTIAN: Right. And we are not, were not expecting it to improve anytime soon.
QUEST: So how do you compensate that?
BASTIAN: Well, we continue to take more Airbus planes, particularly the Neo, the narrow body, which we are very happy with, and we keep our
existing fleet a little bit longer.
QUEST: If you continue down this road, does there come a point when you say, as United has moved, they are more than intact, well, we don't need
those Maxes anyway, and suddenly they say, well actually, the 320 fleet is bigger, so we might as well just grow that larger.
Youve got to a wry smile.
BASTIAN: Well, we need them both. I don't think anyone at our scale, including our competitors in Chicago can go it alone with one fleet type on
the narrow body.
Remember these planes are coming in at 25 percent more fuel efficient than the planes that are retiring. They're coming in larger, coming in with
greater amenities. With the Max, whether it is the Max 10, the Max 7, whatever model is out there that is certified to be safe, I guarantee,
there is going to be a line out the door in Seattle wanting them.
QUEST: What's gone wrong do you think with the supply chain?
BASTIAN: Well, I think it is a coupling of the fact that the supply chain has gone through just devastation. Labor was let go, prices have increased,
materials have been more difficult to acquire.
Remember, many of the airlines, particularly US airlines, we kept our employees in place to hit the rebound, our suppliers didn't, so you have
that, coupled with the fact that the demand has come back much faster than anyone ever anticipated. So the pressure to get those planes in the sky
coupled with the weakness in the supply chain has created this massive logjam.
[16:25:02]
QUEST: You won't be at IATA because in essence, you're doing something more important.
BASTIAN: I am. I am.
QUEST: Tell us where you're going?
BASTIAN: For the last number of years, Delta has paid for and provided a free charter, international charter from the US to Normandy, landing in
Normandy, carrying back our World War II heroes, and this year, particularly being the 80th celebration and anniversary of D-Day, we are
bringing 50 of our World War II heroes, many of whom have never even been back since 80 years ago, since they've landed on the beaches.
QUEST: In essence, everything that we enjoy today comes from them.
BASTIAN: It does. It does.
We take for granted the sacrifices, the amazing courage, the boldness of -- and the unity -- and when you look at the world today, the world feels like
a pretty complicated place. We have to remember why we are here.
QUEST: At a time at the moment, particularly in your country, which seems so riven and divided, whichever side you're on, the ability to create that
unity, do you think it is possible?
BASTIAN: I do. I do.
I believe the spirit wants to work together; unfortunately, the partisanship, as you say, particularly in an election year is at levels
we've never seen and --
QUEST: Does that worry you?
BASTIAN: Of course, it does. Of course, it does. And I think it worries everybody.
And we just have to continue to find causes that unite us. It is a world that needs leadership like never before and whether you're in business,
whether you're in politics, whether you're in community service, whether you're in religious -- you have to find things to bring people together.
(END VIDEOTAPE)
QUEST: That's the chief executive of Delta Air Lines.
Well, demand for travel is still strong, the US labor market continues to show signs of cooling. Job openings for April fell to the lowest level in
three years; a slowing consumer spending as well and that could be the death of the so-called YOLO economy. Gone are the days of heavy spending on
concert tickets and to home improvement.
Recent results from major consumer companies show people are tightening that belts.
Allison Morrow is with me.
Double-edged sword here, because on the one hand, slowing economy is not particularly good in one sense. But at this moment, our slowing economy
could give their headroom necessary for the fed to say, yes, yes, two percent is on the -- we are on right glide path to two percent, therefore,
we can cut rates.
ALLISON MORROW, CNN BUSINESS SENIOR WRITER: You're absolutely right. I mean, the death of the YOLO economy as people are talking about, is not the
death of the economy.
I think it is important to remember that in the heady days right after the pandemic started to look like it was over, we did what Americans do best
when faced with our mortality, we shopped and shopped and shopped, and we booked travel, and we went to concerts and all of this spending kind of ran
up debt on our credit cards, people went through their savings that they had been piling up during this pandemic. And so now, we are kind reaching
the end of our rope, and that is where you're seeing Target, Home Depot, McDonald's, all of those companies that you pointed to are seeing a
pullback, but it is a pullback from a very hot economy and a consumer that really powered us through the pandemic.
QUEST: If this is the case, when do you think we see sufficient evidence for the Fed to do something?
MORROW: Yes, the Fed is seeing core inflation come down a little slower than it would like. So I think it is looking as the Fed always loves to say
it, it is going to be data dependent and that is something that my colleague, Nicole Goodkind who wrote the story about the YOLO economy today
has been hitting on is that the Fed is always going to be looking at multiple data points at once and with Friday's Job Report for the month of
May coming out this week, I think they're going to be looking very closely at that.
Of course, as investors will as well, but expectations for jobs in May, it is still a job creation at around 200,000 or are just shy of 200,000, which
is still historically hot.
So it may take a while for the Fed to see the kind of cooling that it wants in order to start actually cutting rates.
QUEST: Grateful for you this evening. Thank you very much. I appreciate it.
Tonight, a group of OpenAI insiders say companies need to be more transparent about the risks that are powered by artificial intelligence.
They've written an open letter, which calls on Silicon Valley to adopt a culture of open criticism, new protections for those who speak out.
(COMMERCIAL BREAK)
[16:33:22]
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment.
U.K. elections only weeks away. Tonight the CEO of British Airways tells me what he hopes the next government will deliver for aviation. And the CEO of
German software giant SAP, his company has a new AI partnership with Amazon. He'll tell us more about it. We'll only get to those stories after
the news because this is CNN. On this network, the news always comes first.
An FBI special agent is the first witness to take the stand in the Hunter Biden federal gun trial. He's testifying about digital evidence in the
case. Both sides have given their opening statements. Prosecutors said no one is above the law. The defense claim the president's son wasn't using
drugs when he purchased a handgun in 2018.
Iranian media is reporting an adviser in Iran's Islamic Revolutionary Guards Corps has been killed in Israeli airstrikes. Reports say it happened
on Monday near the city of Aleppo. So far Israel has not responded. If true, it will mark the first time that we know of that an IRGC member has
been killed by Israel since the April strike on Iran's consulate in Damascus.
A heat dome is expected to sizzle the Western United States this week. It's a weather phenomenon where air is trapped in high pressure areas and heats
for days even weeks at a time. Anticipation of triple-digit temperatures this week, excessive heat warnings have been issued for millions of
residents in California, Nevada, Arizona, and Utah.
[16:35:16]
A group of current and former OpenAI employees are now calling for new protections for whistleblowers. They've written in an open letter that
advanced AI companies have strong incentives to avoid oversight and that they cannot be trusted to be transparent about the risks of their
technology. OpenAI said in response to the letter, it was proud of its track record on safety.
Clare Duffy is in New York.
I guess, I mean, you know, it's fine for the internal whistleblowers, if you will, to say this. But one would hope that regulators and what those
people on the know or in the know I would say would be well-versed in this sort of thing anyway.
CLARE DUFFY, CNN BUSINESS WRITER: Well, Richard, I think that is what they're really concerned about here is that in the absence of AI regulation
at this moment where there really is no regulation, there's no guidelines from lawmakers or regulators for this industry beyond a set of some
voluntary commitments that these companies have made. And so these workers say that in light of that, it becomes especially important that employees
be able to speak up about their concerns without the risk of retaliation from these companies.
And what I found really interesting in this letter is they call out the specific concern that ordinary whistleblower protections are insufficient
because they focus on illegal activity, whereas many of the risks that these employees are concerned about are not yet regulated, so they are
asking these companies to commit to, for example, not enforcing non- disparagement agreements and to facilitate the sharing of anonymous concerns between employees and board members or regulators.
But you do have to wonder if this is going to become just another voluntary commitment that these companies say, oh, sure, we won't to enforce that
non-disparagement agreement. It makes them look good temporarily, but there's nothing holding them to this commitment. This doesn't replace the
need for regulation, Richard.
QUEST: It most certainly doesn't. And at the same time from the company's point of view, where do you draw the line? I mean, at what point are you
entitled to say, look, if we're not breaking the law and we are doing this, and we're doing it what we said we were going to do, then what's wrong with
that?
DUFFY: Right. And I think that's sort of OpenAI's response here. They've said they've created this safety committee that is made up of board members
and employees that will be consulting outside experts.
QUEST: Right.
DUFFY: And certainly there are probably internal company secrets that they don't want shared with the outside world, even if they do have something to
do with safety. And that's where I think you do need a regulatory regime where there's perhaps, you know, this idea of an AI agency has been floated
where companies have some requirement to share safety information with the government, perhaps not with the entire world, but where regulators have
some insight into what's happening with these companies to ensure that this development is happening safely because there are real significant risks.
I mean, everything from misinformation and election interference to these worries that we've heard in recent weeks from OpenAI employees who have
departed who say this company is developing technology that could become more intelligent than humans. So real significant risks and I think we
need, you know, some sort of regime to oversee this stuff.
QUEST: Clare, glad to have you with us. Thank you.
The AI rally appears to have taken a breather so far this week. Plenty of tech stocks are in their all-time highs. It includes Amazon and SAP. And
both shares up about 20 percent on the year. The two companies all collaborating to give businesses more generative AI tools in the cloud.
That has ever been some skepticism about artificial intelligence in the workplace. The Nobel winning economist Paul Romer said last week he doubts
that AI will greatly increase productivity. I suspect with great respect, Christian Klein, the chief executive of SAP, might see slightly
differently. Christian is with me in Orlando.
And at the same time, I guess you don't want to get into a pissing match with a Nobel economist. So in that scenario, do you see strong productivity
gains from AI?
CHRISTIAN KLEIN, CEO, SAP: I mean, yes. First of all, thanks for having me, Richard. And when you could see the energy here on the show floors here in
Orlando at the Sapphire Conference you could see the excitement around generated AI and our product portfolio.
When you imagine, Richard, we are 300 million end-users working on our solution each and every day, for document management, for HR, for finance,
for supply chain. And these 300 million end-users will have in the future a co-pilot tool which will take over 80 percent of their activities. So there
will be a massive productivity gain for these 300 million users.
[16:40:06]
QUEST: Where do you stand on this dispute? You've heard me talking about earlier. You've got the open letter from OpenAI which is basically asking
for whistleblower protections, at the same time, you have the company saying there are plenty of protections that all there. Now, if you are
going to be developing AI with Amazon and others, you are in a sense facing the same issue, although from a different standpoint. So where do you stand
on giving whistleblower protections?
KLEIN: Yes, so, Richard, really good question. For us, it's very important to also deliver responsible AI, to the point you are raising. And so what
does responsible AI mean for us at SAP? First, we have 40,000 customers sharing with us their data based on a consent. So they agree that we can
use the data and an anonymized in an encrypted way to train the modules, to train our AI generated cases which we are embedding into the business
processes of our customers.
Second, we really want to make sure that the data is secure. So if there are certain (INAUDIBLE) cloud requirements in the U.S., in the U.K., in
Australia, we are serving for that so that the customer always knows where the data does reside and who is touching the data. So that is for us very
important to deliver responsible AI.
QUEST: Responsible AI also requires you to be responsible in the way you develop it and obviously you're very concerned of what happens with your
customers and your consumers, if you will. But that at a societal level, Christian, where's your responsibility there?
KLEIN: Good question, Richard. And actually, for us it's very important to help with our technology, to help the world run better and improve people's
lives. And we really take this mission to our heart. And so what we are doing is when we have, for example, embedding generated AI into our
procurement solutions, we're really screening also the world wide web to say what kind of suppliers can only not only deliver at best cost or best
quality, is there any supplier in your supply chain without actually harming human rights? And so to take this supply out of the supply chain.
If you look at HR and the recording space, we really want to make sure that we are using an embedding AI so that is non-bias in your recording machine.
So that for us very important to all to do good for the society and not only deliver, you know, higher productivity or accelerated revenue growth.
QUEST: Between zero and 100, where do you think we are on the AI scale of development at the moment? Zero being we are not even out the front door,
100 we're there. Where do you think we are?
KLEIN: Richard, it's hard to generalize. When you look at what we announced today with NVIDIA and (INAUDIBLE) at Sapphire, when we announced this tool
for development and tool for consultants, so what we are doing is we have six million people in our ecosystem and we are giving them now a generative
AI based developer tooling in their hand where they can auto generate code, where they can configure systems, design business processes, to run a
company more effective.
I mean, this is massive. So from a scale from zero to 100, I would say this a 70. In other parts, maybe we are 50, but we are definitely on the move
and this technology has a lot of impact on businesses.
QUEST: Very grateful to have you with us. Always good to have you, Christian. Thank you very much for joining us tonight for Orlando in
Florida.
I'm here in Dubai. I've been talking to airline executives as part of our IATA coverage. I spoke to the CEO of British Airways. Sean Doyle has big
plans and now he's got the money to get them done.
(BEGIN VIDEO CLIP)
SEAN DOYLE, CEO, BRITISH AIRWAYS: Seven billion pounds earmarked for the next three years. That's the biggest we've ever done in our history. Now
about half of that is new planes. But the other half is new product on board. It's a new technology stack and a new digital experience.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:46:54]
QUEST: Now news just into CNN. The U.S. House has voted to sanction the International Criminal Court. The ICC's targeting of the Israeli Prime
Minister Benjamin Netanyahu for an arrest warrant sparked anger in Washington. You see the results on the screen there. President Biden has
denounced the decision. His administration of opposes the sanction that the Republicans are pushing through the House.
That bill would revoke the visa of any ICC official targeted -- involved in the targeting. It would also prohibit them from buying or selling property
in the United States. It appears unlikely the Senate will take up the bill given the White House opposition.
The election debate is underway in the United Kingdom. It's a month before polling day. The British Prime Minister Rishi Sunak has called a snap
election for July 4th. He's hoping to extend the Conservative Party's hold on par. A recent YouGov poll suggests the outcome will be a Labour
landslide. Whoever winds -- that's the loser polls.
Whoever wins the election, chief executive of British Airways wants policies that help aviation tap into sustainable fuel, SAF. Sean Doyle also
told me he's building a bigger fleet and landing on more routes, and he wants to do it and he's got the money.
(BEGIN VIDEO CLIP)
DOYLE: We have seven billion pounds earmarked for the next three years. That's the biggest we've ever done in our history. Now about half of that
is new planes, but the other half is new product on board. It's a new technology stack and a new digital experience, and a three vamping the
ground experience. So I think it's a big transformation. We're about two- thirds of the way through it in my book. But the exciting phase is coming in the next couple of years.
QUEST: You've had one major advantage over your predecessor which is you've been allowed to spend. So where are you going to grow the airline?
DOYLE: Well, I think what we will see happen at British Airways is the rebuild of our long haul network and we're taking a lot of long-haul planes
back into British Airways. A lot more efficient than the ones that retired, the 747s, with a great product. So we want to kind of, I supposed, build
back where we used to fly to. And we started that already. Bangkok and Kuala Lumpur come back on the network in winter.
QUEST: But if you look at the geopolitical structures, for example, whether it'd be Russia, no overflight, whether it be in Middle East, with the
problems with Israel and Gaza, your difficulty in managing events is really quite extraordinary.
DOYLE: Yes. And I think we've had, you know, 104 years of actually managing through crisis. We've had various issues to navigate through. I would say
the issues we deal with they are significant but compared to the pandemic these are the kind of things that we're able to cope with. So --
QUEST: The pandemic was existential for the whole industry.
DOYLE: Yes. Yes.
QUEST: In that sense. Everybody faced that same problem. We're now talking about is individual airline's ability to compete in better times
essentially.
DOYLE: Yes. Yes. And I think, you know, the way you compete was going to be basically what you need to do for your customer. And that hasn't changed.
But, you know, what I would say geopolitics, we just have to navigate through these issues and I think still flying and still flying safely.
QUEST: Let's take the word geo off and just factor on politics. Are you worried about after the general election?
[16:50:06]
DOYLE: We need policy certainty. We need support from the path to net zero. I think there's a very kind of exciting set of opportunities for government
to seize on in terms of SAF production and our biggest ask will be, let's lay out some policies that support the aviation transition to net zero by
2050.
QUEST: Have you had any indication from the opposition if they become government that they will change policy or how they will review aviation
policy vis-a-vis British Airways?
DOYLE: Yes. Well, I think there is a consistency in terms of what we need to do for aviation. I think the first thing all parties recognize is the
importance of aviation to the economic model of the country. I think whoever wins the election we need to move quickly to legislate on the
policies that will unlock things like SAF production and the U.K. economy.
QUEST: On SAF, I'm getting weary of hearing everybody say that SAF is too expensive, there's not enough of it, we can't get it, and that policy is
not -- you know, is not conducive to it. How are you set to get your SAF allowance?
DOYLE: Well, we have a 10 percent commitment by 2030, which is consistent with the U.K. mandate. I think what we do need to do is make sure that the
U.K. can build up supply because other countries like the U.S. are well ahead of us in building production.
QUEST: Right. But they're using a different method. They're using a different incentivizing method under the IRA than say for example the
European methods.
DOYLE: Yes. Yes, I'd agree but Europe is beginning to build plants and get policy together, and it's beginning to use I think the reduction in ETS
credits to fund investment and capital. So I think, you know, the wheels are moving in Europe. They're moving very quickly in the U.S., we need to
get them moving quickly in the U.K.
(END VIDEOTAPE)
QUEST: More airlines, over the course of the last few days we've spoken to the largest, the smaller ones, and some that are very niche. For instance,
Fiji Airways. Andre Viljoen tells me the island's economy depends on his airline. Fiji in a moment.
(COMMERCIAL BREAK)
QUEST: Earlier in the program we heard from Ed Bastian of Delta, who served more than 190 million passengers last year for the world's largest. Then
you have Fiji Airways, served nearly 2.2 million by comparison, and here you can see how small and arguably remote the island is. So succeeding for
the small carrier is very difficult. But it means it's all the more important for the island economy.
[16:55:02]
The CEO Andre Viljoen explained the challenges of Fiji Airways.
(BEGIN VIDEOTAPE)
ANDRE VILJOEN, FIJI AIRWAYS CEO: I always say an island airline like ourselves and in many and many have disappeared over the last 15 years,
more than 100, have a challenge business model where 97 percent of your business is inbound leisure. We will say leisure travelers are looking for
great deals. Where does business traffic and we will say have little time and lot of money will pay more for tickets.
We also don't have scale. I need 21 aircraft, five types. So a unit costs are higher than airlines that have 100 of a type. And in every market, we
fly to we're second. We don't have market power. And we also don't have a frequent flyer program because our holiday maker is not going to join a
frequent flyer program for their holiday.
QUEST: You have everything against you, these all the big airlines have in favor.
VILJOEN: So have we overcome it?
QUEST: Yes.
VILJOEN: I'm sure you're going to ask me.
QUEST: Yes.
VILJOEN: With some game changer strategies. And the first is our people. We have incredible people that punch above their weight and we've used a lot
of cognitive psychology frameworks to keep developing that mindset. The second is to constantly look for that little gap we can improve the
business model, but benchmarking against the best. Thirdly, we have a purpose. Simple purpose. We fly for Fiji. Every person wakes up every
morning with that beautiful desire to be the best because we fly for Fiji.
QUEST: You have one major advantage during COVID, didn't you? I mean, you didn't shut the thing down here.
VILJOEN: Yes. We didn't. We chose a strategy to shut down month by month. Then we had a very simple common purpose we created to survive but more
importantly, to be totally ready to be the first mover when the markets open.
QUEST: That was expensive.
VILJOEN: Well, yes, it could have been cheaper to shut everything down, but how would we have restarted and when 45 percent of the economy depends on
us we needed to be ready day one, when the markets open.
QUEST: And you were.
VILJOEN: And we were. We were the first movers and as a result, we grew by 35 percent in the first year.
(END VIDEOTAPE)
QUEST: Extraordinary achievement.
We'll take a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Are you all right? We're OK. What time do you want me out?
Tonight's "Profitable Moment" it has been invigorating and thoroughly enjoyable to be once again in the Gulf. It is always refreshing and
enjoyable to be doing this and to be live on the television from this part of the world. But the reality is, of course, that in many times, that's
QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Dubai.
I'm not quite sure what you've been enjoying for the last 45 seconds. I've certainly been talking to you. I hope you've been listening, and whatever
happens, I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
I'll be back with you in New York next week.
END
