Hong Kong MTR

Hong Kong’s MTR to freeze fares this year in line with renewed adjustment mechanism

Rate of adjustment is lowered to below the threshold for rise after 10 per cent discount is factored in

PUBLISHED : Monday, 27 March, 2017, 6:01pm
UPDATED : Monday, 27 March, 2017, 11:01pm

Hong Kong commuters will be spared a fare rise this year based on newly released government data under a renewed fare adjustment system.

The fare freeze comes after the government announced on Monday that transport workers received an annual wage rise of 3.3 per cent last December. It means the fare increases set over the past seven years will come to a halt this year.

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MTR Corporation chairman Frederick Ma Si-hang predicted last week that fares would probably remain flat under the price-setting mechanism, which was recently renewed after a one-year review.

The government, which holds a 75 per cent stake in the MTR, agreed with the rail corporation recently that it would keep the current fare-setting formula for the next six years instead of bowing to demands for a revamp.

The MTR announced that a one-off 10 per cent discount would be applied to fares as part of a package of concessions.

The original adjustment rate should have been 1.65 per cent, calculated from the average of the annual inflation rate in December, which was 1.2 per cent, and the yearly increase in wages for the transport sector, which was 3.3 per cent. A productivity factor – 0.6 of a percentage point – was deducted.

How MTR fares are adjusted and why they upset Hongkongers

However, after the 10 per cent discount is applied, the final rate will be 1.485 per cent, which is below the required 1.5 per cent threshold needed to trigger a fare increase. This means fares will remain unchanged while the rate of adjustment will be rolled over to next year.

From June this year, passengers will also receive a 3 per cent rebate on fares for every Octopus trip for at least six months, worth about HK$235 million.

It will replace an existing 10 per cent discount for every second trip costing HK$164.5 million.