Transport and logistics

Hong Kong’s biggest bus company KMB and sister firm seek 8.5 per cent fare increase as fuel and staff costs bite

Firms said they applied for the proposed rise for all bus routes under their operation

PUBLISHED : Friday, 07 September, 2018, 8:43pm
UPDATED : Friday, 07 September, 2018, 11:06pm

KMB, Hong Kong’s largest bus operator, and its sister company Long Win Bus are seeking government approval for a fare increase of 8.5 per cent, citing rising operating costs.

In a statement issued on Friday, the firms said they had applied to the Transport Department for the proposed increase for all bus routes under their operation.

A lawmaker called the proposed rise “unreasonable”.

The government last approved fare rises for KMB and LWB in 2014 and 2011 respectively.

“KMB and LWB applied for the fare adjustment with a view to alleviating the pressure from increasing operating costs,” the statement said. “Fuel costs and staff costs together account for 70 per cent and 60 per cent of the total operating costs of KMB and LWB respectively.”

“Since 2015, international fuel prices have rebounded to a high level with a cumulative increase of more than 26 per cent, while staff wages have seen a cumulative increase of more than 20 per cent due to the tight local labour market.

“A number of measures to upgrade staff welfare and benefits have also been implemented.”

In 2017, KMB recorded a net profit of HK$541 million (US$69.3 million) for its franchised public bus operations, down about 18 per cent from HK$659 million the previous year.

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Last year, the bus giant’s total ridership rose 1.6 per cent to a daily average of 2.75 million passenger trips, compared with 2.71 million passenger trips for 2016.

Lawmaker and Democratic Party chairman Wu Chi-wai said the proposed fare rise was “unreasonable”, arguing it far exceeded the level permitted under the bus fare adjustment mechanism and also the 5 per cent wage rise for KMB staff this year.

“The proposed fare rise is much more than inflation while KMB only reluctantly agreed to a pay rise of 5 per cent for staff after repeated negotiations. I don’t see any justification for KMB to make such a fare rise. I also don’t think this will be acceptable to the public,” he added.

The bus giant, founded in 1933, operated more than 3,900 buses on 397 routes as of the end of last year.

Its sister company LWB operated 245 buses as of March 31, 2018, providing transport services on 30 routes connecting Hong Kong International Airport and North Lantau with the New Territories.

The statement said the expanding rail network and worsening traffic congestion had added to a challenging operating environment.

“Despite a highly difficult operating environment, KMB and LWB remain committed to enhancing their services, investing over HK$4 billion in the last three years to upgrade their fleets by introducing over 1,500 new buses,” it said.

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The companies said they hoped the fare adjustment would help to sustain their financial health and enable them to continue to provide a proper and efficient service to the public.

Under the fare adjustment mechanism for franchised buses, the Executive Council considers an application based on a basket of factors.

Hong Kong’s composite consumer price index in July remained steady at 2.4 per cent year on year.