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The second area for improvement lies in the absence of competent high level management. Not only is the present chain of command weak but there is a need for a managerial capability to oversee the fleet expansion programme, to provide forward financial planning and generally to pull together all aspects of the Company's operations.

dan

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Preventive maintenance of vehicles is a third area for improvement. Effectively undertaken this will reduce accidents and increase vehicle availability. Additional fitters/mechanics and additional workshops are required at once to maintain the present fleet adequately. Maintenance is presently supervised by an able but only part-time chief engineer who lacks authority and direction to achieve what he considers needs to be done. Workshop and bus cleaning are important sub-areas for improvement.

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A fourth area where immediate improvements are required is in drivers' working conditions, hours of work and general morale. Improvements in this area will help to reduce accidents and, by attracting more drivers to the buses, increase vehicle availability. Buses are Hong Kong's most important mode of passenger transport and sufficient bus drivers must be available to keep the fleet on the roads.

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A fifth area for improvement is the provision of depots to house the additional buses. The Company has a long history of buying its depot land on the open market because of a reluctance to enter into undertakings regarding alienation required for private treaty grants. This intransigence is currently creating great difficulty with respect to a proposed depot at Aberdeen. Further details of the sort of improvements which are expected of the Company are set out in Annex C.

CONFIDENTIAL

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