MTR faces heat over upcoming 3.3% fare hike

March 29, 2019 14:31
MTR Corp has sought to quell concerns over a fare hike scheduled to come into effect in June, saying rebates will effectively cancel out the higher ticket prices during this year. Photo: HKEJ

Rail operator MTR Corp, which had come under fire in recent months due to a construction scandal and service breakdowns, is now facing heat over an upcoming passenger fare adjustment.

Some lawmakers have voiced strong objections to the rail fare hike, arguing that MTR doesn't deserve higher ticket prices in view of its "lousy" operational performance over the past year.

According to information released on Thursday, MTR fares would go up by 3.3 percent from June under the fare adjustment mechanism allowed for the transport operator, which takes into account transport workers' wage index and the city's broader composite consumer price index (CCPI).

As per government data made public earlier in the day, the nominal wage index for the transportation sector was up 5.9 percent in December 2018 from a year ago, while the CCPI was up 2.5 percent.

Given those figures, MTR's fare adjustment has been set at 3.3 percent, with the revised fares to go into effect from June.

Based on the rate formula, which requires inputs of the two indexes as well as a productivity factor  and a special deduction, MTR should have been able to increase fares by 3.6 percent, but a capping arrangement put such revision at a maximum of 3.3 percent.

This is the first time that the cap has been triggered in nine years, according to RTHK, which said it expects to recoup the remaining 0.3 percent increase in 2021. 

To reduce the impact on commuters, MTR announced that the company will offer a 3.3 percent rebate, based on the fare adjustment mechanism, to Octopus users for six months. 

MTR made a profit of HK$11.263 billion last year. A profit-sharing agreement between the firm and the government requires the rail operator to take HK$225 million out of that amount to offer fare rebates for passengers. As the company had faced fines of HK$20 million for service lapses, that amount also needs to be added to the fare rebate amount, taking the total to HK$245 million.

Jeny Yeung Mei-chun, MTR's commercial director, pointed out that fare adjustment made each year can ensure that the public transport operator has stable income to cover rising operational expenses as well as allow the firm to make investments for the purpose of renewing and replacing assets.

With the rebate, fares paid by regular users of MTR services will, in fact, not rise this year, Yeung said.

Lawmaker Michael Tien Puk-sun, who is a member of the Legco's railways subcommittee, urged MTR to forget about the future increase of 0.3 percent so that it can save the trouble of explaining to the public about complicated mathematics regarding calculations of its fares.

The public may not necessarily understand the complicated mathematical formula, he said.

In response, MTR said it will consider the suggestion.

Meanwhile, lawmaker Ben Chan Han-pan from the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB), who chairs the Legco’s Panel on Transport, criticized the planned fare increase, saying it will create a “lose-lose” situation for both MTR and the general public.

The railway operator’s move to raise prices after making so much money will not only disappoint citizens, it will also not do any good to the firm's image, Chan said.

In other comments, the lawmaker suggested that the government should take the initiative to discuss with MTR the possibility of extending the rebate period to 12 months, the Hong Kong Economic Journal reports.

Democratic Party lawmaker Lam Cheuk-ting, also a member of the Legco's railways subcommittee, lashed out at MTR, saying the company has no grounds to hike fares given the multiple deficiencies that have emerged in relation to the firm.

Citing issues such as poor management of the Shatin-Central Link project and the recent service disruptions, as well as "lousy" engineering management, Lam demanded that MTR retract its fare increase plan.

In other news, MTR operations director Adi Lau Tin-shing said at a meeting of Legco's railways subcommittee on Friday that the company is expecting to pay a HK$25 million penalty for the two-day service suspension last week between Central and Admiralty Stations on the Tsuen Wan Line. 

The amount is expected to be returned to passengers via ticket concessions to compensate for the service disruption.

Lau said the railway operator will also offer almost half-price fares to passengers over the May 11-13 holiday weekend as a goodwill gesture after last week's train crash near Central Station, which led to the operations on Tsuen Wan line getting affected. 

More than 13 million passengers are estimated to benefit from this concession.

The railway executive also said another HK$10 million will be reserved for ticket concessions next year, in view of disruption of services on the Airport Express and Tung Chung lines last Sunday due to an incident of an overhead line near Sunny Bay Station.

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