TNAG-2982-FCO40-1474-Mass-Transit-Railway-(MTR)-in-Hong-Kong-1982 — Page 3

Having regard to the Corporation Board's policy to make a modest increase in fares each year rather than larger increases at less frequent intervals, and bearing in mind the objective to eliminate losses from railway operation of MIS/TWE by 1984 so as to establish a positive cashflow before the Island Line opens in 1985, the following average fares would be necessary on the basis of the build-up in patronage:

Average

MIS/TWE

Year

Weekday Patronage

Fare Paid

1982

1.20M (end of 1982)

$2.14

1983

1.30M

$2.32

1984

1.45M

$2.60

10

Based on the results of various surveys carried out by the Corporation, it was concluded that the current MIS fare levels are not considered unreasonable by the travelling public, nor are they a major deterrent to use of the MTR. Therefore it was the MTRC's conclusion that a small increase could be applied in 1982 without encountering strong passenger resistance. Experience also confirmed the view that to gain additional revenue it is necessary to increase, rather than reduce fares. As an experiment on 22nd February 1981, the adult singel ride cross harbour fare from Jordan was reduced from $2.50 to $2.00 (subsequently on 3rd May when the 1981 fare adjustment took place, it was increased to $2.20). It is estimated that nearly 20% more passengers are now carried than would have been carried had the fare remained unchanged, but overall the revenue is slightly lower.

11

A fare increase in early May 1982 has the triple advantage in terms of timing of being one year since the last adjustment, being at the start of the hotter weather when increased patronage is expected, and allowing the initial TWE fares to stay unchanged for a full year.

A

The New Fares

12

The Corporation Board has therefore decided to raise all adult single ride fares on the MIS by $0.30 and to impose an equivalent fares structure on the TWE. The cross harbour fares will be $2.50, $3.00, $3.50 and the intra-Kowloon fares $1.50, $2.00 and $2.50 (see fares chart at Annex A).

13

The child/student single ride fares will remain unchanged with the exception of the fare corresponding to the proposed $2.50 adult fare, which will be increased from $1.00 to $1.50.