New mechanism: Transport officials Dr Sarah Liao, Joshua Law and Alan Wong explain the revised bus fare adjustment mechanism to the media.

The bus fare adjustment mechanism should be revised to better respond to economic conditions and improve objectivity, Secretary for the Environment, Transport & Works Dr Sarah Liao says.

She told legislators today that a recent survey found 72% of 2,026 respondents said there is a need to establish a fare adjustment mechanism that can adjust fares upward or downward. Of these, 85% said the Government should retain control of bus fare changes to ensure the prevailing economic conditions, public affordability and employment situation can be taken into account.

Over 80% of respondents who see a need for a fare adjustment mechanism agree that indicators reflecting inflation or deflation and public affordability should be incorporated into the mechanism.

Dr Liao said a formula for initiating changes in bus fares will be introduced. It will take into account the wage index, consumer price index and productivity gain which offers operators incentives to boost efficiency and productivity. She wants to launch the initiatives in January.

Triggering point

On passenger reward arrangement, Dr Liao said the existing triggering point for sharing of return with passengers will be lowered from 13% return on average net fixed asset to 9.7%. This will help better reflect changes in the capital market environment.

Measures to enable the public to monitor the use of passenger reward balance will be introduced to enhance transparency. For details, click here.

The bureau will monitor the supportable fare change by applying the fare adjustment formula on a quarterly basis and will consider initiating a downward fare adjustment after having considered the outcome of the formula and all relevant factors.

Fare cut initiatives

Dr Liao said approval will be sought from the Chief Executive in Council for the proposals to take effect in January. The new arrangement will be applied to all six franchisees on the same day.

A number of fare cut initiatives will be introduced, including:

* 15% advance payment day return fare reduction on 42 routes where the single fare is $15 or above;

* 5% advance payment day return fare reduction on 56 routes where the single fare is between $10 and $14.90;

* $2 flat fare or half fare, whichever is lower, for elderly on 433 routes on Sundays and public holidays; and,

* an addition of 47 bus-bus interchange schemes.

Citybus, KMB, New World First Bus and Long Win will offer the cuts. New Lantao Bus will continue offering the special elderly fare concessions on 10 routes on weekdays to provide a discount of 30 cents to $1 on top of the existing elderly half fare.

Dr Liao said the implementation of the initiatives and the 167 interchange schemes currently in place will benefit about 900,000 passengers a day, constituting about one-fourth of total daily bus patronage.

New franchises 

Commissioner for Transport Alan Wong said Citybus, KMB and New Lantao Bus have applied for new 10-year franchises to replace those expiring in June next year, and March and July 2007.

As over 70% of those surveyed are satisfied with their services, Mr Wong said the Government will consider granting the new franchises. However, the operators have to take measures responding to public aspirations.

They must improve services and protect the environment by reducing emissions, cutting trips on busy corridors and fitting safety equipment.