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Tuesday, May 28, 2024

MTR to lower fare adjustment rate by up to 0.8pc over new linkage with property development profit

MTR to lower fare adjustment rate by up to 0.8pc over new linkage with property development profit

The calculation of “productivity factor” in MTR Corp Ltd.’s fare adjustment mechanism will be linked to its property development profit, lowering the fare adjustment rate by 0.6 to 0.8 percent, the train company announced Tuesday.
Under the renewed mechanism, the fares are expected to be adjusted 3.85 percent downward this year. However, MTR’s chief executive officer Jacob Kam Chak-pui said the actual adjustment will depend on the transport nominal wage index to be released by the end of this month.

The original formula 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.

Starting from this year, the calculation of “productivity factor” will be linked to newly established profit tiers covering “profit for the year attributable to shareholders of the company arising from property development in Hong Kong” in the previous financial year.

And the corresponding rate of productivity factor will lower the fare adjustment rate by 0.6 to 0.8 percentage points, MTR said.

The productivity factor will be set at 0.6 percent if MTR’s property development profits are below HK$5 billion; at 0.7 percent if the profits range between HK$5 billion and HK$10 billion; and at 0.8 percent if the profits reach HK$10 billion or above.

In the meantime, the total fare adjustment rate of +2.85 percent – the rate recouped and carried forward over previous years in which the fares were frozen – will be deducted by 1.2 percent as a special offer.

As for the remaining 1.65 percent, it will be deferred to next year (2024/25). MTR also offered to voluntarily defer another 0.2 percent out of the fare adjustment rate this year to next year.

In addition, MTR will arrange “Thank You Day” on April 8, 9 and May 13, and 14 to rebate passengers more directly from this year to 2027/28, allowing all Octopus or QR code ticket users to enjoy half-price discount during the days.

The interchange discount with green minibus will be increased from 30 Hong Kong cents to 50 Hong Kong cents starting from the fourth quarter of 2023 and will be extended till June 2028.

Monthly Pass & City Saver will also be extended to benefit long- and medium-distance travelers.

MTR believed the outcome of the review can respond to the comments received from the public and ensure the financial sustainability of the company to take forward new railway projects and make sufficient provision for maintaining, upgrading and renewing the existing railway system.

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