Troubled waters

In the early hours at Central's outlying islands pier No 6, several late-shift workers are waiting to catch the 3am ferry home to Peng Chau, flanked by another handful of Mui Wo-bound commuters. The first sailing of the day for the triple-decker vessel attracted fewer than 20 passengers.

The scene reflects the fact that Hong Kong's island ferries have long been a loss-making business. Amid dwindling patronage, surging operational costs and the government's transport policy with the emphasis on railways, ferry operators are left to face the tough choice of either cutting costs - which might lead to a reduction in services - or enhancing service quality in the face of vigorous competition from other forms of public transport.

But the decision was never entirely that of the businessmen or the government.

Last month, when New World First Ferry and Hong Kong and Kowloon Ferry demanded fare increases ranging from 30 per cent to 50 per cent before they would commit to another three-year operating licence for four outlying island routes - between Central and Mui Wo, Peng Chau, Yung Shue Wan and Sok Kwu Wan - upon their expiry in June, the government proposed a reduction in services as a trade-off for a smaller fare increase.

Its attempt to make concessions failed to appeal to either the residents or the operators. The first group to protest included district councillors, indigenous villagers and the Rural Committee, who said they did not want fares to rise or services to be reduced. Long-time expatriate residents said they were willing to accept a fare rise of up to 30 per cent only if services could be retained.

The government compromised, retaining most of the services - including overnight sailings that suffered the highest losses - in the second tender of the four routes.

The 25,000 residents of the three affected islands - Lantau, Lamma and Peng Chau - may be pleased with their victory, but the outcome does little to strengthen the ferry business. Many observers and the operators themselves say the services are not sustainable in the long term.