wyliepoon
Senior Member
While Toronto's transit system is mired in funding problems, Hong Kong's subway operator MTR is swimming in cash after posting a profit of HK$9.64 billion ($1.275 billion Canadian) in 2009, HK$2.12 billion ($280 million Canadian) alone through transit operations. Still it is planning to increase fares for the first time in 13 years, justified by a "fare adjustment mechanism" (a formula for calculating fare increase based on consumer wage and price indices). The average fare increase is HK$0.15 (less than 2 cents Canadian, but keep in mind that MTR uses fare-by-distance).
*****
http://www.thestandard.com.hk/news_detail.asp?pp_cat=30&art_id=96320&sid=27536367&con_type=1
MTR fares up 15 cents
Scarlett Chiang
Friday, March 26, 2010
An estimated four million passengers will have to pay an average of 15 cents a trip more from June 1.
MTR marketing and station business general manager Jeny Yeung Mei-chun said the 2.05 percent hike - forecast by The Standard yesterday - is the result of the fare adjustment mechanism, as agreed with the government.
"The mechanism is legally binding," Yeung said. "It is linked to the consumer price index and transport wage index so the result is objective, fair and transparent."
She said it will be the first increase in MTR fares for 13 years.
As the average fare is HK$7.20 per trip, the increase will be around 15 cents a journey.
But Yeung added the rise will only be implemented after a third party audits the result of the mechanism.
The Census and Statistics Department announced yesterday the nominal wage change in the transport sector in the fourth quarter of last year was 1.4 percent - a figure that was used to calculate the new fare.
According to the latest wage index, bus companies may also apply for a fare increase of 1.25 percent but KMB, Citybus and First Bus said they have no plans to do so.
Democratic Party legislator Andrew Cheng Kar-foo said the public must not accept a fare rise - no matter how small - when the company is making a huge profit. He also suggested the government set up a fund from MTRC share dividends to stabilize fares.
A spokeswoman for the Transport and Housing Bureau said the adjustment mechanism has taken into consideration how much the public can afford.
"We will continue to encourage every public transport operator, including the rail company, to provide concessions to the public," she said.
University of Science and Technology economics professor Francis Lui Ting-ming said it is reasonable for the MTRC to increase fares.
"You cannot say only accept a fall and not a rise," he said. "There is no free lunch in this world."
But Cheng, vice chairman of the Legislative Council's transport panel, criticized MTR Corp for making the move even though it has turned in a profit of HK$77.2 billion over the past 10 years and HK$9.6 billion last year.
Coalition to Monitor Public Transport and Utilities spokesman Richard Tsoi Yiu-cheong said the formula ignores important factors such as MTRC profits and changes in wages among the general public.
"If you consider the wages of the general public you cannot agree with a fare increase," Tsoi said.
"If you dig deeper into the MTRC profits, you will never agree with it."
*****
http://online.wsj.com/article/SB10001424052748704784904575111320832780414.html?mod=googlenews_wsj
* MARCH 9, 2010, 11:26 A.M. ET
MTR Posts 16% Rise in Profit, Plans to Offer 5,000 Apartments
By JEFFREY NG
HONG KONG—Rail operator MTR Corp. said Tuesday its 2009 net profit rose 16%, boosted by a rebound in Hong Kong commercial-property prices during the second half. The company added that it plans to put 5,000 new apartments on the market this year to meet booming demand amid low interest rates and flush liquidity.
The government-controlled rail operator also said it will conduct tender offers to develop properties with a combined 7,000 flats near its rail lines this year.
MTR, which has the right to develop commercial and residential properties above some of its Hong Kong train stations, is one of the two main sources of land supply in Hong Kong apart from the city's government. The other is the Urban Renewal Authority.
The government has pledged to work with MTR and the Urban Renewal Authority to increase the supply of flats to help prevent the formation of an asset bubble in the city's real-estate sector, after Hong Kong's residential property prices rose by an average 29% last year. MTR said it intends to discuss with the government later this year plans to boost the city's supply of affordable housing.
MTR's net profit totaled 9.64 billion Hong Kong dollars (US$1.24 billion) in 2009, up from HK$8.28 billion in 2008. Revenue rose 6.6% to HK$18.8 billion from HK$17.63 billion. The rise occurred even as earnings from property development fell because the company completed fewer residential units.
The company, which is 77%-owned by the city's government, recommended a final dividend of 38 Hong Kong cents, up from 34 Hong Kong cents a year earlier.
Apart from its property-development business, MTR also owns a number of shopping malls and commercial buildings. Those properties had a revaluation gain of HK$2.8 billion for 2009, compared with a revaluation loss of HK$146 million a year earlier, reflecting a rebound in property rates.
Excluding the accounting gain, MTR's 2009 underlying net profit declined 11% to HK$7.3 billion, dragged by reduced property-development contributions as the company booked fewer completed projects during the year.
The company's operating profit from property development fell to HK$3.55 billion from HK$4.67 billion, though operating profit from its commercial-property-rental and estate-management business rose to HK$2.01 billion from HK$1.9 billion.
In the past, property development accounted for the bulk of MTR's profit and offset the cost of capital commitments in its core railway business. However, since the government merged Hong Kong's two rail operators, MTR's core rail business has turned more profitable.
Its main rail operations contributed operating profit of HK$2.12 billion, down slightly from HK$2.18 billion a year earlier as demand declined during the financial downturn. Still, MTR said it expects its core rail business to show improvements this year amid the local economic rebound.
MTR has also been seeking to develop rail projects outside Hong Kong, particularly in mainland China, where it recently opened a subway line in Beijing under its management. It has also signed concession agreements for subway services in the Chinese cities of Shenzhen, Shenyang and Hangzhou.
