Another one bites the dust in the tortuous franchised bus market

PUBLISHED : Thursday, 12 June, 2003, 12:00am
UPDATED : Thursday, 12 June, 2003, 12:00am

The largely privately financed public transport system tends to deter new entrants

With the purchase of Citybus by the Cheng Yu-tung family earlier this week, there soon will effectively be just two groups operating franchised bus services in Hong Kong. Will the market ever see the return of a third private operator?

It is a question that government officials - acknowledging Hong Kong's parochial franchise system - cannot answer. But the deal has highlighted the complex relationship between private bus operators and the government. The city's largely privately financed public transport system makes it inherently very difficult for new operators to enter the market.

'Certainly, you can't simply just go in and ask for a route,' a transport official said.

Under the Public Bus Services Ordinance, a bus franchise allows the operator rights to run services on specified routes. Yet how to obtain a franchise is unclear.

In the case of Citybus, which was launched in 1979, it took more than a decade of running bus charters and a residential bus service in Sha Tin before it was finally admitted into the club of franchised operators in 1991.

There seem to be only two paths to new routes for operators, and neither choice is easily attainable. The first is through a 'periodic route development programme' done with the Transport Department.

Assuming the government approves a planned new route, an arduous process begins that takes the proposal through the district and legislative councils. Criteria for acceptance include proof that the route is justified by commuter demand and that services would not lead to congestion.

And there is no guarantee the original applicant will be granted the route. If the proposal is endorsed, the route goes to tender and all bus operators may apply.

The second option is to put in a tender for new routes created by the government or ones given up by an existing operator. Again, neither is easy or open to new players.

A transport official said that, since 1998, all new cross-harbour routes have been allocated via tender, in 'which existing franchised bus operators were able to apply for ... the routes'.

William Barron, an associate professor of urban planning at the University of Hong Kong, agreed the process of awarding franchises or routes was 'not transparent and not necessarily open'.

'But you can't blame the government for not being as transparent as we'd like,' he said.

'It's the dirty little secret of self-funded transport and allows the cross-subsidy of less profitable routes with more profitable cross-harbour ones. If every route was self-funded, there would be far fewer routes.'