Hong Kong rail giant MTR Corporation will increase fares by 2.3 percent this year under a revised mechanism that calculates profits from developing its properties to curb rising fares.
The increase stems from a recently revised fare adjustment formula for the city’s only rail operator, largely based on the inflation rate and wage index for transport workers. The inflation rate rose 2 percent for the year, while wages rose 3.6 percent in December, according to government data released on Tuesday.
The fare increase means that 90 percent of MTR passengers will have to pay a maximum of 40 Hong Kong cents per trip.
As part of a new deal last week between MTR Corp and the government, its controlling shareholder, the formula includes a reduced “performance ratio” that will be tied to profits from the company’s high-volume real estate development business.
The coefficient is set between 0.6 and 0.8 percentage points depending on the amount of profit. The higher figure applies if MTR Corp had property development gains of more than HK$10 billion (US$1.27 billion) in the previous year. Lower figures are used when profits fall below HK$5 billion.
The rail giant reported a total profit of HK$9.8 billion (US$1.25 billion) for 2022, up 2.9 percent year-on-year.
Allowing for other adjustments, which include a 3.35 percent carryover over the prior year, a one-time special reduction of 1.2 percentage points, and a 1.85 percentage point rollover, rates are up 2.3 percent this year.
It wasn’t until the 2021 financial year that the company lowered its rates during the coronavirus pandemic and increased them by 3.3 percent in 2019.
As part of the restructuring, the rail operator will increase the maximum contribution of ticket discount funds from HK$25 million to HK$40 million for each service interruption. Higher fees apply if the interruption occurs during peak hours or lasts more than three hours.
A new agreement to compensate passengers for this disruption also came into effect.