Provisional Legislative Council

Panel On Transport

Hongkong Tramways ' Fare Increase Application

INTRODUCTION

Hongkong Tramways Limited (HKT) has applied for an increase in tram fares by 40 cents for adults, 20 cents for children and the elderly, and $35 for monthly tickets to take effect from March 1998.

BACKGROUND

2.HKT last revised its fares on 12 January 1997 from $1.20 to $1.60 for adults, 60 cents to 80 cents for children and the elderly, and from $100 to $135 for monthly tickets. At existing fares, HKT is expected to make a small profit in 1997, but would incur a substantial loss from 1998 onwards due to increasing operating costs.

FORECAST RIDERSHIP AND REVENUE

3.Ridership has declined from 295,000 passengers a day for 1996 to 281,000 for 1997 and is forecast to remain at this level in 1998 and 1999. Advertising and other income has also declined by 18% in 1997 and is forecast to remain unchanged in 1998 and 1999. The forecast revenue is not expected to increase in the next two years, if fares remain unchanged.

FORECAST OPERATING COSTS

4.The total operating cost in 1997 is estimated to be $177.4 million. It is forecast to increase substantially by about 15% in 1998.

5.Staff costs are the major cost item accounting for about 60% of the total operating costs. It is estimated that staff costs will increase by 13.2% in 1998 due to salary adjustments and an increase in staff, including 36 new motorman posts for the implementation of a full-scale meal break system.

6.Additional recurrent expenses on safety and service improvement programmes totalling $35 million are expected to be incurred during 1998 and 1999.

SERVICE IMPROVEMENT AND CUSTOMER RELATIONS

7.In 1997, HKT implemented a series of works to improve tram services. These include the introduction of an interim meal break system, the introduction of safety improvement measures at critical junctions, the implementation of a track replacement programme and a training programme for its staff. As regards customer relations, the number of complaints received against HKT decreased from 83 in 1994 to 30 in the first 10 months of 1997. The number of accidents also decreased from 129 to 61 during this period.

8.In 1998 and 1999, HKT will continue to implement its safety and services improvement works, which include -

  1. implementing full-scale meal break arrangements whereby motormen will be given meal breaks of not less than 30 minutes;

  2. installing a driver's vigilance device in each tramcar to enable trams to brake automatically during emergencies;

  3. upgrading the electrical and wiring system of all tramcars;

  4. organizing safety and courtesy training as well as a refresher course on defensive driving for motormen;

  5. installing a fully automatic track-switching system at all critical junctions; and

  6. completing the track conversion programmes.

THE RECOMMENDED FARES

9.Following a thorough assessment of the financial position of HKT and a number of fare increase options, the Transport Advisory Committee has recommended an increase in tram fares as proposed by HKT. A summary of the proposed new fares is as follows -

Existing
Fare		 Proposed
Fare
Person of 12 years or more

 $1.60 $2.0
Person under 12 (other than a person under 3 years accompanied by a person of 12 years or more)

 $0.80 $1.0
Monthly ticket (valid for current calendar month only)

 $135 $170
Tourist ticket

 $ 30 $30
(unchanged)

10.The proposed increase is recommended because -

  1. it is necessary to enable HKT to implement essential safety and services improvement measures;

  2. HKT has provided a satisfactory service and the proposed fare increase is necessary to maintain a viable operation and encourage continued investment;

  3. the proposed fares would only have a minimal impact of 0.005% on the CPI(A); and

  4. the proposed increase in fares is small in absolute terms, and tram fares are still low compared with those of other modes of public transport.


Transport Bureau
Government Secretariat
31 December 1997