Bus fare cut in the wind with new formula results

PUBLISHED : Friday, 27 March, 2009, 12:00am
UPDATED : Friday, 27 March, 2009, 12:00am

Bus passengers may get a fare cut in the next few months after the latest calculations under a fare-adjustment formula indicated that the price of an average trip should be reduced by 15 HK cents

But the Transport and Housing Bureau said there would not be a final answer for about six months and there might not be a fare cut at all.

The government first has to collect data from the companies on their operational costs, revenues, projected costs and returns.

It must also consult the Legislative Council and the Transport Advisory Committee before submitting a recommendation for Executive Council approval.

A bureau spokesman said that after all factors had been considered there might not be a reduction.

Lawmakers and community groups nevertheless called on companies to cut fares soon because of the economic downturn and the plunge in the price of oil to about a fifth of its peak value of US$140 per barrel last July.

The formula was introduced in 2006 to determine whether bus fares should be raised or lowered.

The latest calculation takes into account December's composite consumer price index, nominal wage indices for the transport sector during the fourth quarter last year and the operators' productivity rate.

It produced a negative figure of 3.03 for the first time - equivalent to a fare cut of 15 HK cents on average.

However, New World First Bus - which also owns Citybus, said some parts of the equation did not truly reflect the company's situation.

A spokesman said the transport sector wage index for the fourth quarter last year fell 4.2 points, but in reality drivers' wages had risen over the past year. Unions representing drivers for the four local bus companies - who were given a pay rise last July - have demanded pay rises again of between 5 per cent and 7 per cent this year.

Kowloon Motor Bus, which also owns Long Win, said it would study the formula's latest result.

All four operators have seen a rise in fare revenue since their fare-rise applications were approved last July. The latest annual report of KMB's holding company, Transport International Holdings, showed a rise in fare revenue from HK$6.07 billion in 2007 to HK$6.13 billion in 2008, although its profit dropped 14 per cent to HK$292.5 million last year, even after removing a huge one-off property sale in 2007.

Meanwhile, MTR Corporation will not be entitled to a fare rise for another 15 months, according to the outcome of another formula for rail transport.

The corporation agreed to continue a temporary fare reduction when it merged with the Kowloon Canton Railway in December 2007.

There has since been wide speculation that the MTR would be able to ask for a fare rise when the freeze expires in July given the fact that the composite consumer price index and the wage index for the transport sector rose during the first three quarters of last year.

However, the outcome was based only on the last quarter, during which revenue dropped due to the economic downturn.