Early Review of Fare Adjustment Mechanism for MTR Corp. Hong Kong

Image courtesy of MTR

Hong Kong – In response to a letter at the end of last month from the government, MTR has on 20 April 2016 announced that it will bring forward its 2017/18 re-assessment of the Fare Adjustment Mechanism (“FAM”) by one year. The FAM is the process by which MTR Hong Kong can annually adjust travel costs according to corporate needs. The letter and subsequent agreement to an early review of this pricing mechanism comes amidst growing public concern over successive yearly price rises. This year is due to see the seventh annual increase in rail fares in the region, this time at a rate of 2.7%.

“The existing FAM formula is fair, objective and transparent. It balances the interest of different stakeholders and keeps MTR fares at a reasonable level,”

stated Professor Frederick Ma, Chairman of MTR Corporation, continuing:

“2015 was one of the best years for on time performance since the Rail Merger. To ensure the continued delivery of this safe and reliable high performance railway, the Corporation spent more than $7 billion last year in maintaining, upgrading and renewing our railway assets.”

In 2015, the total number of train journeys provided by the company was 2.8 million, with an outstanding punctuality rate of 99.9%.  MTR has recently won accolades for company performance and high levels of customer service.

Professor Ma said:

“We will listen to different views and welcome constructive discussion on this matter. While we must balance the interest of all stakeholders, including our customers and shareholders, it would be in the best interests of all our stakeholders for the Corporation to maintain a sustainable financial model such that we can continue to invest in our rail network.”

The upcoming review, with first discussions scheduled for next month, will be a coöperative process between Government and MTR.  Many of its aspects, such as details of the procedure, involvement of stakeholders and time scale will be matters for this joint decision making process. With calls for publications of proposals before they are discussed, and worries over governmental control of prices due to its 76% stake in the company, it seems that, for the people of Hong Kong, the matter will very much stay in the public eye.