• Our horror trip with British Airways


    It all started as we sat for 24h in Heathrow, after missing the Sao Paulo connection that was supposed to take me and the whole family to a month stay in Paraguay, where we would enjoy some holiday with the family (my wife is Paraguayan and my older daughter was born there) as well as set the stage for a randomized study on the determinants of corruption.

    Actually, now I remember that it happened to me before. When I lived in Edinburgh, around 2007, BA already had me missing this same connection and staying a whole day at the airport thanks to a 3+ hours delay on an Edinburgh-London connection, and in another opportunity they lost our whole set of luggage for 9 full days, and we had to go to an obscure private depot in the suburbs of Edinburgh to force them to give us our belongings back (remember that was the great “new Heathrow” meltdown). Looking back, I am not sure I remember a single time when I flew BA and they were on time. Well, I promised back then that I would never fly with them again. It’s my fault after all.

    So on July 18th, the Toulouse-London flight was only two and a half hours late (not bad for a flight that last 1h30 overall)… I mean, I flew all over Europe with Air France, Lufthansa, KLM, Alitalia, etc., and I never experienced such delays with any of these companies.

    And the service is so professional. Staff in Toulouse, they don’t know… Staff on the plane, they don’t know, but they think you may not make it, and they are kind of sorry. Staff at Heathrow, well they don’t really know, but if you have been rebooked 24h later it must be that this is the only flight, and they have all these great compensation for you. At 11 pm, you get this generous £40 voucher for four people, which you can spend at Marks & Spencer, or maybe at Costa, on delightful triangular carton sandwiches and lemon tarts.

    Definitely, getting cheap can be very costly. At that point, I promised this would be my last time on Bristish Airdelays. I thought the worst was over, but I wrong big time.

    We finally took off from London on July 19th at night (on time!). After settling in our seats (we got premium economy seat for the price of an economy ticket, that was our lucky day!), my younger daughter started watching Rio 2 in the French version. Alas, halfway through the picture, all the airplane screens went dark. Moments later, the cabin lights died out too. We got slightly worried at that stage, especially when we started seeing the cabin crew wandering around with torch lights. Finally the expected announcement came: we would be forced to make an emergency landing in Lisbon because the electric inconvenient (the visible part of the technical fault iceberg for us) could not be readily fixed. The captain also told us that we could not land right away because of the quantity of fuel we were carrying, so they would have to burn some of it first, and it could be a bit noisy for a while. For the next 45 minutes, we were caught in the middle of an impressive roaring noise and plane shaking that was not really reassuring. My two daughters kept their eyes shut while we were holding their hands. As we finally landed in Lisbon at 2 am, we discovered dozens of firefighters trucks with all lights on rushing alongside the landing track. We did not really know how close we got.

    This was the start of a new and long wait.  We sat on the plane for around 2 hours, before they finally told us that we would be taken to local hotels. But Bristish Airways has a quite specific and class-related view on how to accommodate distressed passengers. Business class passengers were asked to disembark first, while the staff blocked remaining passengers on the plane. A tout seigneur tout honneur… I suppose they were afraid these select people would feel somewhat packed on the bus that would take them to the terminal. Quite a while later, the same operation was repeated with premium economy passengers, while the economy “plèbe” was again retained in the plane. So we found ourselves quite relaxed in a half empty bus. But once in the terminal, we were questioned again, because the ground staff mistook us for economy passengers, the like of which were supposed to wait more.

    We finally reached a hotel at 4:30 am. On the next day, discussing with other passengers, we learned that some of the economy group, including a group of Brazilian school children coming back from a European exchange, had to wait until 6:30 am to be provided with a place to sleep.

    On July 20th, around 5pm, a bus came to take us back to the airport. So far, we have had no news from British Airways, not even a text message or email, but we were somewhat hopeful that at the airport we would get some basic information about the rebooking and the new connections to complete our trip. This again proved very optimistic.

    At the counter, an airport  ground staff woman (not from BA) explained that she could not give us any information, but that we had to go through controls, after which at the gate the BA staff would give us all the needed information. When we reached the gate, however, the BA staff, a quite unpleasant woman, proved unwilling to answer our question. The new moto was now that we would have to fly to Sao Paulo and that only there we would get complete information on what to expect for the rest of the trip.

    In short, when faced with passengers’ requests, British Airways staff preferred technique is to kick-in-touch. I must say that I got a bit nervous at that stage, after 48h of travel with two kids that had only taken me from Toulouse to Lisbon. As a made my request a bit more forcefully, this person told me that they had no way to make rebooking arrangements at that airport (the ICT revolution has obviously not reached BA management), and that they were not prepared to deal with an aircraft failure of that magnitude. I told her that if they were indeed not prepared to do that, they should perhaps change business and go into something technologically slightly simpler, such as the textile industry. The dialogue proved useless, but did let her know that the way they were handling passengers was an absolute shame.

    We boarded the aircraft, a replacement 747 that was supposed to be in better shape than the previous one, although the cabin itself was no proof of that, as can be seen from these pictures.










    At that stage, I guess one feels a sense of resignation and starts relying on irrational thoughts of luck and the like to stop from running away and going back home by train. We reached Sao Paulo at 1am the next day, and were sent to a hotel for the third night (well, half night…) in a row. The ground BA staff told us we would first have to get our (8 pieces!) luggage back and carry it to the hotel, but when I firmly refused (it was booked to the final destination in Paraguay after all), they did not insist. I had the impression they had heard about our discussion in Lisbon.

    We reached Guarani airport in Paraguay on Monday 21st after 72 hours of travel. That’s the moment when magically you forget about all previous hardships.

    But, wait a second, there was still a return trip ahead… You will not believe it, but it went so well! We were on time, and they only lost one of our suitcases.

    It’s now one month from this infamous trip and one week from our return. So far, we have not received a single message of apologies, let alone a compensation offer.

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  • Procurement Conference in Lancaster & collusion in Japanese auctions


    On June 12 & 13, I attended the Conference on “Auctions, competition, regulation, and public policy” , organized by Dakshina Da Silva and Klenio Barbosa, at the Department of Economics of Lancaster University Management School.

    Here is the program, with the sample of papers presented. A special highlight for the paper “Detecting Large‐Scale Collusion in Procurement Auctions” by Kei Kawai (NYU) and Jun Nakabayashi (Tohoku University), which analyzes an extraordinary case of systematic collusion in public procurement in Japan:

    This paper documents evidence of widespread collusion among construction firms participating in procurement auctions in Japan using a novel dataset that accounts for most of the construction projects procured by the Japanese national government from 2003 to 2006. By examining rebids that occur for auctions when all (initial) bids fail to meet the reserve price, we identify collusion using ideas similar to regression discontinuity. We identify about 1,000 firms whose conduct is inconsistent with competitive behavior. These bidders were awarded about 7,600 projects, or close to one fifth of the total number of construction projects in our sample. The value of these projects totals about $8:6 billion, about 8:4% of which may have been saved absent collusion.

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  • Development workshop at Toulouse TSE TIGER Forum, June 2 and 3


    Next Monday and Tuesday, in the context of the 2nd Toulouse School of Economics TIGER Forum, I am organizing with my colleague Emmanuelle Auriol a workshop on development economics. We are very happy to gather a great group of researchers:
    – Pascaline Dupas (Stanford University)
    – Marcel Fafchamps (Stanford University)
    – Chris Woodruff (Warwick University)
    – Eliana la Ferrara (Bocconi University)
    – Rocco Macchiavello (Warwick University)
    – Rohini Pande (Harvard University, JFK)
    – Nancy Qian (Yale University),

    and, from TSE, Marti Mestieri, Emmanuelle and myself.

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  • Yale Conference on Grand and Petty Corruption in Developing States


    From Wednesday April 30 to Friday May 2, I attended the Conference on Grand and Petty Corruption in Developing States: Business, Citizens, and the State, organized at Yale by Susan Rose-Ackerman, Paul Lagunes, and Lynn Hancock.

    As can be seen from the website above, very interesting papers and discussions indeed, from a diverse crowd including lawyers, policy makers, political scientists, economists, bringing very diverse perspectives on corruption around the world from their positions in law firms, the OECD, governments or university among others.

    In this opportunity I presented an early version of what can be considered a discussion paper on the role of the construction of large scale hydroelectric dams in Paraguay (Itaipú and Yacyretá) in the 1970s in locking-in corrupt practices over the long-term, and in doing so adversely affecting the development trajectory of the country over the next 40 years. Here is a preview of the slides: The Story of Paraguayan Dams.

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  • Seminars in Santiago, Chile


    Following the workshops in Brazil, I also visited Chile, and I gave a couple of talks at Universidad de Chile, Facultad de Economía y Negocios.

    On Thursday 27, I presented the paper “Road Access and the Spatial Pattern of Long-term Local Development in Brazil” (with Julia Bird), in the regular seminar. Then on Friday 28, I gave a public lecture (in Spanish) entitled “Instituciones electorales, información, y calidad de las políticas económicas“.

    It was also the opportunity to meet again old friends, some of whom I had not seen in more than 15 years, and see some of the changes that the country has been going through in the recent past. This visit was at the invitation of Eduardo Engel, who came back recently from Yale to Chile. On top of academic activities, he is currently doing very interesting work to provide policy advice to the new Chilean government, through the fundation Espacio Público.

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  • Workshops on procurement and concessions in Sao Paulo and Rio de Janeiro


    On March 21-22, and 24-25 respectively, I took part in two workshops in Brazil:

    – The “Workshop on Public Procurement and Concession Design: Theory and Applications”, hosted by the Sao Paulo School of Economics – Fundação Getulio Vargas (FGV). (Program)

    – The “Workshop on Regulatory Environment and Institutions in Public Procurement”, hosted by Graduate School of Economics (EPGE) – Fundação Getulio Vargas (FGV) – Rio de Janeiro. (Program)

    It was the opportunity to meet many friends working on these topics (a set of pictures from the Sao Paulo workshops can be seen here), the organization was splendid, and the overall level of contributions outstanding. Here are some links to papers on some of the running themes of these two workshops (reflects my specific interests, and my ability to find a link to the paper, not a ranking of papers!):

    On bidding strategies in procurement:

    Strategic Bidding and Contract Renegotiation

    Efficacy of a Bidder Training Program: Lessons from LINC

    On procurement, regulation, and efficiency:

    Moral Hazard, Incentive Contracts and Risk: Evidence from Procurement

    Knowledge Spillovers in Cost-Reduction Incentives

    Procurement and Accidents: Bidding for Judgment Proofness, and the Limited Liability Curse

    Theoretical contributions on contracts:

    A Theory of Contracts with Limited Enforcement

    Long-Term Procurement under Uncertainty: Optimal Design and Implications For Renegotiation And Tender Procedures

    Finally, a couple of papers on the effects of the US stimulus plan:

    Highway Procurement and the Stimulus Package: Identification and Estimation of Dynamic Auctions with Unobserved Heterogeneity

    Government Spending and Job Creation in the Highway Construction Industry: Evidence from Texas

    Note: see also this previous post on the stimulus issue.

    I guess we are all looking forward to the second edition!

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