MTR fare increases should reflect profits, not just costs: Expert

PUBLISHED : Tuesday, 02 October, 2012, 12:00am
UPDATED : Tuesday, 02 October, 2012, 4:08am

Train fare increases should be linked to either the MTR Corp's railway profits or the rate of increase in people's incomes, a veteran transport analyst says.

Hung Wing-tat, of Polytechnic University, noted that while the formula for calculating fare increases reflected the railway's costs, it failed to consider profits.

"The MTR need not and should not raise fares when it has a huge profit," he said, suggesting instead to establish an upper limit to prevent the railway from raising its fees when its profits exceeded a certain limit.

Hung made his views clear in an interview after the government began a public consultation on a fare review mechanism.

He said another way to limit a fare increase would be to link it to workers' average pay rise. "Some people are angry because their wages weren't raised as much as the MTR's fare increase."

Officials are reviewing the fare adjustment formula, introduced in 2007, that has allowed the MTR Corp to raise its fares for three consecutive years, sparking widespread criticism from Hongkongers. The review of the mechanism, launched after a public outcry against a 5.4 per cent fare hike in May, is expected to be completed early next year.

Some critics have faulted the corporation for hiking its fares after it made a net profit last year of HK$14.7 billion, but the railway said it was only sticking to its agreement with the government. The MTR offered a HK$670 million package of concessions along with the fare increase, saying that it would offset the profit it made from the hike.

The fare adjustment formula is made up of three components - increases to reflect the consumer price index and changes in wages in the transport sector, minus a small percentage to cover improvements in productivity.

Hung also faulted the formula's productivity factor as unfairly low - zero per cent until next year, then adjusted to 0.1 per cent. "It should be at least 0.5 per cent, to align with the fare adjustment formula of the franchised bus companies," he said.

Richard Tsoi Yiu-cheong, of the Coalition to Monitor Public Transport and Utilities, agreed with Hung's suggestions, saying he also wanted to see quality of service added to the fare adjustment considerations. "When it comes to service performance, it's hard to rely only on a formula," Tsoi said. He said the MTR performance should be graded with a system in which points would be deducted for service interruptions and other problems.

The consultation will end later this month.