CONFIDENTIAL X TO XCK:80/7
For discussion
on 11th December 1979
XCC(79)112 Copy No.. Page 1
ME MCRA NDUM FOR EXECUTIVE COUNCIL
KCWLCON-CANTON RAILWAY
PRCPCSED INCREASE IN FARES
of 80
A
Introduction
On 8th Cctober 1974, after Members had considered memorandum XCC(74)74, the Council advised and the Governor ordered:
(a) that the proposal to revise Kowloon-Canton Railway (KCR) fares as described in paragraph 3 of the memorandum be approved, subject to the increase in any fare (particularly that for the journey between Tsim Sha Tsui and Mongkok) not being more than 60%; and
(b) that the new rates be introduced on Monday, 4th
November 1974.
This was the first increase in fares since 1947, and reflected increasing operating costs and investment in replacement and additional rolling stock.
2
The KCR has registered a surplus in its operating accounts without increasing its fares since 1974 only be cause additional passengers and freight carriage have generated adequate additional revenue to cover increasing costs. Details of passenger and freight revenue since 1974 are given in Annex A. The additional usage of the railway that is now possible before the capacity of the system is increased (with the completion of modernisation and electrification) is minimal and it will no longer be sufficient to offset rising costs.
3
B
A table giving broad details of the KCR operating accounts is included in Annex B. The se project a small surplus of $0.6 million in 1980-81 and a return on net fixed assets of 0.2% only. The se estimated results are very low indeed and are inconsistent with the requirement that the KCR should operate on a commercial basis.
4
Furthermore, it is planned that a fully electrified service should be in operation by the end of 1982. This will change the situation dramatically. The value of net fixed assets will increase from about $300 million to over $2, 500 million by 1982-83 and, at present fare levels,
G.S. 166
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