New concessions taking us for a ride

PUBLISHED : Saturday, 17 August, 2002, 12:00am
UPDATED : Saturday, 17 August, 2002, 12:00am

I am one of those people who never seem to get much out of air miles. Every time I try to cash them in I am told they are not valid on Tuesdays or not valid on the sector or not valid for blue-coloured boarding passes or just plain scrap paper.

So I found it frustrating to see our public transport companies in Hong Kong start to play variants of the air miles game with schemes such as one free ride for every ten or discounts on transfers to other buses. They are obviously under political pressure to bring fares down, what with hard times and an overall consumer price index now in its fifth consecutive year of decline. If bend they must, they prefer to do it in the least trouble-free way. It is much easier to grant a special fare concession than adopt an across the board fare cut because it is much easier later to scrap such a concession than adopt a fare increase.

They certainly have been reluctant so far to cut fares at all, as the first chart shows. That line running across the top represents a passenger weighted average of their fares on the basis of an index in which May 1998, the month that the CPI peaked, represents 100. The figures are taken from the detailed CPI reports and should therefore incorporate all twists, including special concessions.

The bar chart shows you how much they have individually raised (or lowered) their fares since May 1998. It is mostly raised obviously, with taxis and the Mass Transit Railway Corp having squeezed passengers the hardest while the Kowloon Canton Railway Corp has eased a little, emphasis on 'a little' when you set it against what the overall CPI has done.

Can they justify this because of rising costs that hit them but do not hit consumers? That would be a reasonable argument for resisting the trend and one they readily furnish. Let us break it down for fuel costs, equipment costs and wage costs.

On fuel they may have an argument. Oil prices were running below US$15 a barrel in May 1998. They are now running nearer US$26. However, it is not much of an argument for the MTR and KCR, which run on electricity. Electricity prices have remained stable throughout the period.

General deflator numbers say prices of private sector machinery and equipment are also about where they were in May 1998 although it is noteworthy that prices of capital goods imports are about 10 per cent down. Government figures say wages for transport workers are virtually unchanged from the May 1998 level.

So yes, there are probably some cost reasons why public transport fares should have not declined as much as the overall CPI has done. They have actually risen slightly, however, and I would certainly still put the big question to taxi fleet operators and the MTR.

But most of all I wish they would give me straight fares instead of playing around with convoluted concessions.

Graphic: jake17gbz