The Executive Council has approved five of six bus fare rise applications, Secretary for Housing & Transport Eva Cheng says. The approved rises range from 2% to 7.24% and the new fares will take effect on June 8.

Speaking to reporters this morning, Ms Cheng said all the approved fare increase rates, except for the New Lantao Bus Company (1973) Limited, are lower than the proposed fare increase rates in these applications. For details of the approved fare rise rates, click here.

Ms Cheng said the Executive Council, in its deliberations, has fully considered and balanced all relevant factors in the bus fare adjustment arrangement approved in 2006.

Factors for consideration

These factors include changes in operating costs and revenue since last fare adjustment; forecasts of future costs, revenue and return; the need to provide the operator with a reasonable rate of return; the quality and quantity of service provided; the outcome of the formula; and public acceptability and affordability.

On the different fare increase rates approved for different bus companies, Ms Cheng said the financial situations and forecasts of the different bus companies varied and some cost components, in particular fuel prices, had continued to increase in recent years.

The Executive Council, after balancing all related factors -including public acceptability and affordability - decided that appropriate fare increase rate for each bus company should be approved. They took into account each company's own conditions with a view to setting the bus fares at levels acceptable to the public. This would provide operators with the conditions to have reasonable rates of return so they could continue to provide quality services to the public and make improvements. 

Under this principle, a bus company with less satisfactory financial performance and forecast, such as New Lantao Bus Company, will have a higher fare increase approved. For those with better financial performances and forecasts, the increases allowed will be lower or even rejected.

Reference indicator

As regards the fact that the approved fare increase rates do not follow the formula outcome, Ms Cheng said when announcing the bus fare adjustment arrangement in 2006, the Government already made clear the formula's outcome would not operate as an automatic determinant of the bus fare adjustment outcome.

It would provide only a reference indicator for the Government to consider whether a fare adjustment rate sought by a bus company had any basis for assessment.