WEBVTT - Shai Weiss Virgin Atlantic CEO Talks 'Momentum' in India

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. We are joined now

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<v Speaker 1>by shy Wis, who is, of course the CEO of

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<v Speaker 1>Virgin Atlantic.

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<v Speaker 2>I see it, Nice to see you guys.

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<v Speaker 1>He told us a few weeks ago that there was

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<v Speaker 1>some softening in the North Atlantic.

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<v Speaker 2>What's going on now?

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<v Speaker 3>Yeah, I think that it's a common question. I think

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<v Speaker 3>since taris were announced on the second of April and

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<v Speaker 3>until the state of execution on April the ninth, we

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<v Speaker 3>have seen some softening, but it's rebounding a bit. It's

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<v Speaker 3>hard to determine what the slope of the rebound. Is

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<v Speaker 3>A premium book right now, yeah, so improving versus the

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<v Speaker 3>April period premium strong leisure a bit weaker and really

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<v Speaker 3>concentrated in the United States.

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<v Speaker 2>I think a bit of uncertainty. Cloud. Do you say concentrated?

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<v Speaker 2>What do you mean you mean US traveler is coming

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<v Speaker 2>into Europe? That's right, Okay.

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<v Speaker 3>I think all a related story, or is it? I

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<v Speaker 3>don't think it is. I think it's literally an uncertainty

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<v Speaker 3>related story. And travelers like certainty, whether you're a business

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<v Speaker 3>or at leisure, of whether you're going have to meet.

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<v Speaker 2>Family or friends.

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<v Speaker 3>You just want to know that things are just going

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<v Speaker 3>to be as you expected them to be in terms

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<v Speaker 3>of your savings.

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<v Speaker 2>What are you're spending your money on.

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<v Speaker 3>It has improved a bit of I think you've heard

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<v Speaker 3>the theme across a bit of weakness, a bit of softening,

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<v Speaker 3>I would say, in the yield side of things.

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<v Speaker 2>So volumes are.

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<v Speaker 3>There, it's a bit of price, but it's improving day

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<v Speaker 3>by day.

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<v Speaker 1>Right now, can you how much room have you got

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<v Speaker 1>on prices? Fuel helping? How quickly can fuel help? You?

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<v Speaker 3>Know? Fuel is very stable at sixty five dollars, The

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<v Speaker 3>pound is a bit stronger versus the dollar. So all

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<v Speaker 3>these things in the balance help help airlines. But fundamentally

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<v Speaker 3>we need strong demand to continue, which we're seeing that

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<v Speaker 3>emerge after a.

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<v Speaker 2>Very strong start of the year. Did you was there

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<v Speaker 2>any effects off the UK US trade deal?

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<v Speaker 1>Did it in any way meaningfully change that degree of

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<v Speaker 1>uncertain So it's.

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<v Speaker 3>Going to be kind on the US UK trade deal.

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<v Speaker 3>I think actually we're in India more significant is the

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<v Speaker 3>India UK trade deal. We're now at the fourth largest

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<v Speaker 3>economy here in India for US at twenty five years

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<v Speaker 3>of flying here a million seats, we've really grown three

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<v Speaker 3>hundred and fifty percent over the last.

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<v Speaker 2>Five or six years.

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<v Speaker 3>I think this is more meaningful as India moves from

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<v Speaker 3>just a service economy to a manufacturing economy. This is

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<v Speaker 3>really significant for the k Virgin India. You got Virgin,

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<v Speaker 3>You've got Virgin Atlantic. That was the priority you saying

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<v Speaker 3>this surgery, I think, but you've known. We've just announced

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<v Speaker 3>actually yesterday our partnership with Indigo together with our partners

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<v Speaker 3>there France and Kalam. This is really about taking account

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<v Speaker 3>of the strength of our joint venture and expanding it where.

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<v Speaker 2>This one could be.

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<v Speaker 3>You know, there are about four and a half million

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<v Speaker 3>passengers a year to the UK, about seven million passengers

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<v Speaker 3>to the US. Less than ten percent of the population

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<v Speaker 3>here have a passport. I think this can be very

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<v Speaker 3>very big.

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<v Speaker 1>Okay, so this could be a very big moment. I

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<v Speaker 1>want to take you back just to the US with

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<v Speaker 1>just a moment sense that the uncertainty is we just

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<v Speaker 1>don't know what is going on. But do you think

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<v Speaker 1>I'm trying to isolate which fanks is are the most

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<v Speaker 1>important at the moment he's traveling. It's just sent but

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<v Speaker 1>it's traveling to the US just more difficult now, more

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<v Speaker 1>nerve ranking more, especially out of Europe.

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<v Speaker 3>We've heard that there is some negative feelings towards the

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<v Speaker 3>United States.

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<v Speaker 2>Off all the countries.

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<v Speaker 3>In Europe, and I count the UK in Europe, we

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<v Speaker 3>are the least impacted. You know, people love traveling to

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<v Speaker 3>the US, whether it's for business of course New York,

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<v Speaker 3>San Francisco, Los Angeles, but also to Florida. So I

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<v Speaker 3>think that the operative word here is sentiment. Travel in

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<v Speaker 3>all its types is impacted dramatically by sentiment and certainty

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<v Speaker 3>inward investment.

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<v Speaker 2>Just you know, what are the rules of the game.

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<v Speaker 3>And I think we're just waiting to see what happens

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<v Speaker 3>in July after the ninety day pause on tariffs is

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<v Speaker 3>but I already see that people even in this period,

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<v Speaker 3>they are just very quickly and we're seeing a rebound

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<v Speaker 3>in volumes and in price affect all types of travel.

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<v Speaker 1>In terms of the other story that I'm hearing around

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<v Speaker 1>the holes here is the cost to going out. The

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<v Speaker 1>tarents do actually mean higher prices for spare parts, for engines,

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<v Speaker 1>for you name it, it's gonna how much, how inflationally do

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<v Speaker 1>you think it could be?

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<v Speaker 3>Look, this is a question really for the economists, but there.

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<v Speaker 1>Have been aviation CEOs are basically the economists. You have

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<v Speaker 1>to be economists.

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<v Speaker 2>You have to have to be economists.

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<v Speaker 3>You're not gonna let me off the hook on this one, okay,

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<v Speaker 3>So I'll take the question and answer it. I think

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<v Speaker 3>it's fair to say that prices have gone up, of course,

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<v Speaker 3>over the period through the pandemic.

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<v Speaker 2>We're entering into a period.

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<v Speaker 3>Of more stability in the supply chain. You know, engines

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<v Speaker 3>are late, planes are a bit late, and we're seeing

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<v Speaker 3>a recovery. But the tariffs, no doubt will make it

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<v Speaker 3>will have an impact on the price of goods, the

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<v Speaker 3>price of transport, you know, changes of production. But these

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<v Speaker 3>things take time. They don't adjust overnight. So now I

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<v Speaker 3>think we're just gonna have to see how it settles

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<v Speaker 3>and then people adapt.

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<v Speaker 1>Relatively qu But it sounds like you're also telling me

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<v Speaker 1>you've got to deprioritize the US.

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<v Speaker 2>Is that is that fair?

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<v Speaker 1>No?

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<v Speaker 3>And you know for us, it's it's not even a possibility,

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<v Speaker 3>you know, neither do we want to do that. It's

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<v Speaker 3>virgin Atlantic. We always say it wouldn't be virgin without

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<v Speaker 3>the Atlantic. Sixty to seventy percent of our capacity is

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<v Speaker 3>to the United States, it's our more profitable and are

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<v Speaker 3>more successful. And no, I don't think we need to deprioritize.

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<v Speaker 3>Having said that, you can see the growth into India

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<v Speaker 3>we've announced, of course, we started flight to Saudi Arabia.

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<v Speaker 3>We're going to start a flat into Seoul next year.

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<v Speaker 3>In March, Cancun is coming. We launched Toronto. So a

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<v Speaker 3>balanced approach is the right approach.

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<v Speaker 1>Okay, but there is an emphasis. I best you and

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<v Speaker 1>I had the same conversation with him, your good friend.

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<v Speaker 1>He was talking about he sees the bit he's got

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<v Speaker 1>one hundred years, you've got twenty five years. He sees

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<v Speaker 1>the next hundred years as being outside the United States.

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<v Speaker 1>It's being the growth opportunity. Is the growth opportunity outside

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<v Speaker 1>of the United States.

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<v Speaker 3>Now look first forty years of Virgin Atlantic, twenty five

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<v Speaker 3>years of flying into India, and yes, yeah, yes, there

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<v Speaker 3>is there is growth. There is growth in India, and

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<v Speaker 3>that's why we bet on it. Actually, in twenty nineteen,

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<v Speaker 3>we looked at our portfolio and figured that we could

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<v Speaker 3>really only support one amazing growth market and made a

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<v Speaker 3>bet on India to the detriment of other locations, including China.

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<v Speaker 3>It happens to be that the bet seems to be

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<v Speaker 3>working out. We now have five daily flights into Mumbai,

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<v Speaker 3>Bengaluru and Delhi. With our partnership with Indigo, we connect

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<v Speaker 3>into thirty six domestic destinations.

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<v Speaker 2>So the sky is the limit.

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<v Speaker 3>And when Indigo is now flying into Manchester into Skipoll,

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<v Speaker 3>we can connect these passengers.

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<v Speaker 2>Forty percent of the passengers.

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<v Speaker 3>Flying out of India connect onwards either in the UK

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<v Speaker 3>or the United States. So I think it's really about

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<v Speaker 3>the connectivity, it's about the partnership with other airlines, and

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<v Speaker 3>of course it's a betting on fast growing markets, which

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<v Speaker 3>is India not China.

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<v Speaker 1>Though essentially the world needs to be shifting. This is

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<v Speaker 1>now maybe just because we're all here, but this is

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<v Speaker 1>being perceived as being the big growth market. India is

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<v Speaker 1>the growth market. China is not the growth market. Am

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<v Speaker 1>I looking at it the right way? I wouldn't write

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<v Speaker 1>China off.

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<v Speaker 3>You know, it's still the second largest economy and there's

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<v Speaker 3>a long way for India to catch up to China.

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<v Speaker 3>But I think in terms of momentum, the momentum is

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<v Speaker 3>very much here.

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<v Speaker 2>It's palpable. You can feel it, you can see it,

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<v Speaker 2>and you can hear.

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<v Speaker 3>The conversations if it was an outsourcing conversation in the

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<v Speaker 3>past and the technology sector, it's now potentially a manufacturing

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<v Speaker 3>aided by of course, trade deals, aided by tariffs which

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<v Speaker 3>rebalanced the world economy.

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<v Speaker 2>So I've got to catch up. Nice to see you.

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<v Speaker 2>Thank you.

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<v Speaker 1>Sort to get my dates wrong, but you corrective as

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<v Speaker 1>a so I will as the CEO of Virgin Atlantic,