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Martin Wong

Critics say proposed 9pc rise in bus ticket prices is unreasonable

There was widespread public criticism  last night after Kowloon Motor Bus announced plans to raise fares by an 'unreasonable' 9 per cent this year amid escalating fuel costs and intensifying competition.

Describing the proposed increase - the first in a decade by the franchised bus company - as exorbitant and unacceptable, critics quickly called on the government to reject the firm's application, which was submitted to the Transport Department yesterday.

A government spokesman said the department would consult the Legislative Council transport panel and the Transport Advisory Committee, and that the final decision would be made by the chief executive and Executive Council. The spokesman said the application process will take about six months.

Spokesmen for operators Citybus and New World First Bus Services said they had no immediate plans to raise fares.

'Considering the overall economy and people's livelihood, the government should reject the application and KMB should compensate passengers for their hardship during the recession,' said Richard Tsoi Yiu-cheong,  spokesman for the Coalition to Monitor Public Transport and Utilities.

He also described a controversial fare adjustment mechanism introduced 19 months ago, under which fares can theoretically go up and down according to factors including inflation, as 'deceitful'.

'The bus companies were not willing to reduce fares during the recession. The mechanism was implemented in times of inflation,' he said.

Under the fare adjustment mechanism, bus fares are set using different determinants. They include the rate of inflation, public acceptability and affordability, the quality and quantity of service provided, and the company's operating costs, revenue and financial performance.

Discounts introduced since the system was launched in February last year include same-day return-fare reductions for Octopus card users on 100 routes with single fares of HK$10 or more, 20 per cent off  single fares of HK$15 or above, and 10 per cent off  single fares between HK$10 and HK$14.90.

Lawmaker Lau Kong-wah, of the Democratic Alliance for the Betterment and Progress of Hong Kong, said KMB's increase should be only 2 per cent to 3 per cent under the mechanism, in line with inflation.

'KMB has breached the fare adjustment mechanism,' Mr Lau said.

Chinese University associate business professor Raymond So Wai-man said he understood the reasons for increasing fares, but warned of public opposition.

Under the proposal, KMB passengers will pay 51  cents more on average every time they take  a bus from the end of this year.

The increase will be across the board and is estimated to bring in additional annual revenue of about HK$500 million a year.

This contrasts with HK$63 million in fares forgone by all the bus companies under the discounts.

'We just want our company to have a chance to earn what everyone feels is a reasonable return and continue to enhance our service to the public,' KMB senior executive director John Chan Cho-chak said.

He expects a 9 per cent increase to help the company achieve a return of 9.8 per cent next year.

Mr Chan said KMB resisted the pressure to raise fares during the Sars outbreak and economic downturn in 2003.

KMB fares rose 12.9 per cent in April 1994, 8 per cent a year later and 7 per cent in December 1997. Since then, the cost of the  ultra-low-sulfur diesel  its fleet of buses uses has risen to an average of US$77.90 a barrel  this year, five times the 1998 cost of US$15.50.

KMB spent about HK$190 million on fuel in 1998 and HK$980 million this year, said  managing director Edmond Ho Tat-man.

Road to revenue

The amount, in Hong Kong dollars, forgone by all bus companies because of  discounts $63m

The additional annual revenue to KMB as a result of the fare increase $500m



Outcry over KMB plan for fare increase