Basis for considering bus fare adjustments proposed

The Administration briefed the Legislative Council Panel on Transport today (October 27) on the results of a review of the basis for considering bus fare adjustments and proposals to modify the current arrangements.

A Transport Department spokesman said the proposals would improve the objectivity and transparency of the bus fare adjustment exercises. They would also enable passengers to share operators' profits whilst at the same time provide incentives for the operators to improve their efficiency.

The key elements of the proposals are:

* Passengers will be able to share operator's profits if in any year the operator achieves a return which exceeds the historical average rate of return of the local bus industry in the past 10 years. The rate of return is 13 per cent which is a trigger point and not a guarantee. This new arrangement will help stabilize future bus fares to the benefit of the passengers.

* The remaining 50 per cent portion of the above-average return will go to the operators. This would provide an incentive to the operators to continue to improve their efficiency.

* The Administration will adopt a more objective basis to consider public acceptability and affordability by making reference to the change in the Composite Consumer Price Index (CCPI) in assessing fare adjustments.

The spokesman said future bus fare adjustment applications would continue to be assessed on a case by case basis having regard to a basket of factors, including:

- changes in operating costs and revenue since the last fare adjustment;

- forecasts of future costs, revenue and return;

- the need to provide the operator with a reasonable rate of return;

- public acceptability and affordability; and

- the quality and quantity of service provided.

"We hope to achieve a win-win situation for both the passengers and the operators through these new arrangements."

End/Friday, October 27, 2000