LegCo Panel on Transport


The Hongkong Tramways Ltd (HKT) has applied for an increase in tram fares by 60 cents for adults, 30 cents for children and $50 for monthly tickets to take effect from January 1997.


2. HKT last revised its fares on 6 February 1994 from $1.00 to $1.20 for adults, 50 cents to 60 cents for children and from $80 to $100 for monthly tickets. In the last three years, HKT’s patronage has dropped due to competition from other transport modes. With operating costs continuing to increase, HKT is forecast to incur a substantial loss from 1996 onwards at existing fares.

Forecast Ridership and Revenue

3. Ridership for 1997 and 1998 is forecast to remain at the 1995 level, or an average of 310 000 passengers per day, given that the population on Hong Kong Island is expected to remain stable. Correspondingly, farebox revenue is not expected to increase in the next two years, if fares remain unchanged.

Forecast Operating Costs

4. The total operating cost in 1996 is estimated to be $176.6 million. It is forecast to increase substantially in 1997 and 1998.

5. Staff costs are the major item accounting for about 57% of the total operating costs. It is estimated that there will be a substantial increase of 17% in staff costs in 1997 due to salary adjustment and additional staff. The additional staff include 53 motormen for the introduction of meal relief; 10 technicians for the implementation of improvement works on tram cars; and one training executive and two training instructors for overseeing an enhanced training programme. Four senior motormen posts will also be created to provide better career prospects.

6. Additional expenses on tram tracks totalling $9.4 million are expected to be incurred during the period from 1996 to 1998 for a special replacement programme which includes accelerated track renewal.

Service Improvements and Customer Relations

7. During 1996, HKT carried out a series of works to improve tram safety. These include, inter alia, improvements for an automatic track changing system at road junctions, and the installation of emergency switches for the evacuation of passengers in case of emergencies.

8. The service improvement plans for the coming years will focus on the upgrading of tram cars and staff training. For tram cars, HKT will -

  1. install a driver’s vigilance device to enable automatic cut-off of power supply and application of the air brake to stop the tram car during emergencies when the motorman fails to control the tram car; and
  2. modify the electrical and wiring system of all tram cars from mid-1997 onwards to reduce fire hazards.

9. For staff training and customer relations, HKT will -

  1. launch an additional driver training programme to enhance the driving skills of the motormen;
  2. provide the motormen with courtesy and customer service training; and
  3. organize a "Passenger Public Relations and Education Programme" at various educational institutions and senior citizen organizations.

The Recommended Fares

10. Following a thorough assessment of all the relevant financial information submitted by HKT, the Transport Advisory Committee has recommended a fare increase of 40 cents for adults, 20 cents for children and the elderly and $35 for monthly tickets with effect from January 1997.

11. The proposed increase is considered justified because -

  1. HKT expects to incur a loss in 1996, and its projected profit in 1997 even after the fare increase is much lower than its average profit in the past five years;
  2. HKT plans to improve tram safety through the upgrading of tram cars, an accelerated track replacement programme, and better training for its staff;
  3. the proposed fares would only have a minimal impact of 0.0067% on the CPI(A);
  4. the recommended increases are small in absolute terms, and tram fares are still relatively low compared with those of other modes of public transport; and
  5. a lower rate of increase would not enable HKT to recover its operating costs and would make a higher fare increase in the future inevitable.

Financial Position at Proposed Fares

12. The average before-tax profit of HKT for the years 1991 to 1995, as shown at the Annex, is $21.3 million. If inflation is taken into account, this figure would be $26.8 million in 1996 prices. With the proposed fare increase, HKT expects to earn a small profit in 1997 which will enable it to maintain a viable service and finance improvement projects.

Transport Branch
Government Secretariat
22 November 1996


Hongkong Tramways Limited --Profit for Previous Years (1991 - 1995)


Profit Before Taxation

Profit Before
Taxation at 1996 Prices

($ million)

($ million)



















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