Return to Transcripts main page
Quest Means Business
Asian Countries Face Energy Crisis as War Continues; Auto Tech Firm Valeo Breaks Ground on New Plant in Texas; United Airlines to Offer "Relax Row" Economy Seats for Long-Haul Flights. Meta, YouTube Liable in Social Media Addiction Case; Markets Rise, Oil Falls After U.S. Sends Peace Plan; Data Shows Several Ships Pass Through Strait of Hormuz. Aired 4:00p-5p ET
Aired March 25, 2026 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:19]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": The closing bell is ringing on Wall Street and it is all about oil in a sense of
whether or not the war is grinding to a close. We've been up and steady, which means there hasn't been much new news to move the market, just the
optimism of the previous few days or the last 24 hours.
Madam, please do the business. One and a two and one, two, three, four. Trading is over. Those are the markets, 304 on the Dow. The events were
going to chew over: Meta and YouTube have just been found liable for negligence in a landmark social media case. We are getting the numbers on
punitive damages.
Oil prices are falling as traffic appears to be picking up in the Strait of Hormuz.
And United Airlines plans to turn economy seats into lie flat couches, and it will sell them three at a time. The relax row, we will give you a taste
or at least, give some idea of what it might look like.
We are live in New York, mid of the week, Wednesday, March the 25th. I am Richard Quest, I mean business.
Good evening.
A U.S. jury in the last couple of hours has delivered a landmark verdict that could reshape social media, finding Meta and YouTube liable for
developing an addictive product, which has claimed harmed a young user's mental health.
The complaint accused the two companies of being negligent in their design of their platforms, that they were aware of the dangers and failed to warn.
The case was brought by a 20-year-old and her mother. They've been awarded $3 million compensatory. Google says it will appeal. Meta says its
evaluating its options.
The plaintiffs' lead attorney says the verdict sends a crucial message to social media firms.
(BEGIN VIDEO CLIP)
MARK LANIER, PLAINTIFF'S ATTORNEY: It is of very great importance to a generation of people who have been affected. We've had a number of family
members who have been so diligent to be here to lend moral support, prayer support, emotional support during this trial.
There are so many families who have been tragically hurt through the addiction of social media.
Just because of the features alone that drive addiction, these companies can be held accountable. That's a huge message for these companies.
(END VIDEO CLIP)
QUEST: Our media analyst, CNN media analyst is Sara Fischer. She is with me.
I always have a certain, doubt or skepticism when vast case is going to reframe everything, blah, blah. And it all sort of whimpers out in the
future. Do you see this as being a seminal moment?
SARA FISCHER, CNN SENIOR MEDIA ANALYST: I do, because there are a lot of smaller cases, Richard, thousands, actually, that are very similarly
structured. And this case is mostly supposed to set a precedent for all of those.
It also will empower more people to bring forth other cases, because this is such a high profile matter. So I do think this is a seminal moment.
It also is a seminal moment, quite frankly, for the provision legally that protects big tech firms from being liable for content on their platforms.
Traditionally, Section 230 has held pretty strong for them. This is a crack in that law.
QUEST: Okay. I am surprised $3 million awarded in damages. That's compensatory. Apparently, we are just getting reports, according to some
reports, it is not much more for punitive damages, which you know, what is going on here. If it is just in the low millions for punitive damages, what
is the jury saying here? What is the message?
FISCHER: I think they are saying that we believe that these tech platforms, based on the evidence, did harm children and this is important, Richard.
They knowingly did it, and they didn't do enough to educate them and stop it. However, I think what the small damages being awarded both to the young
woman, the plaintiff and in punitive damages, they're sending a signal that suggests we don't know how to evaluate the harm here. It is too nebulous.
And I think that's what future cases are going to help shape, is trying to understand exactly how you map out what actual damage was done. But it is
important to note that in an earlier case this week, Meta was forced to pay $375 million after losing a case. So, this is not in isolation. There is a
lot of legal questions and cases that are still to come.
[16:05:00]
QUEST: The damages is significant because it is supposed to be punitive, and I mean for someone like Meta, $3 million is hardly punitive. It is
barely tickling them around the gills, so to speak.
But once we get to a situation as we are now where there are multiple cases and to some extent, one acts as a precedent against the other, how does it
proceed? Because you can't have hundreds -- maybe you can have hundreds of cases all going on in different jurisdictions, all competing against each
other. It is almost impossible for Meta to even defend them all.
FISCHER: Yes, sometimes these cases get consolidated in courts, and then you figure out a way to compensate all the various plaintiffs in a
different payout structure. We see that happening a lot.
But to your point on the damages, one thing I want to note is a lot of times when you have cases between big businesses, it is a lot easier for
them to point to a way that this hurt my business by saying, I had a reduction in sales, I lost this many customers.
When you're talking about damages to someone's mental health, that is when it becomes very difficult to understand, how do you put a number on
something like that? And that's why I don't think that this number is super high. It is very, very hard to evaluate.
QUEST: I am grateful, Sara. Thank you. You've made perfect sense of it and helped us understand it.
This case is one of many, as we were just talking about, is this social media's big tobacco moment? As Sara mentioned, a jury in New Mexico found
Meta liable for failing to warn users about the dangers of its platform.
Lawsuits brought against the big tobacco companies in the 1990s forced them to reveal that they knew their products were dangerous and addictive, and
marketed them to young people all the same.
The lawyer who argued against Meta and YouTube said employees at those companies had made the comparison to big tobacco.
(BEGIN VIDEO CLIP)
LAMIER: Inside the company's documents at Meta, they had some people who were asking, one day, when all of this stuff gets out, are we going to be
the big tobacco? Is that what we are? You know, are we trying to sow doubt about whether or not this is really damaging, like big tobacco worked for
generations to sow doubt about whether or not tobacco really caused cancer?
And I think what we've got right now is the beginning of an answer to that.
(END VIDEO CLIP)
QUEST: This is what Meta says: "We respectfully disagree with the verdict and will appeal. Teen mental health is profoundly complex and cannot be
linked to a single app. We will continue to defend ourselves vigorously as every case is different and we remain confident in our record of protecting
teens online."
Dominic Romano with me, founding and managing partner at Romano Law. He joins me from New York.
So Meta says, sorry, we think the jury got it wrong and we are going to continue fighting these cases.
Well, when the damages are only $3 million, I guess you can afford to keep doing that.
DOMINIC ROMANO, FOUNDING AND MANAGING PARTNER AT ROMANO LAW: Aha! Don't underestimate what happened here today, Richard. I think Sara is right.
Those internal documents that came out, what the jury saw showed that the company executives may have placed profit above the safety of children.
So $3 million might not seem like much, but it is for one plaintiff. That's one young woman for her, for her damages. The pain and suffering, right,
the punitive damages are TBD. That's coming up. But this is just the tip of the liability iceberg for the social media companies.
They may be saying one thing, but they're running scared. At least Snap and TikTok had the foresight to see the writing on the wall and settled early.
It didn't go to trial. The jury saw this not as a free speech case, but as a product designed to addict young users. It sounds a lot like big tobacco
to me.
QUEST: Right, but the TikToks and Snaps may have settled, but they're going to have to face another day in a different forum, another court.
ROMANO: Absolutely.
QUEST: And, you know, are we now looking at multiple jurisdictions in different states, all with different state laws and courts?
ROMANO: Yes.
QUEST: At what point does this get to the federal courts, or at least a big court that says, right, we are going to deal with this for everybody once
and for all.
ROMANO: This is a canary case. This is a bellwether. The addictive features, for instance, infinite scroll, algorithmic recommendations,
autoplay videos, the lawyers were successful in persuading the jury that those features entice young users to compulsively engage with the
platforms.
Now, if you do that, and you also show that they did this knowingly, that they were comparing it to big tobacco, the failure to warn young users and
their parents of the addictive nature, designing them to be addictive. Hey, this sounds very similar to what happened in the 1990s with big tobacco.
So yes, I think we are going to see this as the first domino. This opens the door. This might be $3 million, but it opens the door to billions of
dollars of potential settlements for big tech.
[16:10:10]
QUEST: I don't want to disparage lawyers. I used to be one, and sort of suggests that you're all in it for the money, and therefore it is a gravy
train leaving the station behind you. But before we get to the -- I wonder how do, if -- nowadays, any parent knowing this, knowing the position can
no longer say, we weren't informed. We knew about it. The last three or four years, people have known about this.
ROMANO: I think you're right. But this has been going on for a while. There are no warnings on these products, and hey, but for the lawyers, the
companies would get off scot-free. It is the lawyers and the courts that are holding these companies accountable.
If you know that a product is dangerous and you know that it is addictive, we know digital addiction is real, you'll be held accountable, especially
if you target children and young people.
QUEST: I think there is also -- one of the problems, I mean, let's just take tobacco. Yes, there were additives added to it in later years that
made it stronger, but tobacco was not -- tobacco was addictive from the start. It wasn't generated and created addictive and cancer-giving. It may
have been added.
These apps from de novo were addictive and were designed with that very idea.
ROMANO: Well, they were optimized over time, right? The algorithmic recommendations, the infinite scroll, the autoplay, those weren't in the
original iteration. They developed over time because big tech found that they could keep people on their platforms that way, generate more
advertising dollars, and there you have it.
But the difference is Australia took steps a few months ago to ban social media for minors under 16. So, there is a realization by governments, by
courts, by parents that this is an untenable situation.
QUEST: What's is the preferred -- from that answer, from that last answer, I am guessing you say it is not a one size. It is not only the cases that
will do it or the governments. This has to be on multiple fronts.
But what position do you think now going forward, having got the Meta case earlier in the week, having got this case today, what happens next in your
view?
ROMANO: Well, you are going to see some appeals. You are going to see the tech companies are not going to roll over and take it. They're going to
fight back. They're going to try to appeal.
I think we are going to see some likely settlements. You're going to see big, big numbers in all like probability. I don't have a crystal ball, but
that's the way the current seems to be pointing right now. And I think you're going to see more laws, more regulations.
Government is going to probably step in and ask that warnings or demand in some cases mandate that warnings be placed on some of these platforms and
some of these sites and some of these apps.
QUEST: I am grateful, we always need you. We always need your help to understand these. And as always, send the bill to the usual place. Thank
you.
Now, coming up, news of possible negotiations to end the war in Iran sent energy prices lower even as the U.S. prepares to deploy a thousand more
troops to Middle East.
Jim is in Tel Aviv for us this evening.
Jim will be with us after the break. QUEST MEANS BUSINESS.
Good to see you, Jim.
(COMMERCIAL BREAK)
[16:16:08]
QUEST: Stocks are higher, oil prices lower and it is all because they believe that U.S. and Iran are going to hold diplomatic talks.
According to senior members of the administration, The White House is working to arrange a meeting with Iranian leaders. The U.S. has sent a 15-
point peace plan. Iran has outlined its own conditions for ending the war. The U.S. is still deploying a thousand soldiers from the Army's 82nd
Airborne Division. A source says, the orders were approved yesterday, and intelligence sources in the U.S. say Iran has been laying traps and moving
its assets to Kharg Island in preparation for possible operation there.
Jim is with me. Jim Sciutto is in Tel Aviv.
Good evening to you tonight, Jim, in Tel Aviv.
All right, it is all over. It sounds like serious measures are being -- no, no, no, let me finish -- it sounds like serious measures are being -- oh,
go on, finish it off yourself. You know what I am going to ask.
JIM SCIUTTO CNN ANCHOR AND CHIEF NATIONAL SECURITY CORRESPONDENT: I hear you.
Listen, this is -- this is as much as always, an information war as it is a war of military power. So you have the U.S. actively considering a ground
deployment in Iran based on physical movements of troops to the region and some public discussion of that.
Iran, quite aware of that, seems to be signaling that it is attempting to raise the costs for any such deployment. So U.S. assessments are finding
that Iran is now mining Kharg Island, adding to its defenses, deploying shoulder fired missiles, which you might imagine Iranian forces using to
shoot down aircraft carrying in those boots on the ground if the President were to make that choice, so it has to be expected.
Iran wants to influence President Trump's own calculus on that decision. We don't know where the President is going to go any more than we knew for
weeks ago, when the President was like today, pursuing both the diplomatic track and the military track.
It really does strike me, Richard, as quite similar to where we were four weeks ago, active public discussion of negotiation, while at the same time
a quite visible buildup of U.S. forces in the region.
QUEST: If it just -- I am just speculating now, but if it does just come to promises not to build a nuclear weapon, a certain amount of handing over of
this or that, I mean, to a large extent, all Iran wants out of any peace, it says it wants a proper, long lasting ceasefire agreement. But all it
really needs to do is live to fight another day.
SCIUTTO: You're right, survival, and listen to be clear, the regime, I mean, many members of the regime are dead and the Supreme Leader dead
within the first 24 hours of this war. But the regime itself survives, still maintains control.
It is, of course, the late Supreme Leader's son, who is now the Supreme Leader and other members of the high ranking officials still in charge, and
they still appear to control the vast majority of their forces and the Revolutionary Guard Corps.
And crucially, Richard, as you've been covering quite closely, they control access to the Strait of Hormuz, which means they have power far beyond
their own borders, which is something that President Trump is quite aware of.
So, if they could live to survive another day, they might consider that a victory. Are they willing to promise to get there? And what is President
Trump willing to accept? We don't know.
QUEST: And Israel? Israel has its own agenda. It is different. You know, will Bibi be looking to the U.S. to, at least look the other way if Israel
continues to do the bombing?
SCIUTTO: Well, listen, I've heard personally, as have our colleagues here in Tel Aviv, deep skepticism from Israeli officials that Iran is truly
willing and ready to negotiate in any substantive form. And some of those - - by the way, some of that communication has not been entirely private. Right?
[16:20:09]
When the Israeli Defense Minister says after the President claims diplomatic progress, that Israeli attacks will continue with full force,
that's quite a physical demonstration that Israel is still in this war to win it from its perspective. And there is some concern here that President
Trump might declare victory on different terms than what Israel would consider a victory.
And that is why it was notable to me in those five points that the Iranian government responded with for its own in-effect requirements for peace. One
of them is they want an end to the war across the board, every front, not just the U.S. versus Iran, but Israel versus Iran and Israel versus Iranian
proxies, for instance, in Lebanon, where, by the way, today, Israel is expanding that war, not -- certainly not pulling back.
So you do have some daylight, as it were, between, it seems, U.S. and Israeli objectives here.
QUEST: I am grateful, Jim. Thank you. Good to have you in Tel Aviv tonight for us. Thank you.
SCIUTTO: Thank you.
QUEST: Traffic is picking up through the Strait. Data shows several ships crossing the waterway. The company says it is unclear whether it reflects a
genuine opening. An Iranian Foreign Ministry spokesperson says the ships involved are coming from countries that aren't involved in the conflict.
They have to pay -- sorry, they have to coordinate with the Iranian authorities.
Anna is with me, Anna Cooban. Who is going through what product or cargo and are they paying a fee?
ANNA COOBAN, CNN BUSINESS AND ECONOMICS REPORTER: Well, Iran is saying that non-hostile countries, countries that are not directly involved in this
conflict against Iran can pass through, but I think we need to put this in context, Richard.
This data from Marine Traffic said that between yesterday morning and this morning, we saw three tankers and one cargo ship go through. Zoom out,
before this war started, we were seeing 65 to 70 tankers going through a day. So this is still really just a trickle. And we've seen this report
from Lloyds List Intelligence, which looks at maritime data that Iran is charging a fee and that one of these fees for one of these vessels was $2
million.
Now, CNN can't independently verify that. But I think that if that is true, that lends credence to what we heard from Abu Dhabi's National Oil Company
yesterday, which is that Iran is effectively holding the world hostage by keeping this Strait basically blocked off.
QUEST: Now, we've also got your reporting about how countries are having to do things very long and different ways. We know Asia particularly, they may
get their stuff from the Gulf, but this is having ramifications. Tell me more about this interesting twist.
COOBAN: Yes, well, I was speaking with an analyst from Xeneta yesterday, this is a shipping data company, and he was talking to me about this long
route that ships were taking, and he started talking about a ship going from China to Jeddah, which is a port on the Red Sea Coast of Saudi Arabia.
And he started talking about the Mediterranean Sea and the Suez Canal, which is at the top of the Red Sea.
And I sort of said, hang on, what are we talking about here in terms of the length of this journey? And I was assuming that they were going next door
to the Strait of Hormuz, up through the Bab el-Mandeb Strait at the base of the Red Sea. But no, a lot of these ships are going across the Indian
Ocean, down around the southern tip of Africa, up across the whole length of the continent, east through the Mediterranean, down through the Suez
Canal, then to the port of Jeddah.
And that is not the end of it, Richard. Then you've got miles and miles of trucks. I was speaking to Kuehne+Nagel, a logistics company, which was
saying that there is congestion at ports, effectively what would have taken 20 days to go from China to Dubai now takes up to 70 days, and so that's
adding costs.
And really, there is going to be no relief until we see the Strait of Hormuz seriously open up.
QUEST: All right, let's have a look at that map again at that chart, that might be an alternative. And there may be isolated -- are there more than
isolated cases of ships doing it, or is it sort of few and far between? Or is this becoming de rigueur?
COOBAN: Well, I asked this question. I said, okay, fine, this is this is the long way around. How many ships are actually doing this? He said, like
quite a few. This is a common route that is now being taken and that's because container ships are still avoiding the Red Sea because of the
threat of Houthi militants backed by Iran.
We haven't seen attacks yet, but we know that the reporting that they are sort of poised to attack vessels in support of Iran. So that is why they
are avoiding the Red Sea.
QUEST: Anna, fascinating. I am grateful. Thank you.
Is this all going to lead to a recession as everything -- just assuming it lasts long enough. The odds are now being calculated by various different
banks. And we are getting some interesting numbers.
Goldman, for example, said on Tuesday the chances of a recession are now 30 percent. EY-Parthenon raised to 40, Moody's has nearly a 50 percent chance
of recession.
Now, of course, this is all pointed out, the odds could change rapidly in the event of a prolonged conflict.
[16:25:08]
BlackRock's chief exec told the BBC that there is risk even if conflict ends.
(BEGIN VIDEO CLIP)
LARRY FINK, CEO, BLACKROCK: If there is a cessation of war and yet Iran remains a threat, a threat to trade, a threat to the Straits of Hormuz,
then I would argue that we could have years, years of, you know, above $100.00 closer to $150.00 oil.
REPORTER: What happens to the global economy if that happens? How do we see it?
FINK: We will have global recession.
(END VIDEO CLIP)
QUEST: Loretta Mester is the former President of the Cleveland Fed. President Mester joins me now.
Well, it didn't take long, did it? Hey, and we are back into talking about recessions and what are the odds -- we had it with tariffs, we had today.
What do you think? I mean, is it too soon to put a number on it in your view.
LORETTA MESTER, FORMER PRESIDENT OF THE CLEVELAND FEDERAL RESERVE: I think it is too soon. The path of the war is going to determine the path of the
economy and then the path of policy that is associated with that. I think there is a lot of uncertainty of how the war is going to work out, and if
you're a policymaker thinking about it or even the people doing the forecasting, as you can see, they are putting probabilities because they
have to think about different scenarios.
So at this point, we know that oil prices have raised measures of inflation. What we don't know, how persistent will that be. We haven't seen
really a pullback on the real side of the economy in terms of growth and employment.
But we do know that generally, when oil prices go up, if it lasts long enough, you will see some pullback. What we can't tell now is what the
magnitudes of those will be and whether policy has to react to those developments.
QUEST: In a sense, policy needs to react, but can't react and frankly, doesn't know what the reaction should be at this particular point.
As you know, if you listen to Chair Powell, he was very blunt -- of course, you did -- he was very blunt about the level of uncertainty.
In this scenario, until you get clarity, is it a case of sit on your hands and do nothing, do as little as possible just in case?
MESTER: Well, they are doing something because I know every Central Bank is evaluating the risk and looking at what the path of policy should be under
different scenarios and I mean, in the U.S., we are in a good situation in the sense that, you know, labor markets, we haven't had a lot of growth,
but we also haven't seen a lot of layoffs and the unemployment rate is still low. So we don't see a big impact there yet.
Inflation has come down. I think it is still too high, and I think that is where I would be focusing in on at this point, given the high oil prices
and the fact that people have experienced high inflation for at least five years, and that we know influences how they feel about inflation going
forward.
So I think inflation expectations could move up on this oil price shock and I think any Central Banks in that situation has got to be focused on those
risks first, and then if the inflation shock is big enough and the uncertainty shock is big enough, we might see an impact on growth that
comes later.
QUEST: But I guess, you know, I hear what you say, but how much leeway are you willing to give before you would want to act? How much -- what more
would you want to see? Because we are clearly not there yet, but we can't be far off. And as you -- I mean, you've talked to me on many occasions
that if you wait until you see the evidence, it is too late.
MESTER: Well, you will see signs. You don't have definitive, but you will be able to see signs.
We already see in the financial markets that some of the market based measures of inflation expectations and even those a little farther out have
been moving up.
So the fed and other Central Banks are going to be looking at those signs. There is survey evidence. There are things that will show up earlier,
right, than what you get from the official statistics.
Firms are in a position now of having experienced high tariffs. Now, on top of that, there is the oil price shock. I think they are going to be more
willing to try to raise prices than they would have if they had one shock.
So this shock upon shock is reminiscent of what we saw in 2022.
QUEST: How close are we, do you think, to needing to raise rates?
MESTER: I think the Fed will be very reluctant to do that because they can hold where they are and still try to maintain expectations where they are
going. I think, you know, Chair Powell, when he speaks, he really emphasizes that they are focused on keeping inflation.
But at some point, they may have to raise rates. I think they will be reluctant to do so because they have to balance what is going to happen in
the labor market.
I think the markets now are putting more weight on a rate rise than I would expect to happen. But again, they are making their assessment as well and
everyone is sort of trying to work through this uncertainty as best they can.
But I think the Fed would opt for holding for longer rather than raising, but everything is on the table, I think.
QUEST: Gosh, its extraordinary times. Thank you very much, Loretta. I am very grateful.
MESTER: Thanks, Richard.
QUEST: Good to see you as always. Thank you very much.
Now, the war in Iran is straining the oil supply. Shocks are taking the toll on East Asian nations, local governments are tackling and how, the
energy crisis, next.
QUEST MEANS BUSINESS.
[16:30:56]
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. You and I, another half hour together. Sorry about that. We'll tell you how the Asian countries are coping with
the energy crisis stemming from the Iran conflict. And if you want to lie flat experience on a plane and can't afford the business class bed, United
Airlines is rolling out the new solution. The "Relax Row." Before that, this is CNN, and on this network, the news always comes first.
Meta and Google have been found liable of creating an addictive and harmful platform. A U.S. jury decided in favor of a 20-year-old and her mother, who
accused the companies of negligence. Meta and Google were ordered to pay $6 million in total damages, and both companies say they're going to appeal.
Two senior administration officials are telling us the White House is trying to set up a meeting in Pakistan this weekend to discuss an offramp
to the war. Vice President J.D. Vance is expected to travel for the talks. Sources in the region says Tehran prefers to deal with Vance rather than
with Steve Witkoff and Jared Kushner.
[16:35:06]
President Trump has announced new dates for his state visit to China. It was delayed by the war. He says he'll now visit China on May 14th and 15th,
and will host President Xi for a reciprocal visit to Washington later this year. Talks are expected to focus heavily on trade.
The governments in East Asia are scrambling to deal with the energy crisis that seems to be getting worse as Iran disrupts the oil supplies. Bearing
in mind how much of the Straits of Hormuz oil goes east to Asia and China. Japan has begun to release oil from its official reserves. China has
announced restrictions, and the Philippines has declared a national emergency.
CNN's Kristie Lu Stout, with more from Hong Kong.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT (voice-over): The Philippines has become the first country in the world to declare a state of national
emergency, thanks to a war thousands of miles away. Long lines snake out of Manila's gas stations and soaring fuel prices have left some of Manila's
jeepney drivers uncertain how long they can stay on the road.
JOSEPH ORINION, JEEPNEY DRIVER (through translator): Instead of being able to bring home the earnings, it goes to pay for diesel. What's left for us
is very little.
STOUT (voice-over): It's all down to the U.S. and Israel's war with Iran, which has closed the Strait of Hormuz to all but a handful of ships.
Asia is especially vulnerable to the supply shocks that's caused. It consumes more than 80 percent of the oil that crosses the strait.
(Voice-over): In South Korea the president has called for a 12-point countrywide energy saving campaign. People are being asked to take shorter
showers, charge their phones during the day rather than overnight, and only use their washing machines and vacuum cleaners at weekends. Fuel shortages
have also caused some of Asia's flagship carriers to consider suspending flights, while India's textile industry has been impacted.
India imports around half of its oil from the Middle East, and shortages have started to cause some factories to close or use carbon fuels and some
residents to abandon their kitchens.
"The cost of gas is so high, we are cooking on this open air stove," this woman tells us.
She is far from alone. People are queuing to fill gas cylinders and fuel tanks across Asia from Kathmandu, Nepal to Colombo in Sri Lanka, where
authorities have declared every Wednesday a public holiday for government institutions including schools but exempting hospitals to manage energy
resources.
And it's not just fuel shortages that are causing hardship. Thai farmers say there's a social stigma, too.
THEERASIN TANACHAWAROJN, THAI FARMER (through translator): "When we bring containers to buy fuel, people look at us and accuse farmers of hoarding.
We simply can't handle the cost anymore. Rice prices haven't risen with the costs.
STOUT (voice-over): Even Thailand's cities are not immune. The Thai government has ordered government employees to lower office air
conditioning to save energy and ditch suits and ties to keep cool. That edict even applies to news anchors.
Kristie Lu Stout, CNN, Hong Kong.
(END VIDEOTAPE)
QUEST: For the moment, we will be keeping things exactly as they are.
After the break, the automotive technology firm Valeo expanding its operations. One of its senior executives on the trade and the tariffs, and
why you are expanding in Texas in a moment.
(COMMERCIAL BREAK)
[16:41:22]
QUEST: The French firm Valeo plans to make high tech components for GM cars at a new plant in Texas. Ground was broken this week. It's a $225 million
plant located across the border from Mexico. Valeo says the goal is to alleviate supply chain risks. And Jeffrey Shay is with me, the North
American president of Vallejo.
Good to see you, sir. Thank you. And how, I mean, look, I understand you don't suddenly decide to build a quarter billion dollar plant, you know,
because of a week last Thursday. And this has been in the works for some while. But the significance and impetus of a plant like this must be
created by wider political, geopolitical, economic issues.
JEFFREY SHAY, VALEO NORTH AMERICAN PRESIDENT: Well, not only, of course, part of the consideration was making sure that we were de-risking supply
chain for American customers and North American based customers here in the U.S. but also we see that there is growth potential for companies in the
auto industry that are supporting the transformation of the auto industry toward the software defined vehicle.
Here, we're producing a central compute unit. We're very excited to say we're opening this plant to support the biggest order intake in the central
compute arena of our company's history. So we have lots of good reason to open here in Texas.
QUEST: And the product of this plant will go where to? The domestic U.S.? I would have said in the past, NAFTA countries or whatever it's called these
days, the North American area. But I mean, that's all a bit dodgy. So are you building this plant predicated on the U.S. market?
SHAY: So the initial shall we say startup production is for a U.S. customer that will be using this central compute unit in multiple vehicles that are
predominantly for the U.S., but also get shipped outside of the U.S. as well.
QUEST: And what about exporting? And I realize, you know, your business may be taken up fully just producing for the U.S. but is there an exporting
component to this project?
SHAY: Well, we -- this initial program that we started we'll be shipping to the United States and to Mexico, specifically.
QUEST: Right. OK, to Mexico as well. Right. To Mexico as well.
Now, each day, I mean, we talk about the computer car and the technology that's going into the vehicles. And this is where you're at the forefront
of everything. And I try to, I mean, I read the, I read the sort of the quick notes about this and didn't understand half of it, frankly, because
it's all very complicated. The, I mean, I love this phrase, the software defined vehicle architecture with a liquid cooled system powered by
processors that act as intelligent backbone for software defined vehicles.
Please put that into English for me. What does it mean?
SHAY: So to make it simple, today's vehicles oftentimes have small compute boxes that are connected to small sensors or cameras that provide specific
features, but it's all controlled in one box. And if you have to update software or anything, you have to go back to the dealership to get re-
flashed.
What we're doing here is providing a central -- liquid cooled central compute unit where it will serve, it will replace many of those compute
boxes and it'll serve multiple domains. So data is coming in from cameras and sensors all into the same location and allow us to over-the-air update
software and add features or change features as we see fit.
QUEST: How important is it that these components can be taken out and replaced quickly?
[16:45:07]
Because, you know, there's a sort of so much relies on them now that if they go wrong and you'll probably give me some statistics that shows that
they don't go wrong, except once in a millennium. But if they do, you need to be able to replace them relatively quickly, cheaply and easily.
SHAY: Well, again, the beauty of over-the-air technology is when we have issues, it's very common for issues to be able to be corrected using
software. At the same time, when we design our hardware we are focused on serviceability so that we can, you know, in the event that there is a
hardware issue that they can quickly and easily be corrected and returned to the market.
QUEST: Fascinating. I'm grateful for you joining us from Texas. Thank you. Lovely stay. Great.
Now, the joy, the planes about to take off. You have the whole row to yourself, but you can't lie down. Now the United is offering a solution.
I'll show you why the "Relax Row" might be the answer on the long haul flight.
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
QUEST: It is the aviation challenge to make economy more comfortable. The battle between economics and ergonomics. Turning these three seats into
something approaching flat.
Now it's already been done, as we say, with Air New Zealand and a few other carriers. Enter the "Relax Row." This shows how much extra space roughly
you're going to get with all of this. It will flap up from under here, and with a bit of luck, you should be able to enjoy this considerably more
comfortably because you have got this extra space.
So let's make this a little bit more realistic.
Julia, put in the seats in front. There we go. That's roughly the seat. Thank you. So that's the seats in front. Now here we go. You know, it's not
bad. Give you a chance to stretch out, and is this better than premium economy? It depends on the price really. Will this be a success? Some
airlines have experimented with similar ideas but abandoned because there wasn't that much demand.
I think this will be a success for United because the airline has these very long routes from United States to Asia, Australia, New Zealand, and
down into Europe.
[16:50:13]
They give you a pillow, but really, you want to steal one from the front of the plane. Goodnight.
(END VIDEOTAPE)
QUEST: Sarah is with me. Sarah Kopit, editor-in-chief at Skift.
Sarah, what do you make of this? It's been -- you know, Air New Zealand has been successful. Some have tried it and dropped it. Some still do it. What
do you make of it?
I think I'm going to be their first customer. I can't wait to try it out. I think it's going to be a huge success.
QUEST: Because largely it is about pricing. I want to show you some pricing models here. We priced just a random date in July for Air New Zealand's
Skycouch, with the cuddle couch. Now, if you buy one ticket, if you just buy one ticket on its own, the Skycouch is $1500, $1600 and it's more
expensive than premium economy. Buy two tickets and it becomes better to buy premium economy.
But, as I point out with this thing, again and again, premium economy doesn't give you a flat bed. It just gives you a seat. So which would
people prefer, do you think?
KOPIT: Well, I mean, if you're a small person like me, a short person, I mean, it doesn't even come close. I want to lie down. So I think that, you
know, assuming that people can get that sort of rest, they can actually go to sleep, I can't sleep in a premium economy seat, but I think I could
sleep on that. And I think that that for long haul flights, for those overnight international flights, I think this is what people will do.
Assuming that the cost is right, just as you said.
QUEST: It is. And it's all about that because you don't -- I mean, you know, I don't think there's any cannibalization here for business class
because that's $5,000, $6,000, $7,000. So we're way under that.
KOPIT: Exactly.
QUEST: But premium -- by the way, these are one-way prices that I showed you. Premium economy is the great success story at the moment, isn't it?
You know, those of us who maybe got a dollar or two more or can afford to pay for a little more comfort and don't want to sit next to students are
prepared to pay that bit more.
KOPIT: Yes, absolutely. I mean, the first time I ever flew business class, it was a long time ago, but I was just like aghast that there wasn't an in-
between section. Well, companies wised up. They thought the same thing I did. And voila, premium economy really was the next thing to come. But this
is better. I think this is better. I think it's going to be huge for United.
QUEST: And particularly with those long routes. Let's talk about the industry generally at the moment because we've got the Gulf Three out and
they're out, I mean they're fiddling around with a few flights here and there, but essentially they are out for the time being. At Airlines for
Europe last week we heard the European carriers say what it's exposed is a huge weakness now, we are so reliant on the Gulf Three.
Do you see any long-term transition or any long-term shifts as a result of this crisis?
KOPIT: I mean, I think that what you're seeing is, I mean, I've never seen the aviation sector on a variety of fronts in such a state of chaos as it
is right now. I mean, not only are we seeing it because of the situation in Iran with gas prices, oil prices, what's happening in the United States is
just unprecedented. And so when you've got all of these situations going on all at once, it starts to look systemic.
But I do think this too shall pass. I think that it has exposed a lot of situations and a lot of weaknesses within the system, that there are people
scrambling right now to try to plug those holes. But, you know, capitalism does have a way of fixing itself. You know, anything that -- anything that
is going wrong where somebody can make money, they're working on it right now. So I think I don't think -- I don't think it's quite the doomsday
scenario that many are writing about. Many are reading about. I think that we may have a better system come out of this crisis.
QUEST: Right. But I did notice yesterday as well, but I mean, United sort of is churning out the announcements. Did you see 250 new planes between
now and 2010 to 2027, 2028? I mean, I wrote it out in like two planes a day. This is almost an extraordinary level of capacity and accrual to
markets at a time when they're also, this is the wonderful part about that industry. You have to think long term and yet you get clobbered by short-
term crises.
[16:55:08]
KOPIT: It seems like a good time to be Scott Kirby.
QUEST: There's more than one person that has said that. I'm grateful to you. Thank you very much. And I look forward, please, send us the pictures
of when you're on the travel couch.
KOPIT: I will.
QUEST: Or the "Relax Row." And I'll send you a bottle -- a glass from the front. How about that?
KOPIT: Very good.
QUEST: Thank you very much, Sarah, for joining us from Skift.
Now, Wall Street closed slightly higher. I need to show you the peace plan reaction. The Dow gained 305 points after spending the entire day in the
green. Look at the Dow. I'm not sure I can remember when I saw Sherwin Williams on top up 2.6 percent. Stocks are sensitive. I can't remember. I'm
sure somebody is going to say to me, well, Richard it was blah, blah, blah. Merck, Johnson and Johnson, closed positively. They are the value stocks
and the growth. Verizon is at the bottom closing down 1 percent. Verizon is always on a frolic of its own.
At this moment remembering where the markets are, we will take our "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." So the United Airlines' "Relax Row." A version of the Skycouch and various others, COUCHii, as it's called by
some airlines. It's a stroke of genius at one level because what everybody wants on a really long haul flight is to be able to lie down, get your feet
off the ground and sort of rest.
You can't do that. You can just about on three economy seats. And in fact, as Tim Clark at Emirates has said many times, economy has been the one area
of the aircraft that's had the least innovation or extras being given to passengers for good reason. But let's just think about the United 777 or
787. It will now have Polaris. It will have premium economy, it will have those economy plus seats with the six extra inches.
It will have real economy. It will have basic economy passengers in the economy. And now it will have "Relax Row." So what this is really all about
is called yield management. Those 12 rows that could be used for "Relax Row," you are constantly pricing. Is it better to sell it to one passenger
who pays more or three passengers who will pay less but more overall? And how do you ensure you don't cannibalize your more expensive seats at the
front?
Luckily, there are some very clever people in all the airlines who seem to spend most of their time trying to work out how to get the most amount of
money from us. My guess is this is going to be a winner one way or the other. Now we just have to try it out when it starts next year.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hour ahead, I hope it's profitable. Yes, the
bell is back.
END
