An increase of 100% from 50¢ to $1.00 is proposed. the higher fare of $1.00 is justified by the distrance covered. Recent complaints about the standard of service on this route will be met by

(i) increasing the frequency of service once new facilities at Blake Pier become

operational, and

(ii) extending the morning hours of normal ferry services from 9.20 a.m. to 10.00 a.m.

It is also proposed that a child fare be introduced on this route at 50¢, or a half of the normal adult fare. HYF points out that this is one service which may be dramatically affected by the MTR, in which case the normal ferry vessels may be removed from service and only a hoverferry service maintained.

Outlying District Services

Most increases proposed are in the order of 50% of present fares, though some, notably the Cheung Chau and Lantau to Central routes on weekdays, are only 33% the differential between fares charged on Sundays and Public Holidays and on weekdays is maintained, save on the inter-island service which caters mainly for local passengers and where there is therefore no differential.

Higher increases

The increase proposed on the Hong Kong - Peng Chau and Hong Kong - Ma Wan and Tuen Mun Sunday service is 100% of the present Sunday fares. This is considered reasonable as it brings the Sunday fares in line with other similary distance Sunday fares, i.e. Hong Kong Lamma, and the proposed weekday increase remains at the 50% level.

The Lamma service

The proposed increase from $1.00 to $1.50 reflects extra expenses incurrred and the insistence of the two Rural Committees that separate but equal services be maintained to Yung Shu Wan and Sok Kwu Wan.

Deluxe Class

The deluxe fare will go up from $5.00 to $6.00 an increase of 20%. As noted in paragraph 3(a)(iii) this is a maximum fare and the Company can decide an appropriate fare up to that level according to commercial principles. In practice, on weekdays, less than $5.00 is

CONFIDENTIAL

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