Welcome for fuel policy on bus fares
A government proposal not to include a separate component to reflect the cost of fuel in the mechanism for adjusting bus fares would mean the public would benefit, legislators and an economist said.
Their comments came after the Transport and Housing Bureau told the Legislative Council that it did not see the need to change substantially the existing fare adjustment formula's components and their weightings.
The adjustment formula takes into account the consumer price index, changes in household income, public acceptability and affordability, and the companies' financial performance. Fuel costs are a factor in the CPI.
The bureau said adding a new fuel cost element would allow bus operators to pass their fuel cost fully and directly to bus passengers through the formula.
'[This] would mean that passengers would have to bear frequent and drastic fare adjustments due to short-term changes in individual cost items, for example fuel costs.'
The government said that simulated results indicated that such an element would lead to very drastic upward and downward movements of the formula outcome.
Bus operators have complained, especially as fuel prices surged over the past two years, that fuel was an important component, representing 10 to 21 per cent of their operating costs.
The five franchised bus operators - KMB, Long Win Bus, New Lantao Bus, New World First Bus and Citybus - increased their fares by between 2 and 7.24 per cent in June. More than 3.35 million commuters are paying from 10 HK cents to HK$3 more a trip after the rises.
Most of the rises were lower than those allowed by the adjustment formula - an average of 4.67 per cent for the five operators, after taking into account the CPI.
Supporting the proposal, lawmaker Miriam Lau Kin-yee, chairwoman of Legco's transport panel, said: 'Fuel cost should only be a consideration for bus operators in adjusting fares, but not an element directly included in the bus fare calculation.'
She believes passengers benefit from the current arrangement.
Andrew Cheng Kar-foo, the panel's deputy chairman, agreed a special fuel element should not be added to the formula. He hoped the government would watch the bus operators in case they sought other ways of passing on fuel costs to commuters.
Dr Raymond So Wai-man, associate professor in Chinese University's finance department, said that if an extra fuel cost element were included, bus fares would fluctuate too often and it might be too chaotic for the public. But excluding one might not be too fair to the bus operators, as fuel prices had been too volatile in the last few years, he said.
A spokeswoman for KMB said it regretted the government's proposal. Fuel was a significant operating cost for the company. A spokeswoman for Citybus and New World First Bus said: 'Since the oil price is not included in the formula, it does not resolve the problem brought about by the fluctuation of fuel prices, which heavily impact on operating costs and hence pressure on fares.'
Bus operators have complained that fuel is an important cost
They say that, as a proportion of operating costs, fuel is up to: 21%