Bus operators which fail to comply will be unlikely to have future rises approved A proposed mechanism for calculating fare cuts on public transport has been unveiled by the government. Although the formula is intended only to offer guidance, transport minister Sarah Liao Sau-tung warned that bus operators which failed to adhere to its principles were unlikely to win approval to raise fares when the economy picked up. The two rail operators have autonomy in setting fares, but they will be expected to at least consider the formula. 'We can't force it upon [bus operators] as we have to respect the free market, [but] I hope this formula will be accepted by all parties,' said Dr Liao, the Secretary for Environment, Transport and Works. 'If they ignore that and insist on not cutting their fares, it is likely that they would not get their fare rises when the economy turns good.' All fare changes must be approved by the Executive Council. Dr Liao said the mechanism was formulated to plug loopholes which leave transport operators under no obligation to take the initiative to cut fares. There has been a strong push for fares to be cut, with the economy undergoing deflation for the past 58 months. Dr Liao stressed the mechanism's guidelines would not be imposed until a consensus was reached with the operators. It will be discussed in the Legislative Council on Friday. The proposed formula, devised by government economists, holds that fare changes should equal an operator's change in costs minus its change in productivity. Among other factors, it would reflect changes in the consumer price index, oil prices, and interest rates. The mechanism for a fare change would be activated when deflation accumulated to a certain level over a certain period. To maintain operating stability, fare adjustments would be capped at about 10 per cent. The excess would be carried forward to the next review. A spokeswoman for Kowloon Motor Bus, the largest franchised bus operator, said it had no objection to the proposal so long as the mechanism allowed for both fare rises and reductions. 'We have to strike a balance between different parties. This includes a value-for-money service for the passengers and a reasonable return for the investors,' she said. A New World First Bus spokeswoman said the company needed more time to study the proposal in detail.