Jake's View
PUBLISHED : Sunday, 17 March, 2013, 12:00am
UPDATED : Sunday, 17 March, 2013, 2:21am

Crazy thinking will damage MTR further down the line

BIO

Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.
 

It is understood the government will add factors such as service quality and affordability to the existing [MTR] fare adjustment formula, which could make it more difficult to increase fares.

It is anticipated the review will lead to a curbing of fare rises, after prices increased three years in a row under the existing formula.

SCMP, March 12

I would like to understand the thinking here but, try as I might, I just cannot do it. It is alien to any rational concept of how a public service corporation works.

Take this idea that fare increases should be denied if services are not up to a standard deemed satisfactory by some nebulous panel responsible for service oversight.

In actual corporate practice, service quality is a matter of investment. If it is generally held, for instance, that there are too many breakdowns on the MTR, the solution would be to invest in new signal equipment, tighten tolerance limits for metal fatigue and adopt a more rigorous maintenance schedule for rolling stock.

It will work. It may not do so immediately and some steps will have less effect than others. But if improvements are carefully thought out, results will follow.

Likewise, if MTR employees are deemed rude by the public, the solution would be to invest in compulsory public relations classes and to fine-tune staff evaluation procedures. Results will follow. They always do. Isolate the problem, work out the remedy, put some money into it and monitor the results. That's how it's done in a corporation.

But the thinking we have here implies that the MTR has a sneaky way of cutting back on service standards in order to make easy money. And the only way to stop it from cheating the public like this is to rap management hard across the knuckles whenever it happens.

I shall grant you that choking income in punishment might actually work if this really described the MTR's practices. A much better way, however, would then be to sack some directors, which our government can easily do as the controlling shareholder.

But if our public officials will accept that the MTR is not best represented as a gouging fat cat tycoon, then the way to improve service quality is to put money into it, not take money out of it. I just don't get the thinking here.

Likewise, I just don't understand this business of refusing the MTR fare increases if some other nebulous panel decides that fares are not affordable. It ignores the fact that if the investment in a rail line is made and if we continue to run trains on it, then we are going to have pay for it one way or the other. What else can we do, ask Argentina to pay?

It also ignores the fact that the best way (in fact, the only way) of determining whether people think the MTR affordable is whether they will pay the fares. At the moment they are clearly happy to do so. The MTR is grabbing passenger share from other modes of transport hand over fist.

But if we don't want this trend to continue, it is easily reversed. Just starve the MTR of investment capital on the basis of an "affordability factor", and then watch service quality go down and people fleeing back to the buses.

Finally, we get to the whinge about "a curbing of fare rises".

The chart shows you that MTR fares on average stand about where they did 10 years ago, while the overall consumer price index has risen 24 per cent.

But it's all a lie of course. These official statistics are all wrong, everyone knows that.

Yes, let's all go live in Cloud Cuckoo Land.

jake.vandercamp@scmp.com

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