New World First Bus

KMB asks for fund to put lid on fares

PUBLISHED : Wednesday, 20 July, 2011, 12:00am
UPDATED : Wednesday, 20 July, 2011, 12:00am


Related topics

Kowloon Motor Bus (KMB) says the government should set up a special fund to buffer it against rising global fuel prices and guard against inflation in bus fares.

This came as KMB's listed parent, Transport International, issued a profit warning, saying that 60 per cent of its routes were loss-making.

The company said it might record a loss for the first half of the year, blaming the fuel price surge and opposition to its plans to cut under-used routes.

The call for the fund also comes two months after KMB raised fares by 3.6 per cent, much lower than 8.6 per cent it had proposed.

KMB managing director Edmond Ho Tat-man said a fare stabilisation fund was needed to avoid a much bigger fare increase and 'for the sake of passengers'.

'We don't want to be the one who always asks for a fare increase and gets the blame,' Ho said.

He did not say how the fund should be set up or whether KMB and the other bus companies should also contribute, only that it should include seed money injected by the government.

The fare stabilisation fund idea was backed by the two other bus companies, New World First Bus and Citybus, both under NWS Holdings.

However, a Transport and Housing Bureau spokeswoman rejected the proposal, saying that a direct subsidy to a private company would create an impression of business-government collusion and violated the principles of how public money should be used.

'The government should treat all transport operators equally,' the spokeswoman said. She added that subsidising the business could encourage 'unnecessary fare increases'.

Legislator Andrew Cheng Kar-foo said the government should consider the subsidy proposal but questioned why a commercial operation should ask for public money.

'When you make money, your shareholders get the bonuses, but now you are targeting public money once you make a loss,' he said.

'How can running a business become so easy?'

If such a fund were set up, bus companies should also put money into the pool if they made a profit, he added.

Ho also said that more than 100 buses on unprofitable routes would be re-allocated to busier ones to raise income. KMB is also proposing cutting services on some unprofitable routes that overlap with the underground system.

The management said the 78-year-old company was struggling to control its finances with the May fare increase only covering half the cost of the rise in oil prices.

'My view for the future is very gloomy indeed,' Ho said.

Such cutbacks in services have been opposed by the district councils in the past, but Ho said it would eventually benefit passengers.

On the proposed bus route changes, the government spokeswoman said they must obtain the consent of the community through consultations with the respective district councils.

It is the second time the parent company has issued a profit warning since 2008 but it was able to turn finances around at the end of that year.

Last year, it reported net profit of HK$866 million, nearly 30 per cent above that of 2009.