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Executive Council approves KMB bus fare increase

     The Executive Council today (June 10) considered a fare increase application from the Kowloon Motor Bus Company (1933) Limited (KMB) and approved an overall average fare increase rate of 3.9 per cent. The new fares will take effect on July 6 this year.

     The approved rate of fare increase is lower than the 4.3 per cent applied for by the KMB on November 29, 2013. It is also lower than the changes in Composite Consumer Price Index (CCPI) (+4.65 per cent) and Median Monthly Household Income (+4.55 per cent) since the last fare increase in March 2013, as well as the formula outcome of a supportable fare adjustment rate (+4.21 per cent) under the Fare Adjustment Arrangement (FAA) for franchised buses. The formula is 0.5 x Change in Wage Index for the Transportation Section + 0.5 x Change in CCPI - 0.5 x Productivity Gain.

     In its deliberations, the Executive Council has fully considered various factors under the FAA. These include:

(a) changes in operating costs and revenue since the bus company's last fare increase in March 2013;

(b) forecast of future costs, revenue and return;

(c) the need to provide the bus company with a reasonable rate of return;

(d) public acceptability and affordability;

(e) the quality and quantity of service provided; and

(f) the outcome of the formula for a supportable fare adjustment rate. The formula is only for reference - the fare level will not be adjusted automatically according to the formula outcome.

     The Executive Council has also fully considered the views of the Panel on Transport of the Legislative Council and the Transport Advisory Committee.

     "We have considered carefully all the factors under the FAA, notably including public acceptability and affordability, the current and projected financial position (including benefits achieved by bus route rationalisation on an Area Approach) of the KMB, as well as its overall service performance in arriving at the approved fare increase rate," a Government spokesman said.

     "A franchised bus operation is capital and labour intensive. A good part of the operating costs are made up of fuel and salary costs which are subject to changes in market conditions. Inflation also has a bearing on the overall operating costs. Having recorded a continuous loss for the last two years, the KMB has applied to increase bus fares in order to cope with rising operating costs and to maintain sufficient financial capability. This can enable it to make the necessary further investment in hardware, such as the purchase of new buses, and service improvement, such as the provision of more bus-bus interchange arrangements, as appropriate.

     "The Government is mindful of the need to strike a balance between minimising the impact of bus fare increase on passengers at large, and enabling the KMB to have financial stability to continue to provide a proper and efficient service and make further investment in upgrading its fleet and services. Meanwhile, the Transport Department (TD) will continue to monitor KMB's efforts to enhance service performance and reduce lost trips," the spokesman said.

     Under the new fares, about 86 per cent of KMB's passengers will either not be affected at all or will need to pay not more than 40 cents extra per trip. About 14 per cent of passengers will have to pay 50 cents to $1 more per trip. Less than 0.1 per cent of passengers will need to pay more than $1 extra per trip and the routes concerned are the racecourse ones.

     Eligible persons enjoying a concessionary fare of $2 per trip under the Public Transport Fare Concession Scheme for the Elderly and Eligible Persons with Disabilities will not be affected by the fare increase. Furthermore, there will be no fare increase for cross-harbour routes jointly operated by KMB and another franchised bus operator to avoid confusing the public.

     The Government spokesman said that the KMB and the TD would continue to actively implement bus route rationalisation through an Area Approach earnestly so as to cut down on low-utilisation routes and redeploy resources from duplicated bus routes to those with keen demand to reduce wastage. This would enhance the overall efficiency of the bus network to better meet passenger demand and lessen the pressure of the fare increase. Also, it would reduce unnecessary road congestion and emissions, thereby bringing about environmental benefits.

     In 2013, the TD and the KMB implemented Area Approach rationalisation proposals in North District and Tuen Mun. The overall feedback was satisfactory. Under this approach, an entire district, instead of individual routes, is used as the basis for reviewing and re-organising bus services in a holistic manner. Bus routes which are underutilised will be cancelled or amalgamated, and new routes will be introduced to meet new demand. Meanwhile, feeder and external routes as well as interchange arrangements will be strengthened, and bus companies will be encouraged to offer interchange concessions as far as possible. Drawing on the experience in these two districts, the the TD and the KMB will continue with the local consultation for phased implementation of Area Approach proposals in Yuen Long/Tin Shui Wai, Tai Po, Tsing Yi and Sha Tin/Ma On Shan in 2014.

Ends/Tuesday, June 10, 2014
Issued at HKT 15:15


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