Information Note on the Licensed Ferry Services
Ferry services in Hong Kong may be regulated by either franchises or licences. Ferry franchises normally cover a network of services and granted by the Chief Executive in Council for a period of more than ten years, with a maximum up to 15 years. Ferry licences, which are used to cater for services whose patronage is lower or which serve localised communities, are granted by the Commissioner for Transport for a maximum period of three years, but could be extended for a further period of three years at any one time, with the aggregate continuous period of licence not exceeding ten years.
2. Now, only Star Ferry's two Tsim Sha Tsui services will continue to operate under a franchise after 31 March 1999. There are, however, over 100 licensed ferry services, and 83 of which are "kaito" type services. Some of them carry no more than 10 passengers a day. After 31 March 1999, the average daily patronage of all licensed ferry services would only be about 100,000 or 1% of the total patronage of public transport. This number is expected to decline over the next few years.
The Advantage of Licensed Ferry Services
3. As compared with franchised ferry services, licensed ferry services are a more flexible mode of operation which enables both Government and operators to respond quickly to changes in the ferry services market due to competition from land transport and changing travelling pattern. The current fare determination mechanism is best suited to the licensed ferry services. Most of them are 'kaito' services which may require frequent and quick changes to fares and operational arrangements in response to market forces. Legislative process will take a long time and may cause hardship for these operators.
4. The current licensing system for ferry operation has been in existence since 1982 and has served the market well. The relevant Provisional District Boards or local communities in general are briefed and consulted before the Commissioner for Transport approves any fare revisions. For example, the Provisional Islands District Board was fully briefed on the details of the new licensed services to be introduced on 1 April 1999 and accepted the service timetables and fare levels, which in some cases were lower than the existing levels.
5. Ferry services operate under a difficult market environment. Any additional constraints in respect of the fare determination mechanism would deter operators from entering or investing into the ferry services market. This may affect the certainty and future quality of provision of ferry services.
26 March 1999