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LCQ18: New MTR fares and concessions

     Following is a question by the Hon Tang Ka-piu and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (May 8):


     The Government announced earlier that the review on MTR's Fare Adjustment Mechanism jointly conducted by the Government and the MTR Corporation Limited (MTRCL) had been completed, and the new mechanism and the new fares would take effect in June this year. MTRCL will also launch new concessionary schemes, including the "MTR City Saver" ticket (City Saver ticket) scheme and the "Monthly Pass Extra" scheme, etc.  In this connection, will the Government inform this Council if it knows:

(a) the new fares for the following five types of MTR journeys, and how the fare paid by a passenger who commutes 44 times each month on the same journey using an Octopus card compares with the fare paid by him using an adult Single Journey ticket;

(i) from MTR Tung Chung Station to other MTR stations;
(ii) from MTR Sheung Shui Station to other MTR stations;
(iii) from MTR Wu Kai Sha Station to other MTR stations;
(iv) from MTR Tuen Mun Station to other MTR stations; and
(v) from MTR Tin Shui Wai Station to other MTR stations;

(b) given that after the MTR fare increases in 2010, there were situations in which the Octopus fares for 100 fare combinations were higher than their corresponding Single Journey fares, and such situations continued in 2012, whether such situations will continue after the implementation of the new fares in June this year; if so, of the reasons for that, as well as the fare combinations for which such situations will occur, and whether the authorities will instruct MTRCL to make improvement;

(c) given that holders of City Saver tickets, set at a price of $400 each, are entitled to 40 rides within 30 days (i.e., the average fare per ride needs to exceed $10 for the ticket holder to really enjoy a concession), but there is no limit on the number of rides for other monthly passes, of the justifications for MTRCL capping the number of rides for City Saver tickets; and of the number of fare combinations with fares exceeding $10 after the implementation of the new fares (set out the details in a table);

(d) given the cap on the number of rides for City Saver tickets, whether passengers using City Saver tickets need to buy another Octopus card to pay for the fares of shorter journeys in order to benefit from City Saver tickets; if they need to, of the number of additional Octopus cards expected to be issued by MTRCL as a result;

(e) given that the Government has indicated that City Saver tickets will also cover all the stations of the additional railway lines (including South Island Line (East) and West Island Line) to be constructed in the urban area, of the details of the relevant fares;

(f) given that quite a number of members of the public who have to work across districts have relayed to me that it is difficult for them to benefit from the City Saver ticket scheme and the "Monthly Pass Extra" scheme (e.g. passengers who take MTR from Ma On Shan to Hong Kong Island must buy several monthly passes in order to enjoy price concessions, and passengers who travel between Tseung Kwan O and Shatin also cannot benefit from City Saver tickets), of the remedial measures taken by MTRCL, and whether it will consider introducing territory-wide monthly passes; if it will, of the details; if not, how it will enable members of the public who have to work across districts to enjoy price concessions; and

(g) given that MTRCL indicated last year that it would give back to MTR passengers within one year the additional income of $670 million generated by fare increases, of the actual amount that MTRCL has hitherto given back to its passengers through various concessionary schemes, and the number of passengers benefitted so far?



     The Government and the MTR Corporation Limited (MTRCL) jointly conducted the review on the Fare Adjustment Mechanism (FAM) in accordance with the Operating Agreement (OA) signed by both parties in 2007.  The outcome of the review on FAM was announced on April 16, 2013 and the new FAM will take effect from June this year.

     The Government submitted a Legislative Council (LegCo) Brief to the LegCo when the outcome of the review on FAM was announced.  The LegCo Brief outlines various arrangements under the new FAM.  They include (1) the existing direct-drive FAM formula will be retained, with the calculation of the Productivity Factor value being subject to a new, objective and transparent methodology.  With the adoption of the new methodology, the Productivity Factor value will be increased to 0.6%, as compared to the original 0.1%.  The overall fare adjustment rate for 2013 will be +2.7%, lower than the original rate of +3.2%; (2) new ticket schemes, i.e. "MTR City Saver", "Tung Chung - Nam Cheong Monthly Pass Extra" and "Monthly Pass Extra" scheme, will be introduced to offer more significant fare concessions to medium or long-distance frequent travellers; (3) a "profit sharing" mechanism; (4) an affordability cap; and (5) a "service performance" arrangement.

     My reply to the Hon Tang Ka-piu's question is as follows:

(a) Based on the overall fare adjustment rate of +2.7%, the MTRCL is now in the process of calculating adjustments to individual fares.  As there are over 40 000 individual fares and there is a need to ensure that all adjustments to individual fares must equal the weighted average adjustment rate, the process of adjusting fares is complicated and the work has yet to be completed.  After the completion of internal process, the MTRCL is required to provide the Government with two certificates issued by independent third party experts to certify that its fare adjustment is in compliance with the requirement under the OA before new fares are implemented.  Therefore, the MTRCL is unable to provide the outcome of adjustments to individual fares for making comparisons at the moment.  

     In accordance with the requirement under the OA, the MTRCL will submit detailed information of the fare adjustments (including Octopus fares and Single Journey Ticket fares) to the LegCo Panel on Transport and the Transport Advisory Committee three weeks prior to implementation of the new fares.

(b) In calculating individual fares, the MTRCL has all along applied the following guiding principles:

(1) adjustments to Octopus fares are in units of 10 cents; and
(2) adjustments to Single Journey Ticket fares are in units of 50 cents (as MTR Ticket Issuing Machines accept coins with value of 50 cents, 1 dollar, 2 dollars, 5 dollars and 10 dollars).

     The MTRCL advised that due to the differences in the units of adjustment to Octopus fares and Single Journey Ticket fares, the percentage increase of some Single Journey Ticket fares (most of which are Elderly or Child Concessionary Single Journey Tickets) would be quite high with a 50 cents adjustment when the above principles are applied in the calculation of individual fares.  Thus, the MTRCL often decided not to adjust these Single Journey Ticket fares.  

     However, such arrangement has created a phenomenon that some Octopus fares are higher than the corresponding Single Journey Ticket fares.  The Government has expressed its concerns over these cases to the MTRCL.  In response, the MTRCL advised that it will proactively follow up.  It further pointed out that if the Single Journey Ticket fares are adjusted to a level higher than the Octopus fares in one go, the increase rate may be too high and the public may not accept.  The MTRCL plans to address these cases in the coming few years, with a view that Octopus fares would not be higher than the corresponding Single Journey Ticket fares eventually.

     As mentioned in part (a) of the reply, the MTRCL is now in the process of calculating adjustments to individual fares and the work has yet to be completed.  The MTRCL is unable to provide the outcome of adjustments to individual fares at the moment.  

(c), (d) and (e) Users of the "MTR City Saver" can travel 40 trips between any two stations within the designated urban area in 30 days at a price of $400.  No deposit for this ticket is required.  The designated area includes all stations on Tsuen Wan Line, Island Line, Kwun Tong Line and Tseung Kwan O Line, as well as the urban stations of Tung Chung Line, East Rail Line and West Rail Line (please refer to Annex 1).  The "MTR City Saver" will also cover stations of all future local railway lines located in the urban area, including West Island Line, South Island Line (East) and Kwun Tong Line Extension.  The MTRCL has yet to set the fares of these new railway lines.  The fares of new railway lines will be announced nearer the time of their openings.

     The MTRCL also advised that, unlike the existing monthly passes of other railway lines, the "MTR City Saver" will be available for sale every day and users will not be restricted to use the ticket within a particular calendar month.  A passenger can purchase another "MTR City Saver" immediately after he finishes the 40 trips within any 30 days.

     The new "MTR City Saver" will adopt a new smart ticket system which is different from the existing Octopus Card.  It will be used independently and not in conjunction with an Octopus Card.  Currently, some 95% of MTR passengers use Octopus Cards to pay their fares.  As such, users of the "MTR City Saver" may still use their Octopus Cards to pay fares for other MTR journeys according to their travelling needs.    

     As regards the number of journeys with fares in excess of $10 following the implementation of new fares, as mentioned in part (a), the MTRCL is now in the process of calculating adjustments to individual fares and the work has yet to be completed.  The MTRCL is unable to provide the outcome of adjustments to individual fares at the moment.  

(f) Passengers travelling between the New Territories and urban areas can be benefitted from the new "Monthly Pass Extra" scheme.  They can enjoy unlimited rides between the designated stations on a designated railway line within a calendar month, as well as a 25% discount for any onward domestic journeys beyond with the "Monthly Pass Extra".  

     For example, passengers travelling from Ma On Shan Station to Admiralty Station can purchase the new "Sheung Shui - East Tsim Sha Tsui Monthly Pass Extra" to enjoy unlimited rides on the East Rail Line and Ma On Shan Line in a calendar month, and enjoy a 25% discount on every onward journey to Admiralty Station.  Similarly, a passenger commuting between Tseung Kwan O Station and Sha Tin Station can enjoy similar benefit vide similar means.  Passengers do not need to purchase two or more monthly passes to enjoy the concessions.

     Under the new FAM, apart from the "Monthly Pass Extra", passengers using Octopus Cards to travel between the New Territories and urban areas can also benefit from other promotions, such as the "10% Same Day Second Trip Discount" promotion under the profit sharing mechanism and service performance arrangement.  The MTRCL advised that the monthly passes of various railway lines and the new "MTR City Saver" have covered all domestic railway lines (except Disneyland Resort Line), and benefit medium or long-distance frequent travellers.  The MTRCL has no plan to launch a monthly pass for the entire railway network.

(g) An update on the usage of the $670 million fare concessions offered by the MTRCL in 2012 is set out in Annex 2.

     According to MTRCL's estimation, as at June 30, 2013, there will be a carry forward of an unspent sum of around $200 million committed from 2012 fare concessions scheme.  All unspent sum will continue to be spent through offering concessions under the 10% Same Day Second Trip Discount.  The promotional period is expected to be extended for around five months.  

Ends/Wednesday, May 8, 2013
Issued at HKT 12:01


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