TNAG-0855-FCO40-1065-Construction-of-underground-railway-system-in-Hong-Kong-1979 — Page 73

CONFIDENTIAL # *

For discussion

on 8th May 1979

XCC(79)45 36

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of 80

HAKK 173/2

MEMORANDUM FOR EXECUTIVE COUNCIL

THE MASS TRANSIT RAILWAY CORPORATION. BOARD'S FARES FOR THE MIS

Introduction

408

No Jas &

Under section 6 of its Ordinance (Chapter 270), the Mass Transit Railway Corporation (MTRC) has the power to determine the fares payable by its passengers but, under section 3 of the same Ordinance, the Corporation, when operating the railway, is required to pay regard to the reasonable requirements of the public transport system of Hong Kong. With this latter consideration in view, Members are being informed of the decision reached by the MTRC's Board of Directors regarding the fares for the Modified Initial System (MIS), which will open from Kwun Tong to Shek Kip Mei on 1st October 1979, to Tsim Sha Tsui in January 1980 and across to Hong Kong Island by March 1980.

A

The MTRC's Decision on Fares

2

At its meeting on 2nd April 1979, the MTRC Board decided on a fare structure for the MIS when it opens in stages, beginning on 1st October 1979. The fares range from $1.00 to $3.00 with an average fare of $2.00. The Corporation's fares schedule is at Annex A. Consistent with the statutory requirement for the Cor- poration to conduct its business according to prudent commercial principles, the Board's decision was based upon forecasts of 1980 costs and therefore envisages a fares review at the end of 1980, if necessary, to take account of cost increases during the intervening period. The decision was made at the April Board meeting in the light of the need to advise Members prior to publication and having regard also to the time required by the Corporation for marketing, printing tickets and making all necessary arrangements for opening on 1st October 1979.

C.S. 166

3

Largely because the costs of construction have been held down and progress has been ahead of schedule, the fares which the Board has approved are lower than might have been expected in 1975 when the decision to proceed with the MIS was taken. An indication was given in 1975 that the fares on the MIS might range between $1.00 and $2.50 in 1975 dollar terms. Inflation was envisaged at 7% per annum which gives a calculated 1980 fare of $1.40 to $3.50.

Since

CONFIDENTIAL

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