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MTR’s profits to be linked to Fare Adjustment Mechanism: sources
Linking MTR Corp Ltd.'s revenues into the calculation formula of its Fare Adjustment Mechanism has been approved by the Executive Council on Tuesday, according to sources.
That means that the greater the train company’s profits, the smaller the fare increases will be.
It is understood that more details will be released within the day.
It is also understood that the maximum amount set aside for each incident will be increased from the current HK$25 million to HK$40 million.
The fare adjustment mechanism was introduced in 2009, two years after the merger of MTR and Kowloon-Canton Railway (KCR).
The equation first adds up half of the year-on-year percentage change in the composite consumer price index and half of the year-on-year percentage change in the transport nominal wage index and subtracts the productivity factor, set at zero between 2017/18 and 2022/23.
The result will then minus the 0.6 percent of special adjustment and generate the final fare adjustment rate.
However, deflation rarely occurs, and the mechanism doesn't take the train company’s profits into the equation. Of the 14 years the mechanism has been running, fares were increased for nine years. Only in one year were the fares reduced due to the Covid-19 pandemic.
As for years in which the fares were frozen, the adjustment rates will be recouped and carried forward to the following years.
It is understood that more details will be released within the day.
It is also understood that the maximum amount set aside for each incident will be increased from the current HK$25 million to HK$40 million.
The fare adjustment mechanism was introduced in 2009, two years after the merger of MTR and Kowloon-Canton Railway (KCR).
The equation first adds up half of the year-on-year percentage change in the composite consumer price index and half of the year-on-year percentage change in the transport nominal wage index and subtracts the productivity factor, set at zero between 2017/18 and 2022/23.
The result will then minus the 0.6 percent of special adjustment and generate the final fare adjustment rate.
However, deflation rarely occurs, and the mechanism doesn't take the train company’s profits into the equation. Of the 14 years the mechanism has been running, fares were increased for nine years. Only in one year were the fares reduced due to the Covid-19 pandemic.
As for years in which the fares were frozen, the adjustment rates will be recouped and carried forward to the following years.
