THE traditional Hongkong trams, which have trundled along their Island lines for almost 70 years, are to be replaced by high-tech steel vehicles to save on maintenance costs. And Hongkong Tramways will ask to raise tram fares by 20 per cent to $1.20 in a bid to cover costs. Hongkong Tramways' director and general manager, Mr Ian Hamilton, said the company's 162 wood-panelled trams had a service life of five years each and were particularly expensive to maintain, costing about $324 million a year. The company planned to gradually replace the fleet with steel trams that would be three times more durable, he said. The tram's ''shoebox'' design has been in use since 1925 when the first fully enclosed double-decker tramcar with permanent roof was built at the Causeway Bay depot. The new vehicles would be of similar size and capacity due to restrictions in the track alignment. The company is also looking to the steel trams to expand its service to the Central and Wan Chai reclamation and the Green Island reclamation. A government study on rail development for the next 20 years, which is now under public consultation, suggests that trams should be upgraded and continue to serve various districts along the north shore of Hongkong Island. Mr Hamilton said the company planned to expand a loop service between Tin Hau and Central to serve the reclaimed waterfront. He also expected to extend tram services westward from Kennedy Town to Green Island before the Government committed itself to building an MTR link from Sheung Wan via Green Island and Yam O to the new airport. He warned that concessionary fares for elderly passengers were unlikely because it would seriously affect income. Mr Hamilton said the expected extra fare revenue, about $25 million a year, would be just enough to cover operation costs, which rose by up to 20 per cent every year.