Natalie Kwok
F.4A (11) 15/04/06
Foreign Office warns against travel to Nepal
Daily Telegraph
(Filed: 11/04/2006)
http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2006/04/11/unepal.xml
Nepal's political party activists defied a government curfew for the
second consecutive day yesterday to press their demands for the restoration
of democracy.
The Foreign Office has advised "against all but essential travel" to
Nepal because of enhanced tension in the Himalayan country.
Three people have been killed and hundreds injured while they were
chanting pro-democracy and anti-king slogans as police opened fire on
crowds. There have also been hundreds of arrests.
The Foreign Office (FO) warned there was a
risk of visiting Britons getting caught up in
violence on the streets.
"Those British nationals already in Nepal
should decide whether their presence there
is essential," the FO said. "We will keep this
advice under close review."
The FO said that the political situation in
Nepal remained tense and unpredictable
and levels of violence remained high across
the country.
Hundreds of people
have been injured
It added that despite a ban, large scale demonstrations took place in
Kathmandu, Chitwan, Pokahara, and Bardiya over the weekend.
The FO's travel advice went on: "The political parties have extended
their general strike, which began on April 6, 'until further notice'. Violent
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flashpoints are likely to continue during this period of instability.
"You should expect disruption to your journey and avoid
demonstrations and large gatherings of people."
Summary of the News:
Since Nepal broke out large scale demonstrations that were
against the King and to fight for the restoration of democracy, the political
situation in Nepal remained tense and unpredictable and levels of violence
remained high across the country. So the Foreign Office (FO) warned
there was a risk of visiting Britons getting caught up in violence on the
streets and has advised "against all but essential travel" to Nepal because of
enhanced tension in the Himalayan country.
From the news, we know that now Nepal is politically unstable due to
large scale demonstrations broke out across the country to fight for the
restoration of democracy. Besides, the Foreign Office warns against travel
to Nepal. As a result, most people from other countries will not travel to
Nepal in order to be safe, so the demand for flight services to Nepal will
decrease. Besides, social unrest in Nepal tends to increase the
geographical mobility of labour.
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Explanation of the graph:

Suppose the numbers of flights that leave Nepal are constant.
Gain /
increase in
revenue
Old total
revenue
New
Total
Revenue
Qs
< Qd
Flight Services that leave Nepal
(Fig. 1)
Since Nepal broke out large scale demonstrations, political situation
becomes unstable, social unrest in Nepal tends to increase the geographical
mobility of labour. (Geographical mobility refers to the ease at which a
factor can move from one place to another.) This is because many people
will leave Nepal to find some peaceful places / countries, and so will
increase the demand of flight services that leave Nepal (D 1 to D2). As a
result, increase in demand of flight services that leave Nepal will lead to an
increase in the airfares (P1 to P2). From Fig.1, we know that since the
numbers of flights to Nepal is constant, this means the supply of flight
services to Nepal is perfectly inelastic (S). At P2, although the demand of
flight services that leave Nepal is higher, quantity transacted remains
unchanged (Q1) since the supply of flight services is fixed. Since the new
air ticket price (P2) is still lower than the equilibrium price, so quantity
supplied (Qs) is less than quantity demanded (Qd), and so excess demand
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(Ed) of flight services that leave Nepal exists.
Total revenue equals to price times quantity transacted. In this case,
old total revenue is 0P1CQ1, new total revenue is 0P2AQ1. Thus, total
revenue increases (P1P2AC).
Furthermore, tertiary production refers to the provision of various
kinds of services. Airlines are involved in tertiary production because they
provide flight services to customers.

Suppose airlines did not change airfares, and the numbers of
flights to Nepal are constant.
Loss / Decrease in
revenue
New total revenue
Old total revenue
Q2
Q1
Qd < Qs
Flight Services to Nepal
(Fig. 2)
Since Nepal broke out large scale demonstrations, political situation
becomes unstable, so many people will not travel to Nepal in order to be
safe, this will lower the demand of flight services to Nepal (D1 to D2).
From Fig.2, we know that since the numbers of flights to Nepal is constant,
this means the supply of flight services to Nepal is perfectly inelastic (S).
Besides, since the airlines did not change airfares, so the ticket price
remains unchanged (P1). At the same price (P1), quantity transacted
decreases (Q1 to Q2). Since quantity supplied is fixed, so quantity
supplied (Qs) is larger than quantity demanded (Qd), and so excess supply
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(Es) of flight services to Nepal exists.
Total revenue equals to price times quantity transacted. In this case,
old total revenue is 0P1BQ1, new total revenue is 0P1AQ2. Thus, total
revenue decreases (ABQ1Q2).
Furthermore, tertiary production refers to the provision of various
kinds of services. Airlines are involved in tertiary production because they
provide flight services to customers.

Suppose airlines had lowered the airfares, and the numbers of
flights to Nepal are still constant.
Loss / Decrease in
revenue
New total revenue
Old total
revenue
Q2
Q1
Qd < Qs
Flight Services to Nepal
(Fig. 3)
Since Nepal broke out large scale demonstrations, political situation
becomes unstable, so many people will not travel to Nepal in order to be
safe, so this will lower the demand of flight services to Nepal (D 1 to D2).
From Fig.3, we know that since the numbers of flights to Nepal is constant,
this means the supply of flight services to Nepal is perfectly inelastic (S).
Besides, the airlines had lowered the airfares, so the ticket price falls from
P1 to P2. At P2, quantity transacted decreases (Q1 to Q2). Since the new
air ticket price (P2) is still above the equilibrium price and the quantity
supplied is fixed, so quantity supplied (Qs) is larger than quantity
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demanded (Qd), and so excess supply (Es) of flight services to Nepal exists.
Total revenue equals to price times quantity transacted. In this case,
old total revenue is 0P1CQ1, new total revenue is 0P2AQ2. Thus, total
revenue decreases (0P1CQ1 –0P2AQ2).
Furthermore, tertiary production refers to the provision of various
kinds of services. Airlines are involved in tertiary production because they
provide flight services to customers.
THE END
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