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LCQ7: Demand for non-franchised bus services

     Following is a question by the Hon Miriam Lau Kin-yee and a reply by the Secretary for Transport and Housing, Ms Eva Cheng, in the Legislative Council today (May 23):


     It has been reported that the figures from the Transport Department (TD) reveal a continuous drop in the number of school buses in Hong Kong by as much as 14% from 4,244 in 2004 to 3,633 last year.  Those reports have pointed out that one of the reasons for the continuous drop in the number of school buses is the freeze imposed by TD on the number of non-franchised buses (NFBs) since 2005, thus the operators concerned can only acquire licences from the market in order to expand their services, resulting in rampant speculation on such licences, and the current licence price is as high as $2 million each.  Those reports have also pointed out that the growing demand from the tourism industry and the cross-boundary transport sector has induced operators to convert quite a number of school buses into tour buses, resulting in the shortage of school buses and fee increase at present and, meanwhile, the operating costs of tours and cross-boundary transport have also increased.  In this connection, will the Government inform this Council:

(a)  given that the authorities control the number of NFBs in the market and  operators seeking business expansion or new entrants have to acquire existing NFB licences from the market, of the respective number of existing NFB licences successfully purchased from the market by operators each year since 2005, as well as the services involved;

(b)  whether the authorities have assessed the current demand for various types of NFB services; which types of NFB services are oversupplied and which are in short supply, and the gap between demand and supply;

(c)  given that school bus services can reduce the traffic burden on the roads around schools and bring convenience to students living in remote areas but it has been reported that there is a shortage of school buses at present, of the measures taken by the authorities to assist those schools which are not able to arrange school bus services for their students; and

(d)  given that the Transport Advisory Committee conducted a review of NFBs between 2003 and 2004 in response to an oversupply of NFB services at that time but it has been reported that in tandem with the changes in economy and urban planning, NFB services (particularly those for students) are in short supply at present, whether the authorities will conduct a review of NFB services (including consideration of relaxing the licensing control on NFBs); if they will, of the plan; if not, the reasons for that?



     In response to the concerns that the transport trade had on the supply and demand of non-franchised buses (NFBs) and the operation of unauthorised NFB services by certain operators, the Government invited the Transport Advisory Committee to review the regulatory framework and licensing system of NFBs.  The review was completed in 2004.  After consulting the relevant trades and organisations as well as the Legislative Council Panel on Transport, the Government has implemented a series of improvement measures with reference to the recommendations made in the review.

     The improvement measures include more stringent processing of applications for NFB services in order to strike a balance between supply and demand.  Specifically, the Government encourages applicants for new services to actively source buses from outgoing NFB services in the market instead of purchasing new vehicles.  This is to avoid excessive growth in the overall number of NFBs and help optimise the use of existing NFBs to meet service demand.  The Government understands that imposing a cap on the number of NFBs will restrict the flexibility of the operation of the trade, and obstruct the acquisition of additional buses by some services due to special circumstances.  We stress that the current policy has not frozen the number of NFBs or imposed a cap on the number of NFBs.

     My reply to the question is as follows:

(a)  The Government encourages incumbent operators who wish to acquire additional buses or prospective entrants to actively procure buses from the current NFB fleet in the market.  This can make good use of existing resources.  

     In the past seven years (from 2005 to 2011), the average number of transactions on successful purchase of existing NFBs in the market is about 515 per year.  Details are at Annex 1.  These NFBs may, according to the endorsements approved, provide tour service, hotel service, student service, employees' service, international passenger service, residents' service and contract hire service.

(b)  Under the current regime, operators may in response to market demand apply for increasing the number of buses or changing the types of services provided to cater for market development.  The operators have to provide valid contractual proof for the service concerned.  When assessing the application, the Transport Department (TD) will consider the adequacy of existing transport services and other relevant factors before making a decision.  Separately, the operators will adjust their NFB services in tandem with market demand.  Since 2005, the demand for NFB services in the market has been steady at large.  A breakdown by the number of NFBs and the different types of service endorsements since 2005 is at Annex 2.

(c)&(d)   At present, there are about 4,900 (Notes) buses and light buses providing transport service for students in the market.  All operators providing transport service for students must obtain a valid Passenger Service Licence as well as the endorsement or approval required for the vehicle type concerned.  Any person who wishes to run a school private light bus service needs to provide TD with details of the intended service.  In submitting the application to TD, he/she needs to provide the relevant personal or company documentary proof and a letter of recommendation from the relevant educational institution to support such an application.  TD neither requires the applicant to first procure light buses from outgoing school private light bus services in the market, nor imposes a cap on the number of school private light buses.  Meanwhile, the Education Bureau suggests in case there is tight supply of school bus service for a certain area, the school concerned may make necessary arrangements in the light of its own circumstances and needs.  Such arrangements include forming a school bus network via negotiation and coordination with schools within the same area or under the same sponsoring body.  Invitations for quotations or tenders from the operators for the provision of school bus service may then be jointly arranged.  

     In fact, Annex 2 shows that the number of NFBs from 2005 to 2011 has remained steady, with the number of various service endorsements issued changing in tandem with service demand.  That being the case, the improvement measures proposed in the 2004 review have been effective in adjusting the number of NFBs and service endorsements issued.  The Government has no plan to review the regulatory framework and licensing system for NFBs for the time being.  

     Nevertheless, TD will continue to draw reference to the changes in the number of various types of NFBs and keep in view their utilisation in monitoring the operating conditions of NFBs.  TD will maintain close liaison with the trade through regular meetings and make flexible adjustments to the measures concerned in a timely manner in response to the changes in the supply and demand of NFBs.  This is to cater for the development of the society and the changing operational environment of the NFB trade.

Notes: Buses and light buses currently providing student service include school private light buses (commonly known as "nanny vans") (1,281 in number), non-franchised public buses (3,543 in number) and private buses (60 in number).

Ends/Wednesday, May 23, 2012
Issued at HKT 12:30


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