Some Perceptions on Travel Outside the US

A friend recently emailed me asking about booking travel from the US to India, and experiences with airlines. I offered my personal (and very limited) perspectives to her two questions, and thought I'd share them here. This is about personal travel by coach with a close eye on the budget. Anything you'd like to add is welcome.

Q: I'm planning a trip to India. Do you know and use any good travel agents, or do you just book online?
 

A: I do know of good travel agents (and supplied that information to our friend.)

However, the online options have improved a lot over recent years and I've found very good deals on http://www.kayak.com/ and http://www.orbitz.com/ in that order. The fares fluctuate and the best ones may be available for just an hour or so before they are snapped up. So if you've time it is best to check multiple times every 4 - 5 hours, and/or at odd times like early morning or late night.

The other thing is that for international travel their systems don't work well in real time. So just like Travelocity has problems even in domestic flights, these sites often display low fares that they later say are no longer available when you proceed to book your travel. You do sometimes get those lower fares when you try subsequently. 

Frequent flier miles sometimes come in very handy.  Daughter Sheena got a business / first class ticket for her forthcoming trip from Austin, TX, to Lima, Peru on American Airlines for relatively few (60K) AAdvantage miles.  This is on dates when paid fares even in coach are very high.

Q: Which airline have you mostly been flying? Are you happy with it? Have you ever taken the Air India nonstop? (i.e., the direct flight from New York or Chicago to Delhi or Mumbai.) I'm curious about it, and also about its quality aspects.

A: Some of my recent trips to India have been on Delta non-stop from JFK (since discontinued), American-Swiss combos via Zurich, Air France via Paris, and Thai Airways. The US airlines typically have the skimpiest service, especially American, while the European (and Thai) airlines have better food and cheerier attendants. Continental is better among the US carriers, though. They took great care of us in Frankfurt when we were stranded for 3 days due to bad snowstorms in the US.
 

In contrast, when we flew American Airlines and missed a connection in Zurich due to a late incoming flight, they wrongly blamed this on the weather and we stayed a day at our own expense without any help from them. They ultimately paid up months later, but that's a long story.

There are mixed reviews about Air India but my experience on all 6-7 trips on it has been very good. A couple of times passengers tended to be unruly or unsophisticated - a Sardarji swaying drunkenly after several free drinks, and some passengers getting up from their seats on landing while the plane was still taxiing on the runway. But those were sources of amusement rather than inconvenience for me / us.
 

To us personally the Air India crew has been very attentive, polite and gracious, emblematic of typical Indian hospitality. On one occasion after we were airborne a flight attendant noticed I had long legs and of her own re-seated me (and Anita) in a more spacious section. At other times the flight attendants have plied me with multiple alcoholic drinks when I requested for one (may be I look like a boozer.)

And those traveling non-stop from the US to on Air India have generally liked it a lot even in coach - plenty of leg room, good food, unlimited drinks, polite crew, etc. Jet Airways invariably receives rave reviews though I've not used it for international travel myself, and they don't offer non-stops to India. In general it's better, faster and less uncertain (due to delays and missed connections at intermediate airports, volcanic ash in Europe, etc.) to travel non-stop from US to India. So I'd recommend it, on Air India or whatever.

Moreover, the crews are individuals so experiences can vary - I've often seen great attendants and got service to match even on my lowest ranked airline, American Airlines.

Guarding Your Tail

Imagine you are running a $100B company. Your personal salary is 2% of the excess earnings (over and above the safe treasury rate) of your company. You secretly bet your company's fortune so you get an extra 1% of return on investment with 98% probability, but your company can lose everything with a 2% probability.

Any bookie can see these are terrible odds for the company since the "expectation" is (0.98 X 1) - (0.02 X 100) = -$1.02B. In other words your actions will cause your firm to lose $1.02B a year on average over a long period of time.

But if you are mainly concerned about about your own earnings during your 5 year tenure at the top, then making this bet makes perfect sense. There is an over 90% chance that your company gets that 1% for all five years, netting you $20M every year. If they are unaware of the chances you've taken, then your investors will attribute your "success" to your superior managerial capability. And if that calamity does occur wiping out your investors, you personally get to walk away paying nothing. You even keep your past earnings, go yachting and getting your life back, as BP's CEO Tony Hayward would say.

That in essence is why people can have strong incentives to take on tail risks defined as very unlikely but catastrophic events. Instances of such tail risk taking include:
a) The aforementioned BP spill, where cutting corners and ignoring safety imperatives can save oil companies hundreds of millions of dollars a year. While the other oil chiefs solemnly swear to the complete safety of their practices, they know the chance of any such false claims being exposed on their watch is very low. Just as it was for Tony Hayward who was unlucky enough to have lost the reverse lottery. But the the risk of something terrible happening is very high, when aggregated over all the operating companies and the tens of thousands of wells operating under loose regulations.
b) The financial meltdown led by the collapse of the sub prime mortgage loans market. The easy money architects like Alan Greenspan thought the risk was very low. Many lenders, traders and money managers (backed by their rocket scientist quant analysts) knew that a drop in real estate prices could be catastrophic to the derivatives market. They just figured that the bubble wouldn't burst in their short term trading horizon, and someone else down the line would take the fall. Or if they were too big to fail, that they could collect on the upside while a lot of the downside would be borne by taxpayers. They were right on many counts. Even Goldman Sachs which famously dodged the bullet would have done badly if the housing price collapse had started a year earlier, before they unwound their positions.
c) Hurricane Katrina and the damage to New Orleans. Generations of politicians and lawmakers avoided raising and strengthening New Orleans' barriers. These would have guarded against the very unlikely possibility (in their watch) of a Category 5 hurricane directly hitting the city. They instead could divert such resources for popular "pandering" projects that would win them accololades and political support, with no one the wiser about the risk that did not materialize. But a city's life should be measured in centuries (think of the Netherlands' dikes) and over that horizon the risk was very high.
d) Other as yet unrealized disasters like nuclear accidents (assuming Three Mile Island wasn't bad enough and a while back) or earthquakes where safety codes are not strong or enforced enough.

The common factor in all these instances is that the people taking the risks on average derive a huge benefit from doing so, even if this is severely detrimental to the affected populace. That's why leaving the regulation and policing to the private industry can be so harmful. These special interests can lobby fiercely, or use a portion of their expected benefits to bribe or buy support and intimidate opposition that wants tighter controls.

At "my" University of Chicago the majority academic view leaned heavily towards private enterprise and self regulating markets. It went way beyond the concept of "efficient markets" relating to stock, etc. prices that makes intuitive sense. Many of the arguments and reasoning I heard in support of this more extreme "private and unregulated is generally the best" view was not convincing to me. It generally cited historical correlations between free enterprise and economic prosperity. Many of these no longer hold as even Andy Grove pointed out on July 1 in BusinessWeek in a different context of job creation and the rise of China and other controlled economies.

Still, to its credit the University of Chicago does tolerate dissent and fosters diversity of opinion. Paul Krugman in his April 9, 2009 NYT column, pointed to Raghuram Rajan of this school presciently warning back in 2005 of the risk of a financial meltdown, absent adequate controls. Now we just need to have lawmakers and politicians step up to the plate and have the right government safeguards to watch our collective back - and tail.