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QUEST MEANS BUSINESS
Airspace Over Europe Starts to Open Up; Europe May Take Legal Action Against Goldman Sachs
Aired April 19, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: A ray of hope through the clouds. Airspace over Europe is starting to open up.
Counting the cost of the shut down, British Airways wants financial compensation.
And gunning for Goldman Sachs: Europe joins the posse in pursuit of Wall Street finest.
I'm Richard Quest. We're live in New York, where tonight I mean business.
Good evening to you.
And a warm welcome to the program, which tonight comes to you from John F. Kennedy Airport, on the night when of course European aviation seems to be opening up again. You'd hardly know it from here at Kennedy, which is looking a bit like a no-man's land. To look at this international building well, there are not passengers, no stranded passengers here. This international hub has become a temporary crash pad. People have been leaving and arriving, coming back as and when they can to get information on when they'll return to Europe.
And tonight there new news on when the European skies may open up. Planes are returning to the skies in drips and dabs as the restrictions are slowly released. In Britain the airspace over Scotland parts of Northern England is expected to reopen from 7:00 a.m. local time on Tuesday.
The Air Traffic Authority says ash is no longer being thrown up to an altitude that would endanger flights over the U.K. And the existing cloud of ash is expected to blow southwards. British Airways says it aims to resume flights in and out of London from 7 p.m. on Tuesday; 15 Lufthansa planes are making their way back to Germany, tonight, from around the world. German aviation authorities granted special permission for them to return home carrying possibly up to 15,000 passengers.
However, flight restrictions remain in place in Germany. France says it is opening air corridors in the south of the country. Other countries that are easing restrictions include Belgium and Denmark.
Now, you can find out all the details on where you flight restrictions are at the moment. They can be found at CNN.com. Of course, your own airlines website will keep you informed, but so will CNN.com.
Now, Brian Flynn is deputy head of operations at Euro Control. A short while ago Euro Control came out with new rules. Basically no-fly zones that they believe will make flying safe and help open up aviation again.
Brian joins me now. Apologies, Brian, I wasn't able to hear you quite, just from there. Brain, the new plans that you are putting in place. Do you believe that they will make significant inroads in the early stages of this?
BRIAN FLYNN, DEPUTY HEAD OF OPERATIONS, EURO CONTROL: Hello. I'm sorry I didn't quite catch your question.
QUEST: I'm sorry, Brian, we are as you can hear having one or two communications difficulties. I'll ask the question again. The new no-fly restrictions and the new zones, how will this open up dramatically, airspace, or is it still going to be a very slow process?
FLYNN: It will be a gradual process, but hopefully it will not take too long. At the moment the number of routes are being opened up to flights between some of the major city pairs and to allow some traffic to operate in and out of Europe, by flying on routes which have already been flown by test aircraft, or non-passenger carrying aircraft over the last few days.
So, we already have a number of additional flights that are flying in the airspace at the moment in time.
QUEST: OK. But if we take a look at how it develops, for instance, we know tonight that Skipall (ph) says flying is not going to start until tomorrow evening. We know Heathrow says one thing, other airports say another. So even with these new restrictions and new opening up, it is still going to be a hodgepodge of where you can fly and where you can't, isn't it?
FLYNN: I wouldn't describe it as a hodgepodge. All of these flights will be fully coordinated between all of the air navigation services throughout Europe, and at all times the security and the safety of the passengers will be ensured. Today we expect to have almost 9,000 flight operating. I think the prognosis for to morrow is a lot more optimistic. We'll have lots more flights flying tomorrow.
QUEST: Brian, the one other thing of course that people are asking is, is there a conflict between the airlines that have been asking for airspace to be opened much more quickly, and the authorities, which say that safety comes first. The airlines also say safety comes first. Why is there this discrepancy?
FLYNN: I don't believe there is a discrepancy. There are, of course, in any very difficult situation like this there can be differences of opinion, differences of interpretation of the advice. But throughout the meetings that we have had today I think that the aviation community in Europe has managed to find a solution which will allow a gradual restoration of normal aviation services, bearing in mind that the volcanic ash cloud still is a part of the airspace.
QUEST: Right. Brian, one final question, I just have to ask you, one of the wire services is reporting that European air traffic is to return to pretty much normal, by tomorrow. So, can you confirm that to us, at the moment-by Thursday, I beg your pardon. By Thursday, can you confirm that to us?
FLYNN: I think that would be the optimistic expectation that we would be back to normal by Thursday. But I think, certainly, tomorrow will be a day of significance. Perhaps, Wednesday (UNINTELLIGIBLE). And the optimists would be, as you said, by Thursday we'll be back to something approaching normalcy. However, with the-there's been a lot of economic inconvenience and economic loss, as a result unfortunately.
QUEST: All right. Brian, many thanks indeed. Brian from Euro Control, joining me there. Just to recap what Brian was saying. And optimistic approach that perhaps European air traffic returns to normal by Thursday. But certainly with the new regulations being put in place by Euro Control, things becoming a lot easier as flying gets back to normal.
Alex Cruz joins me now, via broadband. Alex is the chief executive of the low-cost carrier, the Spanish carrier, Vueling.
Alex, good evening to you. Many thanks for that.
How difficult has it been for you, running a network during these- during these strained times?
ALEX CRUZ, CEO, VUELING AIRLINES: It has been difficult for us. Although it looks like not as difficult as some of the other carriers in Europe. About one-third of our operations have been disrupted throughout the day, today, and yesterday.
QUEST: Alex, as things get back to normal, and as flying starts again, what is your biggest difficulty? Is it the fact where planes are? Is it the stranded buses? What is the toughest bit for your network?
CRUZ: I think at the end, what most people are concerned about are their own trips, their own experiences, and have they been able to manage them correctly. To make a decision when to cancel a flight is extremely tricky. We want to wait for the authorities to make the right decisions in terms of opening up the different airspaces. But there are a lot of passengers all around Europe and in our airports, which are waiting. Some of those positions sometimes it is difficult to get all the airlines to synchronize to the same minute, and of course, passengers are all looking at exactly the airport display.
QUEST: On this question, do you believe that airlines should receive compensation, either from national governments, or from the European Commission or the European Union for their losses, as the U.S. airlines did after 9/11?
CRUZ: I think all the different airline associations have been expressing their intentions and their feelings with regards to this matter. Our own association, the European North Air Association (ph) has made it fairly clear in terms of several options in which the European community and the different countries to help us in this respect.
QUEST: And finally, one question, Mr. Bisignani of IATA, Giovanni Bisignani of IATA, said this morning that it is possible that smaller and medium sized airlines could find themselves in financial difficulties. And by that, of course, we can extrapolate, go out of business. Do you think any airline is going to go under as a result of this?
CRUZ: I think it is very possible, particularly if the situation was to go on for a few more days. This is a business about cash. If we are not able to generate cash, we will not be able to survive. At the moment, if we are able to finish it up in the next couple of days, I think the number of casualties will be quite low.
QUEST: Alex, many thanks, indeed. Alex Cruz, always good to have you on the program from the Spanish airline, Vueling.
When we come back in just a moment, the other big story that we're following in the financial world, it comes from Goldman Sachs, and the problems facing the big name on Wall Street. How bad is it going to get for Goldman, in just a moment.
QUEST MEANS BUSINESS, we're at Kennedy.
QUEST: It is eerily quiet here at Kennedy Airport, admittedly it is only just after 2:00 o'clock in the afternoon. But this will be the time when the European flights would be landing, preparing, of course, to head back to Europe in the early hours of the evening, those red-eye flights. Much loathed by business men and tourists alike.
Let's look at the Big Board in New York at the moment. The Dow Jones industrials are now over 11,000. The market had taken a tumble, not only on Friday, on the back of the Goldman Sachs announcement. But also, of course, because it was felt that it was time to take something of a breather.
When the weekend reaction from Goldman arrived, it was feared that it would be another serious fall on Monday. Maggie Lake joins me now from CNN New York.
Maggie, the Goldman factor in the market, it may not have had a massive effect today but certainly it is the talking point.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: It certainly is, and it is going to be all week, Richard.
Just want to bring you up to date with the latest news we have on that report that for that Fabrice Tourre, the Goldman executive named in that SEC suit is perhaps not surprisingly going to take some personal time off. Goldman stressing that he is still an employee. He has not been suspended, but he's going to take some time off. No doubt to prepare for the legal battle. But it is really the battle in the court of public opinion that is intensifying and moving swiftly now this week.
Today the White House announced that President Obama is going to come to New York on Thursday to rally support for financial reform that is making its way through Congress. He's not doing it in D.C. He's coming right to Wall Street's doorstep, so to speak, in order to make that. You bet that he's going to use strong language. The U.K.'s Gordon Brown, of course, has slammed what he calls moral bankruptcy announcing that regulators in the U.K. are going to probe Goldman. It is likely that Germany will do the same.
Over the weekend Dick Bove, a widely followed bank analyst here, from Rochdale, predicting that top management, perhaps including Lloyd Blankfein, will ultimately in his words, `have to fall on their swords". You know, resign, because of what happened to Goldman's persona. But not everyone, it should be said, is jumping on this bandwagon, this anti- Goldman bandwagon.
"The Wall Street Journal"-I had a very interesting op-ed that caught my eye today. They say after 18 months of investigation all the government can come up with is an allegation that Goldman misled some of the world's most sophisticated investors? This is more like a water pistol than a smoking gun.
And what we are really waiting for is Goldman's chance to defend itself. Lloyd Blankfein sending out a voice mail to all of his employees, we have the text of that today. Saying that they are getting ready to defend the firm and its reputation, that they don't stand by any wrong doing. They are having a conference call that was already scheduled, about their earnings, tomorrow morning. The general counsel will now be on that call and they are inviting the public to call in, if they want to, to listen. And you can believe they are going to be rolling out the heavy artillery to make their defense and defend the firm's reputation, Richard.
QUEST: All right. Maggie Lake, in New York, with that part of the story.
Maggie, so you'll be on that conference call? Or at least you will be accessing that conference call and you and I will talk abut it tomorrow.
If only Goldman Sachs' problems were on this side of the Atlantic. They might be OK, but they're not. They seem to be global, certainly trans-Atlantic. The European governments have been weighing, putting the boot into Goldman Sachs, if you will.
John Defterios is in London.
DEFTERIOS: John, you know, people-is it a case of kicking Goldman when they're down?
JOHN DEFTERIOS, CNN ANCHOR, MARKETPLACE MIDDLE EAST: A little bit Richard. The charges against Goldman in the U.S. may not be the only action the bank has to deal with, as Maggie was noting. The U.K. and the German governments are now signaling they may take legal action of their own. Prime Minister Gordon Brown, during the election cycle here, has U.K. regulators to open their own inquiry.
He said he was shocked at the, quote/unquote, "The moral bankruptcy of the conduct Goldman is accused of. Going back to Richard's point right now. Germany has asked for more details from the SEC, according to Chancellor Merkel's office. Stock markets in Europe reacting with shock on Friday, and that view prevailed throughout the morning session, then stocks stabilized, not surprisingly all around the airline recovery, if I can put it that way, in the afternoon.
Let's take a look at the numbers, of course, the overall numbers, and then we'll drill down a little bit. The FTSE 100 down .28 percent, and we had losses in the major three markets. The DAX down about 0.30 percent, as you can see here. Paris down about 0.41 percent The biggest loser, of course, because driven by banks was the Zurich SMI, down 1.31 percent. UBS was down 2 percent, Deutsche Bank off 2.5 percent. But one reverse bank play was RBS, up more than 4 percent on speculation it will claim damages from Goldman Sachs over huge losses on the subprime mortgages. All that trading that took place there.
It's not the only story of course that traders were focusing on. Airlines, not surprisingly capping the headlines today. British Airways down one 1.4 percent. Lufthansa down 2.7 percent and Air France, KLM down 2.8 percent. I suspect, I don't want to speak out of turn here-that we'll see a recovery, probably as the skies start to open up, with trading tomorrow.
The Asian markets, Asian investors started the selling reacting to the Goldman Sachs news. The deepest losses were in China, but again, let's take a look at the overall markets and we'll come back and drill down, afterwards. Nikkei 225 down 1.75 percent. In Hong Kong, the Heng Seng down just over 2 percent. As I noted the bigger seller was in Shanghai, down 4.79 percent, there. Partially because of what we saw with Goldman Sachs and partially the sentiment with the airlines, but more importantly the Bank of China now reining in some of that lending. Not just on second homes, but on third homes as well.
The broader index, the S&P ASX 200, that was down more than 3 percent on the day. Japan's Mitsubishi Financial, HSBC, down more than 3 percent for the banks in Asia.
And commodities fell today, including the stocks, BHB Billiton down 1.5 percent, in Sydney. And oil prices fell in reflection to some concerns whether this recovery will continue. Again, the Goldman effect, we saw prices down earlier better than $2. Let's take a look at where they finished off in European trading. Down $1.66 a barrel, at $81.54. It is worth noting, though, that we hit an 18 month high 10 days ago, of $87. So, again the Goldman affect playing out through the commodity markets.
And also, flight cancellations. Of course, they fly on jet fuel. And perhaps demand goes down if this comes back and causes delays in the airports.
So a very interesting day in the markets. You had the airline stocks dominating the markets in the second half of the day, in the front have of the day, we had not surprising the banking stocks being driven lower because of the Goldman affect, Richard.
QUEST: John Defterios, with the markets there.
When we return in just a moment to New York, actually we are looking at our "Future Cities". There are many ways you can get around cities, but I'm going to show you the new way for the future. "Future Cities" returns in just a moment.
QUEST: One thing that we have learned over the last few days. When it comes to designing our future life, and our "Future Cities", the issue of travel and transportation goes to the very heart of the way we live metropolitan life. Whether it is in the air or on the ground, we can't avoid the challenges that it faces.
Take for example, on the ground. We have already shown you in "Future Cities" how the London Underground is being rebuilt, literally, to try and make it better for this century. But what about those of us that still want to get around on our own steam? Whether it is in vehicle or boat we believe that we know a better way to do it now. New energy, as I discovered when I took a ride in a car.
QUEST (On camera): I'm starting to feel like I'm a pioneer. Motoring, that is what this is all about, motoring. I'm feeling rather smug. Here's me whiter than white, driving my environmental chariot through the city.
The traffic is just dreadful today.
Go home, with your dirty motor!
I'm about to pass Downing Street. Home of the prime minister.
My car is green, is yours?!
I'm on my way to see the Mayor of London Boris Johnson. He's been a pioneer and a champion of electric vehicles in the British capital. He wants to see them everywhere by 2015.
Now, about to cross Tower Bridge.
(Voice over): Once upon a time Boris Johnson was a motoring correspondent. So, why is he now a convert to these cars?
MAYOR BORIS JOHNSON, LONDON: I'm proud to have driven some of the most aggressive consumers of fossil fuels ever made, but you can get just as much grunt, and just as much torque, T-O-R-Q-U-E, out of an electric vehicle.
QUEST (On camera): I can't even beat the motor bike, yes, yes? There is no acceleration. Zroom! No danger of getting a nose bleed in this vehicle.
JOHNSON: Moving to electric vehicles is just part of a general drive towards a low-carbon economy. It is part of moving toward using more renewables, combined heat and power schemes, so that you actually, you are firing, you are powering up your EV, your electric vehicle, with juice that is generated in a low-carbon way. That's-that's the holy grail.
QUEST (voice over): Boris Johnson is such a fan of going electric, he's vowed that by 2015 every single Londoner will live within a mile of battery recharging points. Or juice points as they are called. There are some, though, who doubt their green credentials.
JENNY BATES, FRIENDS OF THE EARTH: This looks green, but the truth is that only a fraction of our electricity, at the moment, comes from renewable sources. And the rest of it comes from fossil fuels, like burning coal and oil. And clearly, they aren't green.
QUEST: Boris Johnson is not deterred. He sees real potential.
JOHNSON: I think that the truth is that the real ultra greens basically hate consumption, hate motorists, hate cars, hate people buying them lovely machines. For those kinds of people the electric vehicle presents a very considerable emotional challenge. Because I have driven- not an electric vehicle, Richard-I have driven an electric Porsche and it goes like the clappers (ph). And for a green, for an ultra that was-do you see the emotional problem? They think, how can this be?
QUEST (On camera): The battery meter has gone down. I'm becoming paranoid by this meter. There are one, two, three, there are six notches. Two have already gone. Quick, come on, through the lights.
In theory, I can charge this car anywhere where there is electricity. But I'm not about to pop into the local cafe and say, "Do you mind if I plug in me car?"
My battery anxiety was mounting. I don't know why this is any worse. A car can easily run out of petrol, after all.
At last, my juice point was in sight.
Come on, out of the way! The batteries are running out.
(voice over): So, I arrived in Barclays Square to park, plug and charge. There was one problem, both the juice points were being used.
(On camera): What do you do when somebody else is already charging? What is the etiquette of just unplugging somebody else?
These blue charging points, they're not very aesthetically pleasing are they? I mean, is this your vision? You want to have 22,500 charging point.
JOHNSON: You mean the ones with the blue lights on them?
JOHNSON: Yes, well, some councils have put them in.
QUEST: You don't like them, though?
JOHNSON: I don't object to them.
QUEST: You don't like them!
JOHNSON: I don't have as a bad a reaction as you seem to have to them.
QUEST (voice over): It wasn't too long before I found one, and it wasn't too difficult to plug in and get charging. Love'em or loathe'em, the juice points and the electric vehicle will soon be part of London's future.
QUEST: The question of future cities next week looks at the interesting question of sustainability of living. And we go to the very top of the tree to get a view that is very different on a how we might do things in the future.
(BEGIN VIDEO CLIP)
IRVINE SELLAR, DEVELOPER, THE SHARD: This building will be a building that, you're a Londoner, you'll own it. You can eat there, view there, sleep there, or work there. It is public. It has got public accessibility.
RENZO PIANO, ARCHITECT, THE SHARD: One thing for sure, that building is not a castle, it is not a palace separated from life.
(END VIDEO CLIP)
QUEST: That's "Future Cities" on next week's QUEST MEANS BUSINESS. But never mind the future, we can't get planes in the air at the moment. When we come back, what is the future here at Kennedy and in Germany, where I'll hear about Lufthansa's plans to start flying again. QUEST MEANS BUSINESS, with the travel chaos of Europe.
QUEST: Hello. I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN, where tonight I'm broadcasting live from Kennedy Airport outside Terminal Four. We used to call it the old international arrivals building.
They are not too many passengers here. They've been told to stay away from the airport, find out from the airlines when they're expected to fly and don't come back until the planes are flying again.
In Europe, there may be some good news tonight, as more countries open up limited amounts of air space. And EUROCONTROL says that they are going to start to allow flying to get going again.
Lufthansa German airlines is one of the carriers that's already making plans.
Fred Pleitgen joins me now from Frankfurt on the line -- Fred, we know Lufthansa is bringing in planes to start the flying again.
But when do passengers feel the benefit?
FREDERIK PLEITGEN, CNN CORRESPONDENT: Well, they could feel the benefit pretty soon. I'm actually seeing people check-in right now into Lufthansa flights, some of which are due to leave this evening. Apparently, they got an exemption from the rule.
But as soon as possible, Lufthansa wants to operate 50 long haul flights in all, some of them going to South America, some of them going to Asia. In all, they believe they can transport some 15,000 passengers in those flights and it could begin very soon.
I was actually on the apron just a couple of minutes ago and I saw technicians taking the covers off the engines of some long haul planes -- Richard.
QUEST: Fred, is Lufthansa one of those airlines that will also be seeking compensation?
British Airways is doing it. Lufthansa says it's been losing $34 million a day.
PLEITGEN: Well, Lufthansa says it may want to see compensation from the German government. Certainly, there was a very hefty war of words here between the German government, Lufthansa and Germany's second biggest carrier, Air Berlin. The two airlines were telling Germany that they felt the Germans had kept their air space closed for a very long time without doing their own scientific research.
The German government today sent up a research plane to actually measure the ash concentration in the sky. It's not clear what the results of that are. But Lufthansa does say it might sue the German government -- Richard.
QUEST: OK. Now, finally, Fred, let's be absolutely clear. So for the avoidance of any confusion tonight, just once more tell us when do Lufthansa believe that its service is going to get started and they'll start to be able to bring the stranded passengers back to Germany?
PLEITGEN: Well, they're certainly going to try to do that as early as possible tomorrow morning. There's already flights going out in the night to some of those destinations. There's also flights being checked in here from Frankfurt, some of which are going to leave tomorrow morning.
Other are going to leave tonight, actually. There's a flight from Chicago that I'm seeing on the board, which is, in fact, scheduled to leave. So this could begin very quickly. This could begin as of early tomorrow. Some passengers already might make it back through tonight -- Richard.
QUEST: All right. Fred Pleitgen in Frankfurt.
And I can just add to what Fred was saying. Here at Kennedy Airport, there are numerous Lufthansa planes over there on the apron. They were the ones that were stuck here when the flying came to an end.
Adam Twidell is with PrivateFly and joins me now.
PrivateFly, of course, renting out -- chartering aircraft for those people for whom money is no object.
Now, Adam, first of all, you can't fly anymore than anyone else can when there's ash in the sky, can you?
ADAM TWIDELL, CEO, PRIVATEFLY: That's totally correct. The U.K. air space is divided into two. You have the controlled air space where the scheduled airlines normally fly and you have uncontrolled air space. And the uncontrolled air space has been opened. And some of our aircraft operators fly piston propeller aircraft. And a piston aircraft, very much like your car, has an air filter. And that has been filtering out the ash.
And so the options are back. And they've been working incredibly hard throughout the U.K. and some other European countries, ferrying people around.
QUEST: OK. So have you jacked your prices up to accommodate the fact that your -- the demand for your services is clearly much higher?
TWIDELL: Well, PrivateFly doesn't have any control over the prices. We're a -- an open network, a marketplace where customers can meet operators. And it's an option style environment. It's a market environment. So the operators set their prices. And the -- the customer can compare and choose which operators they want to fly with.
Some operators have been inflating their prices, but, surprisingly, a lot of very traditional companies have just set the same prices.
QUEST: You know, listen, this is a free market program, Adam. You're not going to hear a complaint from us no QUEST MEANS BUSINESS. You can't live by capitalism and then not expect to -- to have a certain amount of profiteering and taking advantage of the situation.
Adam, at the end of the day, has this given a bit of a lease of life, do you think, to the idea of chartering -- of using your own aircraft and has really proved, perhaps, that it's not just a boondoggle for the corporate execs?
TWIDELL: Well, absolutely. Private aviation has never been about luxury. And that's one of the common misunderstandings. Private aviation is about getting passengers A to B as quickly as possible and closer to their destinations.
Now, in the last few days, we've seen a huge number of people who would have never ever dreamt of chartering a private aircraft come to PrivateFly. And they have been pleasantly surprised by how cost-effective it can be.
QUEST: Adam, many thanks, indeed.
Adam Twidell of PrivateFly, joining me there, talking about, perhaps, the -- well, I -- I won't say the luxury end of the market. Perhaps more the privileged end of flying.
Just a short while ago, over at Terminal Seven, here at Kennedy Airport, I met some people who certainly could not consider themselves privileged. Some have been here just a few hours. Others have been here for days.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: We have absolutely no information from our airways. That was Jet Airways. Wet got some information through our consulate. They try to -- to -- to actualize the information. But that's all we get.
For the rest, we were left on our own by our governments, by the airways, by the Americans, everything. The problem is the government doesn't decide anything. The army is not coming. The ministry of foreign affairs doesn't give any recommendations to the consulate or the embassy.
UNIDENTIFIED MALE: If and when they start to fly again, we -- it will all be chaos. And we just have to come here and wait, probably with thousands of others. And the first to get here get served first.
(END VIDEO CLIP)
QUEST: When we come back in just a moment, it's not just passengers, of course, that have felt the full effect. Maybe the economic effect has been most felt in the freight and cargo division. We're going to talk about the part of industry with Christopher Snelling from the freight head of global flying in just a moment.
QUEST: Welcome back, QUEST MEANS BUSINESS, where we are covering all angles, of course, on the crisis affecting aviation. On this program, you've already heard from passengers. You've heard from chief executives. Now, let's hear, of course, from another part of the area.
Let's talk about freight, transportation and the difficulties of companies that will be seeking goods and products that they simply wont be able to get hold of.
Christopher Snelling joins me now to talk about this from the Trade -- from the Freight Traders Association.
Christopher, we know that courier flights have had to be -- find all sorts of imaginative ways around this.
But how serious part of the equation is this issue?
CHRISTOPHER SNELLING, FREIGHT TRANSPORT ASSOCIATION: Well, I think this is very serious for a lot of industry. Air freight only makes up a very small percentage of the total goods that we trade between countries, but it makes a very -- it makes up a very big part of the value. Here in the U.K., it's something like 1 percent of the volume, but about 25 percent of the value.
And it's very important products for industries like pharmaceuticals and the manufacturing industry in general, the way that assembly lines work these days, to keep things functioning optimally.
QUEST: Right. So this is -- this is truly the era -- the new ways of thinking just in time and all these sort of management techniques where you're designed just to get the product at the last minute. But now, of course, to use a phrase, it's come back to bite you.
SNELLING: Well, a little bit. I mean this -- the globalization that we've had over the last 20 years, which the -- the genuine economic growth we've seen has really been based on -- does have a certain disadvantage, yes. And, of course, we're seeing that in the last few days, when people's supply chains have been extended.
QUEST: Christopher, when we look at the -- the -- the recompense, the compensation that comes about from this, is this money that just has to be written off or is it insurable?
Will it be a strong recovery -- a pent up demand recovery on the back of it, do you think?
SNELLING: There's going to be a lot of companies that will lose out, I think, particularly, you think of African farmers who've lost an awful lot of produce over the last four or five days. There are also pharmaceutical companies whose products will have perished because they have a fairly short shelf life.
But beyond that, you have some manufacturing companies, I think, that will have had to slow some production processes because they've run out of key components. So those are losses that simply won't be recovered.
But for everyone else, hopefully, if things do start to ease up tomorrow, the goods will start to get through and we won't see a too significant disruption on the scale it could have been if it had carried on much longer.
QUEST: Christopher, when you can come back to us, please do, and give us some idea of exactly what you would put the value of losses to be in.
Christopher Snelling, many thanks, indeed for joining us and bringing us a different side of this rising crisis.
Now, let's turn our attention to the weather forecast and Guillermo -- Guillermo, never has there been a more important time for me to ask you whether the ash cloud, as they believe it's dissipating, what are you seeing on your radar screens?
GUILLERMO ARDUINO, CNN METEOROLOGIST: We are seeing the same. And it's all contingent to the actions in Iceland. And we got word today that there was a little bit less activity. And at time, they talk about a ceasing of the activity in the area.
There are a couple of things that I want to clarify now. You see that the warnings continue to be pretty much in the same area. And there's new evidence that there is Newfoundland, parts of Canada and Greenland affected by this. But it's at a lower level, where the winds are going on a westerly direction.
But we -- then I -- I got worried about the United States and the major airports in the Northeast. And -- and we were talking here behind the scenes. And we see that when you look at the map on a globe, you see the proximity of Newfoundland and Greenland to Iceland. And that's not the case in the Northeast.
So I want to emphasize once more that we think the Northeast will not be affected. And we see the winds pretty much stay where they are right now. The strongest that are around Iceland and that's why we see the same normal behavior of the wind.
The greatest threat continues to be the same area, moderate to the south. And this can vary a little bit. But they are not going to change. And everything is contingent to the earthquake.
Let's take the other router, Mark (ph), and I'm going to show you what we have in here. You see this is -- what the flight -- what flights are operating right now. We see quite significant volume here in the south. We see more in Germany. And I'm going to show you one thing that I can do with this.
For example, I'm going to take this flight over here. I'm going to ask it where it's coming from. It's coming from Prague. So you see, also, another one here of the coast of Africa. It's coming from Copenhagen.
But the important thing about this is to notice that here in the Terranean Sea, also in Turkey, that a lot of flights operating. Kiev, a minute ago, had a flight here on the radar, as well. Germany and Poland have -- have some and Scandinavia has a lot of flights, as well.
Compared to what we saw at -- on the weekend or on Friday, Richard, this is much better. This is very significant. So it seems that everything is getting organized and taking advantage of those pockets, especially now with the three divisions of the air, with those pockets where they can operate -- Richard.
QUEST: Guillermo, many thanks.
Please come back to us...
QUEST: -- the moment there is more to report on how that may be changing.
Now, I need to bring you breaking news and developing stories to you here.
According to CNN sources, Toyota is to recall 6,000 Lexus GX460 sports utility vehicles. It suspended worldwide sales of the vehicles last week after the U.S. magazine, "Consumer Reports," put a "don't buy" rating on it. The magazine said the car ran the risk of rolling under certain circumstances.
Now, Toyota's latest recall comes on the same day it said it agreed to pay the U.S. authorities a massive $16.5 million fine over its response to a safety glitch found on several different models.
When we come back now, the U.K. election is getting ever closer. And more interestingly, so are the polls. We'll have that in just a moment.
QUEST: Later this week, the leaders of Britain's three main political parties will have their second debate in the U.K. general election. The debate of the first one -- or the first debate -- threw into focus the role and the party of one man, Nick Clegg. Compared to his two rivals, he's been unaccustomed to being center stage.
if you don't know who he is, you're not alone. But it does show that you probably couldn't live -- didn't live in Britain. Nick Clegg is the leader of the Liberal Democrat Party, the so-called third party. He was the acknowledged winner of the first televised debate between the leaders. The Liberals haven't won a national parliamentary election in 100 years.
The Liberal Democrats have some fairly severe policies on what they would like to see happen in the banking and finance industry, not least of which, a levy on banks to help pay for those that have failed.
The Liberal Democrat policies on banks have put into focus, of course, the role of Britain's financial industry. It's taken center stage in an election, as Jim Boulden now reports.
JIM BOULDEN, CNN CORRESPONDENT (voice-over): The figures on the Corporation of London speak for themselves -- a turnover of nearly $1.7 trillion of foreign exchange each day, 70 percent of traded Eurobond turn over, home to some 250 foreign banks. Seventy-five percent of Fortune 500 companies have offices here, etc. Etc.
The so-called city of London easily trumps other financial centers in Europe.
But what about those from other time zones?
RUTH LEA, ARBUTHNOT BANKING GROUP: London is certainly in the top spot, to equal spot with New York. And more to the point, Hong Kong and Singapore are really coming up against London.
Well, those who work here blame higher taxes -- especially a brand new 50 percent income tax rate, plus all the stronger regulation imposed or threatened since the financial crisis.
BOB PARKER, CREDIT SUISSE: And we will see, certainly if one looks at private equity firms, if one looks at hedge funds, I think certainly a number of those will move to more favorable environments, where tax is lower and possibly where the regulatory situation is also easier.
BOULDEN (on camera): Now, with an election looming, those who work here in the financial heart of London are keen to remind the next government just who it is that makes all the money.
(voice-over): Stuart Fraser travels the world to entice financial firms to set up shop in London.
STUART FRASER, CORPORATION OF LONDON: My job is not to defend Hong Kong or New York. It's to defend London. And -- and certainly, we are less competitive now.
BOULDEN: Fraser says higher taxes and increased financial regulation has taken its toll, even though there's no proof companies are planning to leave.
MARK MCALISTER, COLLIERS PROPERTY CONSULTANTS: I've never said there will be a mass exodus. But you've got to bear in mind that it's not the number of people, it's the quality of the people. So you have what are known as rainmakers, who are the people that can bring in business. They are globally mobile. They are quite prepared to go and live and work in Hong Kong. They don't need to have the whole bank with them.
BOULDEN: Mark McAlister has been behind much of London's building boom, to meet the demands of the once growing financial sector.
MCALISTER: Most of the global corporates like to be in London. It's safe. They speak the same language. Their wives can go shopping in shops they understand. The blokes can go play golf. The schools are good. It's good countryside. All these threats from Europe haven't really come to anything at all in my career.
BOULDEN: So it may just be whomever wins the election on May 6th won't let up on the bankers.
LEA: It's very interesting when you see politicians now. Of all the three major parties here, sort of outdoing themselves in being the most hostile and nasty about the banking sector. But deep down, they know that the city of London is a very, very important part of the British economy.
BOULDEN: Simply put, the financial sector accounts for around 8 percent of U.K. GDP.
(on camera): It's how the next government will treat this financial center that will be watched carefully by those other financial centers, hoping to steal some of its limelight.
Jim Boulden, CNN, London.
(END VIDEO TAPE)
QUEST: The question of Britain's financial industry, which, of course, has also been hit by the allegations concerning Goldman Sachs. And those allegations have taken their toll on the market. Goldman's shares were down sharply on Friday.
Now, as we take a look at the New York Exchange, open and doing business at the moment. The Dow Jones Industrials is just over evthh. But, of course, the Dow Jones and what has happened with Goldman Sachs is still very much on the agenda.
Let me tell you later in this week, on Thursday, we now know that President Obama will be coming to New York, where he'll be giving a speech on financial reform and the state of play in the administration's proposals. Well, we are in New York, stranded or otherwise. QUEST MEANS BUSINESS will come from New York on Thursday. We'll be on Wall Street, gauging reaction.
Finally, let me remind you, if you are expecting a plane tonight, Lufthansa and British Airways both say they are starting to fly tomorrow, taking advantage of the new euro control release -- restrictions that divide European airspace into three separate zones. In the hours ahead, we'll have the exact details on who's flying just where and when.
And when I come back in just a moment, there's a very sad man or woman who managed to release the pictures of Apple's new iPhone. We're going to show you the secret pictures, in a moment.
QUEST: Now, one Apple employee is probably not looking forward to returning to work. Some serious questions will be asked about how these pictures managed to get into the public domain.
Gizmodo Technology blog has posted pictures of what it says is the next generation of the popular iPhone. Apparently, they were left at a bar in California.
Some of the features include a front facing camera for video chat, sharper screen displays and longer battery power. It's the iPhone 4G, as it's going to be called. It is expected to be launched in June. And you saw the pictures here first.
Perhaps I'm not the best person to be showing you this. Look at the thing that I still use. Well, it's got a track oh wheel and it keeps us on air.
And that is QUEST MEANS BUSINESS from Kennedy Airport.
I'm Richard Quest reporting.
Whatever you're up to in the hours ahead, I hope it's profitable.
Hala is next.