Legislators believe it could lead to a better quality service Analysts and government officials say the merger of Hong Kong island's two main bus companies could improve the overall quality of bus services and even provide scope for future fare cuts. On Monday, Scotland-based Stagecoach Group agreed to sell Citybus, Hong Kong's second-largest bus company, to the Cheng Yu-tung family's Chow Tai Fook Enterprises, the ultimate owners of rival New World First Bus. Executive Council members endorsed the deal yesterday and dismissed fears that it would lead to a decline in bus services. 'One bus company on the island would not necessarily create a monopoly situation,' said Tsang Yok-sing, an Exco member. 'It could serve to raise service standards and lower costs, so that might mean lower fares as well,' he said. Another Exco member, James Tien Pei-chun, said 'the merger is good for Hong Kong'. Mr Tien said it was unlikely that a single owner for the two bus companies would lead to higher fares. 'Given the poor economic situation and lower economic growth, the room to raise fares is not high,' he said. 'The merger will give the companies better scale, and allow them to lower costs. It gives them room to cut fares if they have said in the past that there is no room to lower fares because their costs were too high,' he said. He also said that more closely co-ordinated operations between the two bus companies could help relieve the congestion caused by overlapping bus services in some busier parts of Hong Kong. Mr Tien said that, given the benefits, he found the deal acceptable even if it resulted in some layoffs. However, the deal's beneficial side-effects, as described by Mr Tien, might be a long time coming. While some economies of scale might result from merging the management of the companies, route consolidation was another matter. The companies are likely to find it difficult to gain approval from the individual district councils and the Legislative Council. Geoffrey Rogers, an independent transport consultant with Sustainable Transport Planning (Asia), said: 'One person's inefficient bus route may be another's essential service. That's always been the difficulty of bus planning.' He said it was unfair to compare the present situation with that of China Motor Bus, whose declining service levels resulted in its routes being given to New World First Bus. 'The controls built into the bus franchise legislation are a lot stricter now. I don't think the CMB situation could occur again,' Mr Rogers said. A spokeswoman for the Transport Department said the government would monitor the deal closely to see if the companies were adhering to their licence pledges. 'As the routes are granted to the franchisees on a non-exclusive basis, the government can always introduce competitors if the level of service provided is unsatisfactory,' she said.