XN000022-1994-03-22 — Page 7

TUESDAY, MARCH 22, 1994

6

KMB'S FARE INCREASE APPLICATION SLASHED

FOR

THE GOVERNOR-IN-COUNCIL HAS APPROVED A 12.9% FARE INCREASE KOWLOON MOTOR BUS (KMB) WHICH IS SUBSTANTIALLY LOWER THAN WHAT THE COMPANY SOUGHT IN THEIR APPLICATION.

YEARS.

THIS GIVES KMB A SIGNIFICANTLY LOWER RETURN THAN IN PREVIOUS

A GOVERNMENT SPOKESMAN EXPLAINED THAT IN CONSIDERING APPLICATIONS FOR BUS FARE INCREASES THE FIRST AND FOREMOST OBJECTIVE IS TO ENSURE AN EFFICIENT SERVICE WILL BE PROVIDED AT AN AFFORDABLE PRICE.

IN ADDITION, SINCE PUBLIC BUS SERVICES ARE NOT SUBSIDISED, IS NECESSARY TO GIVE THE BUS OPERATOR A REASONABLE RETURN.

IT

THE SPOKESMAN EXPLAINED THAT INFLATION HAD LITTLE DIRECT BEARING ON THE OPERATING COSTS OF THE BUS INDUSTRY. THE KEY ELEMENTS ARE:

WAGES

OPERATIONS ARE LABOUR INTENSIVE AND WAGES CONSTITUTE MORE THAN 60% OF KMB'S TOTAL OPERATING COSTS. OVER THE PAST FEW YEARS, KMB HAD TO AWARD SALARY ADJUSTMENTS HIGHER THAN INFLATION IN ORDER TO RETAIN AND RECRUIT SUFFICIENT DRIVERS.

ROADWORTHINESS OF BUSES

BUS INSPECTIONS ARE COSTLY BUT ESSENTIAL IN SAFEGUARDING SAFETY, THIS ALSO CONTRIBUTES TO INCREASE IN OPERATING

PASSENGER EXPENSE.

NEW ROUTES AND FREQUENCY IMPROVEMENTS IN EXISTING ROUTES

THESE ARE NECESSARY TO SATISFY PASSENGER DEMANDS. SUCH SERVICE IMPROVEMENTS ARE CONTAINED IN A FIVE-YEAR FORWARD PLANNING PROGRAMME WHICH IS UPDATED ANNUALLY AND SUBJECT TO CAREFUL SCRUTINY BY THE TRANSPORT DEPARTMENT, CONSULTATION WITH DISTRICT BOARDS AND THE ENDORSEMENT OF THE TRANSPORT ADVISORY COMMITTEE. GIVEN LITTLE OVERALL GROWTH IN PATRONAGE, SUCH IMPROVEMENTS WILL SIMPLY ADD ΤΟ OPERATING COSTS.

A FARE INCREASE OF 12.9% IS AFFORDABLE SINCE 80% OF THE PASSENGERS WILL PAY AN ADDITIONAL FARE OF 40 CENTS TO 50 CENTS

ONLY: 10% OF THE PASSENGERS WILL PAY 30 CENTS EXTRA OR LESS AND THE REMAINING 10% 60 CENTS TO $1 MORE.

THIS IS FURTHER ILLUSTRATED BY THE FACT THAT THE INCREASE JUST APPROVED WOULD ONLY RESULT IN A VERY MARGINAL INCREASE OF 0.18% ON THE CPI(A).

IN APPROVING THE FARE INCREASE, THE GOVERNOR-IN-COUNCIL HAS ALSO ASKED THAT THE SCHEME OF CONTROL AND THE QUESTION OF LAND SALES BY FRANCHISED BUS COMPANIES BE EXAMINED.

/THE SPOKESMAN