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Financial Performance

Fares for Hong Kong Transport Operations

We offer three different classes of fares in our Hong Kong transport operations, namely, Adult, Student and Concessionary. Children below the age of 12, senior citizens 65 years and older, and eligible persons with disability enjoy concessionary fares on all lines. Full-time Hong Kong students between the ages of 12 and 25 are also eligible for concessionary rates.

This chart shows that adjustments to our fares have been in line with long-term consumer price changes and consistently lagged behind wage growth in Hong Kong.

 

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Please refer to our customer website for the latest information about Tickets, Fares, Special Schemes, and Frequent User Passes.

 
 

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With implementation of the Government’s Public Transport Fare Concession Scheme, elderly people and eligible persons with disabilities can travel on MTR Domestic Services with a concessionary fare of HK$2 per trip. The scheme aims to build a caring and inclusive society by encouraging these groups to participate more in community activities.

 

Fare Adjustment Mechanism

Fare adjustments are a sensitive issue for many of our stakeholders, particularly those living on low incomes or who depend on our services for convenient transportation to and from remote parts of our city. The Fare Adjustment Mechanism (FAM) was agreed with Government at the time of the rail merger in 2007. It is designed to meet three key objectives, namely, to ensure that our fares reflect Hong Kong’s economic conditions, to address the travelling public’s concern about affordability of our services, and to ensure that we generate sufficient revenues to support our operations over the long term.

Review of the FAM

The FAM is subject to review once every five years, either upon request of the Company or the Government. The first review was completed in 2013, resulting in revisions to the pre-set “Productivity Factor” and new algorithms for determining the amount of funds that we put aside each year for the 10% Same-Day Second-Trip Discount. The next review of the FAM is expected to take place in 2018.

FAM Formula

The FAM is based on an objective, transparent and direct drive formula that allows us to set fares with a measure of predictability and to balance our financial obligations to shareholders with social responsibilities to the community. It takes into consideration the Composite Consumer Price Index (CCPI) and Wage Index, which are published by the Government’s Census and Statistics Department, as well as a Productivity Factor that is agreed with Government. This means that passengers will enjoy a share of productivity gains in our business.

Fare Adjustment in 2014

The latest fare adjustment came into effect in June 2014 with an Overall Fare Adjustment Rate of +3.6 per cent, reflecting

  • a year-on-year increase in the Nominal Wage Index of 4.1 per cent,
  • an increase in the Composite Consumer Price Index of 4.3 per cent; and,
  • a Productivity Factor of 0.6 per cent.

As agreed with the Government during the review of the FAM in 2013, the Productivity Factor for five years between 2013 and 2017 will be 0.6 per cent instead of 0.1 per cent, as originally specified before the FAM review. This means that fare increases during this period will be lower each year than they would have been under the original formula.

 

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The Nominal Wage Index is provided by the Census and Statistics Department and measures changes in wage rates of employees up to supervisory level.

 

Concessions and Discounts

In recognition of our 35th Anniversary of passenger services and to thank our customers for their support over the years, in May 2014 we announced a package of fare promotions, including those associated with the FAM. These have an estimated value of approximately HK$500 million, adding to the annual HK$2.2 billion worth of ongoing fare concessions and promotions that we already offer today.

Fare Concession Schemes

As part of the review of the FAM in 2013, we agreed to share our commercial success with passengers through schemes that give back a portion of our profits in the form of time-limited fare concessions:

  • Profit-related Fare Concession Scheme - Each year we set aside a pre-determined amount of money based on a sliding scale referencing the amount of profit that is generated by its underlying business. The money is given directly to customers through the 10% Same-Day Second-Trip Discount.
  • Affordability Discount - This scheme is designed to provide temporary relief to customers during difficult economic times when the FAM overall adjustment rate (calculated from FAM formula) and the yearly percentage change in Median Monthly Household Income (MMHI) for the 4th quarter of the most recent calendar year are both positive, and the FAM rate is higher than the rate of change of MMHI. We will introduce this discount for a limited period of up to two years to ensure that in any given year the actual increase in fares paid by customers is capped by the yearly percentage change in the prevailing MMHI published by the Government.
  • Service Performance Arrangement - Each time there is a service disruption of 31 minutes or longer arising from an equipment fault or human error, we put aside a pre-determined amount of money. The amount is based on a sliding scale referencing the length of delay and is given to customers through the 10% Same-Day Second-Trip Discount.

Discounts for Our Passengers

Each day during 2014, more than 1.7 million passengers on average enjoyed the 10% Same-Day Second-Trip Discount for Octopus card holders. We extended this discount scheme for six and a half extra months from 15 October 2014 to 30 April 2015 to thank our customers for their continued support during our 35th year of passenger services.

In June 2014, we launched the first multi-ride smart card, MTR City Saver, designed to save money for regular commuters making medium to long distance cross-harbour journeys within urban areas. The 40 rides scheme proved so popular that nearly 40,000 New MTR City Saver tickets were sold within the first week.

Trial of an Early Bird Discount Promotion was introduced from September 2014 to May 2015 in order to help manage morning peak demand. This promotion offers adult passengers a 25 per cent fare discount if they exit gates between 7:15am and 8:15am on ordinary weekdays at 29 designated stations.

Other discount schemes in 2014 included discounts for outlying island ferry passengers, Monthly Pass Extra and Day Pass. We also offered free travel for elderly and disabled passengers to celebrate Senior Citizen’s Day and the International Day of Disabled Persons respectively.

 

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Please refer to Tickets and Fares on our customer website for the latest concessions and discounts.