23rd February 2024 – (Hong Kong) Hong Kong’s minibus and taxi operators face their most perilous period in decades amidst a confluence of challenges. With devalued licences and eroded incomes, many struggle to stay financially viable. Thoughtful government assistance tailored to revitalizing these critical transport modes merits strong consideration. Doing so supports operators, commuters and the economy alike.

The trying circumstances faced by Hong Kong’s minibus and taxi industries encapsulate the broader economic malaise. With depressed asset values afflicting housing and stocks, license values for these transport providers exhibit a similar downward spiral.

Over the past year, taxi license prices declined nearly 23%, plunging below HK$3.4 million. But minibuses confronted an even steeper 90% wipeout from peak prices of HK$8 million, with licenses now trading at distressed levels around HK$500,000 to HK$700,000. This massive devaluation devastates operators.

Average daily number of passenger trips on red minibuses in Hong Kong from 2013 to 2021(in 1,000s) Source: © Statista 2024

The predicament worsens with banks aggressively repossessing vehicles when loan repayments falter. Industry groups estimate around 500 out of 1,000 total minibuses already sit idle given unviable operations. If conditions remain unfavourable, experts forecast repossessions could double, delivering a devastating blow. Myriad factors contribute to the present quandary. The pandemic altered consumer habits, cutting late-night dining and entertainment that sustained nighttime ridership. Cross-border reopening also failed to deliver an anticipated revival as travel momentum remains below pre-pandemic norms.

However, industry observers equally fault government policy for neglecting minibuses while supporting rival modes. Approving extensive new bus and metro routes catered to by behemoths like KMB and MTR has eroded minibus niche areas. Critics accuse the government of deliberate undertakings to marginalize minibuses. Regardless of intentions, the predicament’s severity is apparent. Operators describe despair and demoralization at seemingly inevitable demise. The issue extends beyond individual bankruptcies to the public costs of losing affordable transport options that serve vital supplementary roles.

To reformulate policy effectively, the indispensable economic and social functions minibuses provide require recognition. While less glamorous than corporate bus fleets and sleek trains, minibuses fill crucial mobility gaps.

For many, especially the elderly, minibuses offer accessible connections not viable for full-size buses. Lines penetrating narrow neighbourhood lanes or carrying small passenger loads depend on minibuses. Likewise, they often maintain off-peak or intermittent schedules unprofitable for large operators. Losing these services damages mobility.

Moreover, minibuses promote fare affordability through market competition. Their existence compels reasonable pricing from major operators who might otherwise monopolize routes. Removing minibuses thus risks higher fares, especially burdening underprivileged groups.

Preserving these pro-consumer benefits for commuters and broader economic activity requires urgent policy solutions to stabilize the industry. Doing so also upholds Hong Kong’s reputation for free enterprise by allowing small businesses to fairly compete against quasi-state corporations.

Delivering targeted relief necessitates understanding minibuses’ distinct cost structure. Operating expenses range around HK$20,000 monthly excluding license mortgages. But plunging ridership leaves average daily revenues often under HK$1,000, an unsustainable gap.

Bridging this requires boosting ridership. The government can immediately help by approving new routes giving minibuses access to high-demand areas like new towns. Priority should also be given to transferring unprofitable routes from large bus companies to interested minibus operators.

In parallel, the government could offer direct fee waivers. Temporarily suspending license mortgage payments buys operators urgently needed breathing room during turmoil. This avoids painful repossessions while providing an opportunity to adjust business models.

Tax deductions on expenses likewise reduce cost burdens. Promoting minibus use through discounts for riders utilising electronic payments stimulates demand. Grants to upgrade vehicle fleets could also help minibuses better compete through enhancing comfort, connectivity and green credentials. Operators would gain impetus to invest if government assistance lowers upgrade costs. Hong Kong cannot sustain all transport modes indefinitely through direct subsidies, lest inefficiency result but targeted temporary relief helps minibuses overcome an extraordinary crisis not of their making. Losing these services leaves commuters stranded and Hong Kong less vibrant.