ENG-1970 — Page 38

REVIEW

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Kong Island and Kowloon linked by a tunnel under the harbour. The report is now being considered.

Meanwhile some improvement in the quantity of public transport has been brought about by public light buses, which were introduced as a new category of licensed vehicle in September 1969. These have developed into an extremely profitable and widely used form of public transport although the aggressive tactics adopted by some of the drivers of these vehicles came in for some criticism from private motorists. It was estimated that by the end of the year about 1.1 million passengers a day were being carried by public light buses; the profitability of this form of transport is indicated by the rate of return on capital invested, which was estimated to be between 100 per cent and 200 per cent per annum, depending on the area of operation.

The financial position of the two franchised bus companies on the other hand was far from buoyant. Fares had not been increased for 20 years but the cost of acquiring and operating vehicles had steadily risen; profitability has decreased and the companies have found it difficult to finance the expansion of their services needed to meet the demand.

Under the terms of their franchise the Kowloon Motor Bus Company (which covers Kowloon and the New Territories) paid 20 per cent of its gross takings as royalty and the China Motor Bus Company (operating on Hong Kong Island) paid 46 per cent of its net profits before tax. After a close examination of the whole financial position of the companies it was decided that the Kowloon Motor Bus Company should pay no royalty and that the royalty payable by the China Motor Bus Company should be reduced to 20 per cent. At the same time the concessions previously given of reduced rates of vehicle licence fee and of tax on diesel fuel were withdrawn. The fare structure of Kowloon Motor Bus Company buses was also altered to provide a flat rate of 20 cents for all journeys within the area of Tsuen Wan and urban Kowloon in place of the previous system by which fares ranged from 10 cents to 40 cents according to the length of the journey. The price of an adult monthly season ticket was also raised from $18 to $20.

These measures have made it possible for the companies to continue with their programme of expansion. This will mean that