New World First Ferry

Buy-back of ferry operators on cards

PUBLISHED : Monday, 10 November, 2008, 12:00am
UPDATED : Monday, 10 November, 2008, 12:00am

Consultation on outlying island services

The government will consult the public next year on a proposal to buy back loss-making outlying island ferry services, in what would be a big shift of public transport policy, a senior government source says.

The government has had a clear stance not to subsidise any transport, even in times of financial turmoil. When the oil price peaked at US$140 a barrel, and ferry operators demanded up to 50 per cent more on fares because of severe deficits, it never changed its position of not interfering in the market.

However, as ferry services become less sustainable businesses, but remain an irreplaceable method of transport for those living on remote islands, the government is seeking to find out what the public thinks about a change.

'The consultation would not just be confined to islanders, but also people living in remote areas in the New Territories and those who don't use ferry services,' said the government source. 'It would include anyone who would ask why the government should give outlying island residents privileged use of their money.'

The consultation - scheduled to be held by next June - would call for public opinion on a plan for the government to buy back vessels from operators of the outlying island ferry services, and then contract the services back to them for management.

It has not yet been determined whether the consultation would cover all 15 outlying island routes - including the private service between Discovery Bay and Central - or only some.

Nelson Ng Siu-yuen, director of Hong Kong & Kowloon Ferry, said it could be an attractive offer for the company's shareholders, who had suffered an accumulated loss of HK$27 million since obtaining the service licences between Central and Lamma Island in 1998, but he questioned whether the policy would win public consensus.

'Didn't [the government] use to say they cannot subsidise public transport? If they subsidise us, they would be asked to subsidise others. There are big implications here.'

The government source asserted that the government still believed in market forces and was well aware of the possible impact as the island population continued to age and shrink. Also, fuel prices could resume a rising trend any time soon, and there was a risk that some day privately owned ferry services might simply become unviable.

'Some operators did consider giving up the licence when the oil price was at its peak, and the ferry is these islanders' only means of transport,' the source said. 'However, it is also their choice to live there.'

Islanders could expect stable or even cheaper fares if their ferry services were turned over to the government, but even Richard Tsoi Yiu-cheong, an activist in transport issues, said the government should not make any hasty decision.

'We don't object to this, but it may spark a chain reaction among other public transport operators.

'The government might exhaust other methods first such as extending the licence or expanding non-fare revenues before coming to this.'

The bureau said it had been studying these and other options to help operators.

Taxi activist To Sun-tong was opposed to the plan, saying it amounted to subsidising businesspeople with taxpayers' money.

But Chung Yuen-yi of Tin Shui Wai Development Network, whose residents often battled to cope with high transport fares, said they were willing to subsidise the islanders' transport fares.

Wind of change

Development of outlying island ferry services

1923 - 2000

Yau Ma Tei Ferry

Monopolised all outlying island ferry services and city routes not served by Star Ferry

At one time, the largest privately owned ferry fleet

In the 1960s annual patronage exceeded 100 million, served by 64 vessels on 16 routes

In 1963 it set a record net profit of HK$10 million

2000 - now

11 operators: New World First Ferry; Hong Kong and Kowloon Ferry; Tsui Wah Ferry Service; Islands Ferry; Winnertex; Fortune Ferry; Chuen Kee Ferry; Discovery Bay Transportation Services; Peng Chau Kaito; Coral Sea Ferry; Park Island Transport

In the 6 years to 2006 New World First Ferry accumulated a deficit of HK$12 million

In the 10 years to 2007 Hong Kong and Kowloon Ferry accumulated a deficit of HK$27 million


Government-owned / Private operation?

Sources: Transport Department, Census and Statistics Department