Citybus offers HK$42m in fare discounts

PUBLISHED : Saturday, 29 January, 2011, 12:00am
UPDATED : Saturday, 29 January, 2011, 12:00am

Citybus passengers will have more cash in their pockets during a three-month ticket discount period because the company must share excessive profits with patrons, who are entitled to HK$42 million worth of fare concessions.

From February 3 to May 2, passengers can get a 20 per cent discount on the second leg of a journey on 24 routes, including cross-harbour trips. A HK$2 discount will also be offered on the second leg of a trip on all Citybus' 64 franchised routes, except cross-harbour services jointly operated with other bus firms, and the airport and Disneyland routes. Only Octopus card users can get discounts.

The discount is offered under the passenger reward arrangement in a franchised agreement signed between the government and Citybus in 2006.

It forces Citybus to share equally with passengers excessive revenue - any amount above the 9.7 per cent rate of return based on the net value of fixed assets.

In the agreement, when the excess is more than 1 per cent of total revenue, Citybus is required to give rebates within a year.

Citybus' total revenue last year reached HK$1.2 billion, of which HK$84 million is excessive revenue. Half will go on discounts.

Independent lawmaker Andrew Cheng Kar-foo said it was unfair that not all Citybus passengers could enjoy the discount. He said the money should be used to set up a fare stabilisation fund to offset future fare increases.

News of the excessive revenue gives a bus drivers' union hope for wage negotiations in April.

'Everyone says the bus service is a sunset industry. But the excessive earnings have suggested otherwise,' said Hui Hon-kit, deputy chief of the Citybus Employees Union. 'It has also proved us right that the bus company has been pretending it is dying and therefore denying us the right to more reasonable wages.'

The union said it wanted a 7 per cent pay rise this year because of an expected increase in inflation.

But the bus firm stressed that the excessive earnings did not indicate business improvement. Instead, discounts were possible because of lower oil prices last year and the lower value in assets because of the ageing fleet.

'The outlook for us does not look very good as the oil price has gone up a lot recently and there will be more competition from the railway, too,' a Citybus spokeswoman said.

Citybus, which carries about 570,000 people a day, has no plan to apply for a fare increase. The last time ticket prices were increased was in 2008, when fares rose by an average of 2 per cent.

Kowloon Motor Bus, the city's largest franchised bus operator with a nearly 4,000-strong fleet, said rising wages, higher oil prices and tunnel fees would require a fare increase.

The government is considering KMB's application for an 8.6 per cent fare rise, and a 7.4 per cent ticket price increase for its subsidiary Long Win, which operates the airport routes on north Lantau. These proposed increases translate to 52 HK cents and 85 HK cents per passenger trip, respectively.

A decision on those applications is expected to be made by the end of this month.

A spokeswoman for New World First Bus, a sister company of Citybus owned by Chow Tai Fook Enterprises and NWS Holdings, said their excessive earnings came to HK$2.5 million last year, which had been spent on discount fare schemes.

Healthy balance

This is the amount of excessive revenue, in Hong Kong dollars, Citybus earned last year: $84m