Cheaper MTR tickets on horizon after Hong Kong officials ask for revised fare formula in 2017
Corporation to review how it sets prices as concern groups want government to have final say on level of increases to protect consumers
Commuters can expect more affordable MTR rides when a revised formula for determining the level of fare increases is adopted in 2017.
The government has asked the MTR Corporation to review its fare adjustment mechanism next year – one year ahead of its review scheduled for 2018. A letter requesting the move was issued to the corporation on Tuesday, a government spokesman said.
The company said in a statement on Wednesday morning that it had received the request for a joint review of the fare adjustment mechanism with the government, and that it would convene a board meeting to determine its response to the request, pending further announcement in due course.
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Concern groups wanted the government to have the final say on the level of increases, as in the case of bus fare adjustments, to protect consumers’ interests.
According to the present system, in place since 2007, the fare adjustment mechanism is reviewed every five years. The last review was in 2013, and the next scheduled review should be due for completion in 2018.
The 2013 review included factors such as corporation profitability and service performance as well as a profit sharing mechanism to ease commuters’ fare burden.
But critics said the formula was inadequate in protecting commuters’ interest, and they were especially unhappy that MTRC had been allowed to increase fares for the past six years despite huge profits.
Last year, it increased fares by 4.3 per cent.
The government spokesman said experience since the last review suggested it would be possible to conduct “an early review” of the mechanism so that its operation could further respond to the public concern about the corporation’s overall profitability and passengers’ affordability “whilst still respecting the financial prudence required of the corporation as a listed company”.
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For bus companies, the Chief Executive in Council decides on the level of fare adjustments, after considering proposals from franchised bus companies.
But the corporation did not appear too keen on the government request. In a statement on Tuesday, it said MTRC was “studying this request and aims to respond to government in the next few months”.
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It said the present system tracked fare adjustments with economic conditions and wage levels.
“Sustainable and stable revenue is crucial to the provision of high quality railway services,” the corporation statement said. “The corporation spent HK$7 billion on maintenance and upgrading facilities in 2015, compared to HK$6 billion in 2014. Such costs will keep increasing.”
MTRC, which is 76 per cent owned by the government, posted a 5.9 per cent fall in post-tax underlying profit to HK$10.89 billion for last year. The railway operation, which also develops housing near its stations, said a 34 per cent drop in profit contribution from its property business was partly to blame.
