New World First Bus

Bus fare discounts fall far short of targets

PUBLISHED : Thursday, 01 June, 2006, 12:00am
UPDATED : Thursday, 01 June, 2006, 12:00am

Long-awaited Transport Department policy gets off to a disappointing start

The much-heralded bus fare adjustment mechanism is under fire for failing to deliver on promised fare discounts.

In March, the first full month of operation, fewer than 5 per cent of passenger journeys enjoyed a discount, well below the government's estimate of 25 per cent.

Transport Department statistics showed only 5.4 million journeys attracted a fare discount - just 4.46 per cent of the total 121 million journeys.

This meant the four bus companies offering the discount would lose $4.6 million to $6.5 million in revenue a month, or between $55.2 million and $78.5 million a year.

The March figures were much less than the government and bus companies expected. The government had estimated that up to a quarter of all passenger journeys would benefit from the discount, while Kowloon Motor Bus said the discount would cost the company $60 million a year.

A transport expert said the revenue loss would be even less because the figures showed an increase in total passenger volume, indicating that more people chose to travel by bus after the discount.

Legislators and a transport concern group yesterday called for a general fare cut for all passengers.

'We have been ripped off,' said Richard Tsoi Yiu-cheong, spokesman for the Coalition to Monitor Public Transport and Utilities.

'Only a few people have enjoyed the discount, but in return, bus companies have got a formula to raise fares without facing strong political pressure.

'This fare mechanism is a failure and bus companies are the winners. The government must now ask for a general fare cut.'

The fare mechanism was pushed by Secretary for Environment, Transport and Works Sarah Liao Sau-tung and announced late last year after years of negotiations with bus operators. It was widely seen as the minister's key policy achievement.

Under the system, launched on February 19, fares will be determined by diverse factors, including the Consumer Price Index and bus companies' operating costs.

To kick it off, KMB, Citybus, New World First Bus and Long Win Bus offered medium- and long-haul passengers fare concessions of 5 and 10 per cent.

The discounts, which could last for three years, apply only to round-trip journeys on the same route.

Democratic Party lawmaker Andrew Cheng Kar-foo said the government should explain why its projections were so high when it presented the plan to Legco.

'Apparently, this fare mechanism is problematic. The government should now go back to the negotiation table and get a general fare cut for all commuters,' Mr Cheng said.

But Susanne Ho, a spokeswoman for KMB, which also owns Long Win, said the loss in revenue was already substantial.

'Remember that our bus operation only made a profit of $385 million last year. The data shows the loss in revenue will still represent 10 per cent of our profit,' she said.

A spokesman for both Citybus and New World First Bus said the figures were expected.

The Transport Department declined to comment on the effectiveness of the fare mechanism. But a spokeswoman said more people would enjoy discounts soon, when the round-trip discount is introduced on 24 jointly operated routes.