Hong Kong’s rail operator will cut ticket prices by 1.7 per cent this summer in its first reduction in more than a decade as the economy continues to limp along during the coronavirus pandemic.
The MTR Corporation revealed on Monday that the reduction would begin on June 27. It last raised fares by 3.3 per cent in 2019.
The company is making the cut despite posting a record deficit of HK$4.8 billion (US$617 milion) in 2020, falling into the red for the first time since going public in October 2000. An existing scheme backed by the government allowing commuters to claim back up to 20 per cent of the fare for each trip is due to end in March and is unlikely to be extended.
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But the rail giant has decided to provide a 5 per cent rebate for every trip taken between April 1 and June 26.
Under a fare-adjustment mechanism deal between the MTR Corp and the government, the majority shareholder, ticket price changes are calculated using the inflation rate and a wage index for transport workers. The operator pointed to the 0.7 per cent year-on-year drop in inflation in December and the 1.5 per cent annual decrease in transport workers’ salaries.
The reduction is the first since the formula was implemented when the MTR Corp merged with the Kowloon-Canton Railway Corporation in 2007.
MTR Corp commercial director Jeny Yeung Mei-chun said the reduction reflected economic realities.
“We truly feel that both MTR and Hong Kong people have been hard hit by and have been facing continuous unprecedented challenges amid the pandemic over the past year,” Yeung said. “Notwithstanding the difficulties, as a Hong Kong-rooted corporation, MTR is dedicated to keeping Hong Kong moving and riding out the tough times together with the public through different measures and promotions.”
The price cut and other fare promotions are expected to cost more than HK$900 million for 2021-22. The MTR Corp will also continue to offer more than HK$1.7 billion in fare concessions annually to different types of customers, including students.
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Quentin Cheng Hin-kei, spokesman for the commuter concern group Public Transport Research Team, said the MTR Corp played “fair and square” under the mechanism which required the company to slash prices that factored in macroeconomic statistics.
“Although the 20 per cent fare rebate subsidised by the government will come to an end in March, the MTR Corp still showed some sincerity by willingly giving out 5 per cent rebates on each journey,” Cheng said.
“It’s still better than nothing, given that the company is expecting to take a financial loss in rolling out the discount,” he added.
Transport sector lawmaker Frankie Yick Chi-ming said the rail operator had kept its word to follow the mechanism it had set up with the government.
“It’s their basic duty to cut the fares based on the calculation mechanism,” Yick said.
He pointed out that the rail operator’s ridership had pummelled due to the “abnormal effects” of the pandemic, but projected that passenger numbers would resume quickly if the virus situation came under control.
“The company’s biggest challenge right now is recouping the loss in rental income, as some tenants have pulled out from the usually popular but expensive MTR retail locations,” Yick said.
Meanwhile, legislator Ben Chan Han-pan, from the pro-Beijing Democratic Alliance for the Betterment and Progress of Hong Kong, said the price cut was not enough to help those in dire straits.
He said while the unemployment rate had risen to 7.1 per cent, the fare-adjustment mechanism had only resulted in a 1.7 per cent reduction in train fares.
“Many residents are in deep waters because they lost their jobs or are trying to cut on daily expenses. The small cut in fares wouldn’t be much help,” Chan said.
The Transport and Housing Bureau said the government had long asked the MTR Corp to respond to public concerns and offer more fare concessions, taking into account the overall economic environment and market conditions.
The bureau added the public transport fare subsidy scheme, which covers one-third of monthly commute expenses, would be extended from June 30 until the end of the year. The monthly subsidy cap would also be raised to HK$500 (US$64) from HK$400 starting on April 1.