The Executive Council (ExCo) on Tuesday approved an application by Kowloon Motor Bus (KMB) to raise fares this year by 4.9 percent instead of the 8.5 percent that the company had requested. Secretary for Transport and Housing Cheung Bing-leung said after the ExCo meeting that the panel understands the public's concern about bus fare hikes and, before reaching its decision, carefully weighed people's ability to pay. He added that the latest fare hike is insufficient to allow KMB's passenger transport service to break even and the company will continue having difficulty maintaining its bus routes in the next two years.

From the people's livelihood point of view, the approved fare hike is barely acceptable. The HKSAR government has played its mediator role in this case by drastically slashing the fare increase from 8.5 percent to 4.9 percent, which is even lower than the aggregated inflation rate following the last fare hike and less than median increase of household monthly income in the same period of time. About three-fourths of KMB passengers are expected to pay four cents more than they do now for each trip. That more or less justifies KMB's request to raise bus fares. If KMB's passenger service continues to run at a loss in the years to come, its quality may suffer as a result.

Raising fares is no doubt a poor way to increase revenue, which is why KMB also relies considerably on ad sales. But ad sales can only contribute about HK$100 million a year to the company's annual return, far from enough to make up the shortfall in bus fares. In terms of cutting costs, the best method is apparently to rearrange bus routes, of which up to 70 percent currently operate at a loss. Yet, local resistance to bus rerouting and/or reducing runs is very strong. KMB proposed to rearrange 42 routes last year but only four were approved, while its attempt to reduce runs on 55 routes succeeded in just about half of them. The key to invigorating KMB's unprofitable bus service should be increasing efficiency, not fares. The government has already promised to do its best in helping KMB implement its rerouting plans. It is very much up to concerned local communities to rationally consider KMB's rerouting proposals for the sake of sustaining daily service.

This is an excerpted translation of a Hong Kong Commercial Daily editorial published on Wednesday.

(HK Edition 02/21/2013 page1)