Legislative Council Panel on Transport
New Franchise to Kowloon Motor Bus Company (1933) Limited


Kowloon Motor Bus Company (1933) Limited (KMB)’s current franchise expires on 31 August 1997. Negotiations are ongoing with the company on the terms of its new franchise.

Assessment of Performance

2. KMB currently operates 368 franchised routes, including 58 cross-harbour services. We have assessed KMB’s performance against a number of well-established indicators. Its bus availability increased from 100.7% in 1995 to 101.6% in 1996, whilst the number of lost trips dropped from 4.9% to 3.52% during the same period. Among the four franchised operators, KMB consistently receives the smallest number of complaints per million passengers.

3. KMB is forthcoming in disclosing its financial and operational information and organises regular meetings of its passenger liaison groups. In the coming five years, it aims to introduce 40 new routes and 1,183 improvement items. It will expand its fleet from the present some 3,700 buses to 4,000 buses in 2001. It also proposes to cancel 12 routes and introduce 108 items to rationalize services which are under-utilized or serving areas with a declining population.

4. We are satisfied that KMB is able to maintain a proper and efficient service and intend to recommend to the Executive Council the grant of a new 10-year franchise to KMB. In response to some Members’ suggestion, we intend to bring forward the expiration of the proposed new franchise by a month, to 31 July 2007 instead, so as not to coincide with the start of a new school year, i.e. 1 September.

Franchise Terms

5. The terms of the proposed franchise will be similar to those of the franchises recently granted to Citybus Limited and New Lantao Bus Company (1973) Limited, with changes made to reinforce the Administration’s monitoring arrangements and to pave for the way for more competition in the provision of public bus services.

6. We are still in discussion with KMB on the detailed terms but we have made our position clear to KMB on the following aspects -

(a)Abolition of the Profit Control Scheme

At present, KMB is the only bus franchisee left with a profit control scheme. In various motion debates held in the Legislative Council concerning franchised bus services, Members expressed the view that action should be taken to abolish KMB’s profit control scheme. It is the Administration’s intention to recommend to the Executive Council that KMB’s new franchise should be awarded without a profit control scheme.

(b)Non-exclusivity of Routes

Similar to other bus franchisees, we intend to remove the exclusivity of all KMB’s bus routes upon expiry of the current franchise. This will pave the way for increased competition and will provide the flexibility needed for adjustments in bus operations to deal with changes in the operating environment in the future.

(c)Requirements for information

New requirements for more information on KMB’s bus services will be added such as the number of additional journeys operated, the number of drivers allocated to each route, its procurement procedures and practices, etc. in order to increase the transparency of its operation.

(d)Mid-term Review

Under the proposed new franchise, Government will conduct a ‘mid-term’ review after the fourth year of the new franchise to evaluate KMB’s performance, including its financial position, management structure, maintenance capability as well as network efficiency.

Transport Branch

June 1997

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