Latest MTR concessions 'stingy'

Under mandatory system, rail firm will give passengers back just HK$200m of its profit this year, a third of what it returned last year

PUBLISHED : Saturday, 08 June, 2013, 12:00am
UPDATED : Saturday, 08 June, 2013, 4:16am

The MTR will give fare concessions of just HK$200 million this year after the 2.7 per cent fare rise kicks in at the end of month. This is only a third of the concessions it gave last year.

It is the first year that the rail company is being forced to give a certain amount of concessions.

One critic described the package as "stingy".

This year, under the MTR's new obligation to share its profits and make up for service disruptions, it will give away HK$163 million through a 10 per cent discount on every second trip a passenger takes.

The MTR said that together with five monthly passes and a new ticket to be launched next year for frequent passengers on urban services, the concessions would amount to HK$200 million.

Last year, when it did not have to, the company gave concessions of HK$670 million, while in 2011, the figure was HK$757 million.

Most passengers will pay 10 cents to 50 cents more for each trip from June 30. Those who travel between Sheung Wan and Tung Chung, and Tuen Mun and Hong Kong, will be hardest hit.

The fare increases will rake in extra revenue of HK$360 million, HK$70 million less than the rise would have brought in under the old formula.

Under the old formula, the increase would have been 3.2 per cent. While last year's concessions wiped out the extra fare revenue, this year, the MTR is expected to pocket an extra HK$160 million because of the lower concessions.

MTR general manager for marketing and planning Eddie So Chung-tat said the company did not intend to offer any more concessions on top of the HK$200 million package and HK$1.8 billion recurring discounts, such as half fares for students. He said previous years' concessions might not be comparable because of many variable factors.

May Wong May-kay, MTR's general manager of corporate relations, said the new mechanism was more transparent as the public would know how the concessions were determined.

Under this year's package, monthly passes will be "upgraded" so passengers get a 25 per cent discount on fares for connecting journeys beyond stations that a pass covers.

A new pass, between Tung Chung and Nam Cheong, will be introduced on July 1 and a "City Saver" ticket, which costs HK$400 for 40 rides on the urban network, will be launched by next June.

The 10 per cent discount for every second trip on the same day will last until March.

The South China Morning Post earlier calculated that the company could have saved as much as HK$1.53 billion in the past three years if it had used the new formula to determine fares.

Economist Andy Kwan Cheuk-chiu, who said the new concessions were "stingy", said the new formula "was drawn up after very careful consideration so that the MTR could still enjoy its profits".

"It could have given away more concessions to improve its corporate image," he said.

Kwan said the mechanism should be tougher so the company could not increase fares while reporting a huge profit.

Its underlying business profit last year was HK$9.78 billion.

The amount of concessions it has to offer to share its profit is now capped at HK$250 million, and the maximum fine for a service disruption is HK$15 million.

Kwan said the ceiling should be raised or removed, especially when more lines were being added to the network, further pushing up revenue.

After this year's fare adjustment, 878 single-journey fares will still be lower than Octopus fares.

The MTR said the number had dropped substantially from last year, and the situation would be eliminated eventually.