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Transcript of remarks by STH
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     Following is the transcript of remarks by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at a media session today (June 10) on The Kowloon Motor Bus Company (1933) Limited's fare adjustment application at the West Wing lobby, Central Government Offices, Tamar:

     The Executive Council today considered the 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 for KMB. The new fares will take effect on July 6 this year.

     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 all the racecourse routes.

     The approved rate of fare increase, ie 3.9 per cent, is lower than the 4.3 per cent applied for by KMB in November last year. It is also lower than the changes in Composite Consumer Price Index (CCPI), which is 4.65 per cent, and Median Monthly Household Income, which is 4.55 per cent, since the last fare increase in March last year, as well as the formula outcome of a supportable fare adjustment rate, which is 4.21 per cent, under the Fare Adjustment Arrangement for franchised buses.

     The Executive Council has fully considered a range of factors under the Fare Adjustment Arrangement. These include changes in operating costs and revenue since the bus company's last fare increase in March last year; forecast of future costs, revenue and return; the need to provide the bus company with a reasonable rate of return; public acceptability and affordability; the quality and quantity of service provided; and the outcome of the formula for a supportable fare adjustment rate. Of course I need to emphasise that this formula is only for reference purposes.

     Having recorded a continuous loss for the last two years by KMB íV the figure involved is $43 million in 2012 and $12.4 million in 2013, KMB has applied to increase bus fares in order to cope with rising operating costs and to maintain sufficient financial capability, so as to enable the company to make the necessary further investment in hardware and service improvement.

     Both the KMB and the Transport Department will continue to actively implement bus route rationalisation through an Area Approach so as to cut down low-utilisation routes and to redeploy resources from duplicated bus routes to those with keen demand. This will enhance the overall efficiency of the bus network to better meet passengers' demand and lessen the pressure on fare increase. Also, it will reduce unnecessary road congestion and emissions, thereby bringing about environmental benefits.

     Lastly, we are aware that there have been criticisms from passengers and the general public about the service provided by KMB in particular about lost trips. As you know the Ombudsman published the report last year and the Transport Department is pursuing the recommendations of the Ombudsman. We will try to make improvement in due course.

Reporter: How big an impact do you think this is going to have on members of the public?

Secretary for Transport and Housing: We think that the increased rate of 3.9 per cent should be by and large affordable because this figure is lower than the various benchmarks that we are employing to enable us to come to a reasonable fare increase. On the one hand we have to make sure that the fare increase is reasonable, affordable by the general public as passengers. On the other hand we have to ensure that the bus company has got sufficient financial sustainability in order to maintain existing services, to improve services as well as to make the necessary investment in hardware. Of course we are not encouraging bus companies just to ask for fare increase, so when we look at the actual application we have to make sure that the company has strived to manage itself properly. So we take into account a whole range of factors.

(Please also refer to the Chinese portion of the transcript.)

Ends/Tuesday, June 10, 2014
Issued at HKT 16:14

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