Panel on Transport (Papers) 12 Dec 97

Provisional Legislative Council

Panel On Transport

Rationalisation of HYF's Franchised Routes

INTRODUCTION

Hongkong and Yaumati Ferry Company Limited (HYF) proposes to cancel the following services in 1998 -

North Point - Kowloon City vehicular ferry service;
Central - Jordan Road passenger ferry service; and
Central - Tsuen Wan via Tsing Yi passenger ferry service (both ordinary and hoverferry services).

BACKGROUND

2.HYF currently operates a franchised network of 15 routes, including six inner-harbour routes, two new town routes, six outlying island services and one vehicular route. Please see Annex A for details.

3.HYF has been incurring heavy losses since 1994, mainly due to a persistent decline in patronage of its cross-harbour and new town ferry services. HYF's franchised operations have been heavily cross-subsidised by profits generated from recreational ferry services to the outlying islands as well as non-farebox income from excursion services, ferry chartered services, shop rentals and advertising at piers. Even with these incomes, the accumulated losses between 1994 and 1996 are $130 million.

4.Since the opening of the Western Harbour Crossing (WHC) in April 1997 and the associated re-structuring of cross-harbour bus networks, there has been a significant decline in HYF's patronage on routes serving West Kowloon and the western part of the New Territories.

JUSTIFICATION
North Point - Kowloon City vehicular ferry service

5.The average number of vehicles carried per day on this ferry service was about 1 800 in the past three years. This has dropped by nearly 40% after the opening of the Western Harbour Crossing. At present, only 70 vehicles cross the harbour on this vehicular ferry service during peak hours (in one direction) (Annex B). After the cancellation of this vehicular ferry service, the diversion of these vehicles to the three cross-harbour tunnels is not expected to have any significant impact on traffic conditions at the tunnels.

Central - Jordan Road passenger ferry service

6.Patronage of this service has been seriously affected by the relocation of piers at both ends and the introduction of cross-harbour bus services via WHC. Patronage dropped from almost 11 000 passengers a day in 1994 to an average of 3 200 in October 1997 (Annex C). After this service is cancelled, ferry passengers affected may use cross-harbour buses or the MTR.

Central - Tsuen Wan via Tsing Yi passenger ferry service

7.Patronage of this service has been declining in the past three years (Annex D). It is expected to drop further after the MTR Tung Chung Line, which also serves Tsing Yi, commences operation in mid 1998. Apart from taking the MTR Tung Chung Line, passengers may use cross-harbour buses operating via WHC.

THE ADMINISTRATION's ASSESSMENT

8.The Administration supports a rationalisation of ferry routes to ensure that essential ferry services are maintained and ferry operations are financially viable. Non-essential ferry routes, which are heavily loss-making, should be excised from existing franchised networks in order that resources may be deployed by ferry franchisees to improve essential ferry services. The Administration would also examine carefully whether it is commercially viable to tender out some of the routes as licensed services and let market forces determine the future of such routes.

9.The Administration does not intend to tender out the North Point - Kowloon City vehicular service and the Central - Jordan Road passenger service because of declining patronage and the availability of convenient land transport alternatives. Furthermore, future reclamation will necessitate demolition of the Jordan Road and Kowloon City piers, which poses a further threat to the longer term future of these services. The Jordan Road ferry pier will have to be demolished in 1999 and the Kowloon City vehicular ferry pier will be demolished in 2003 as part of the Southeast Kowloon Reclamation project. The short duration of these ferry services further reduces their attractiveness to potential operators.

10.The Administration proposes to tender out, by public tender, the Central - Tsuen Wan via Tsing Yi ferry service, as requested by the Kwai Tsing Traffic and Transport Committee. HYF will be required to continue operating the ferry service until the replacement service is in place, which is expected to be no later than September 1998.

THE WAY FORWARD

11.Under section 13(8) of the Ferry Services Ordinance (Cap 104), the Commissioner for Transport may with the consent of the Chief Executive in Council permit a franchisee to cease operating a ferry service. In the light of the above assessment, the Administration intends to seek the approval of the Chief Executive in Council for the proposed cancellation of these ferry services.

Transport Bureau
Government Secretariat
TRAN L/M 2/11/22
4 December 1997

Annex A