MTR Corporation set to cap fare increase at 3.09% amid economic adjustments

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1st March 2024 – (Hong Kong) The MTR Corporation’s annual fare adjustment mechanism is anticipated to reveal a maximum fare hike of 3.09% this month. This figure aligns with the upper limit regulation, tethered to the year-on-year change in median monthly household income from the previous year’s last quarter, which has been reported by the Census and Statistics Department on 29th February to have risen by 3.09%.

This year’s fare formula calculation is a delicate balance: 50% of last December’s Composite Consumer Price Index’s annual change combined with 50% of the nominal wage index change in the transport sector from the same period. The equation is further refined by a ‘productivity factor’ linked to MTR’s profit from property development in Hong Kong. Depending on the net profit margins after tax, reductions could range between 0.6% to 0.8%.

A fare adjustment is triggered if the calculated change reaches a threshold of 1.5%. However, should the fares be eligible for an increase, they cannot surpass the change in median monthly household income from the last quarter of the previous year.

While the nominal wage index in the transport sector for last December and MTR’s property development profits for the previous year remain undisclosed, the annual change in December’s Composite Consumer Price Index has been published at 2.4%. If last December’s nominal wage index change tallies between 1.8% and 2.2%, it will meet the 1.5% trigger for fare adjustment.

There is, however, the potential for the MTR Corporation to apply a delayed 1.85% increase from the previous year, which could suggest a potential overall hike of 5.45%. But, due to the capping mechanism, only a 3.09% rise can be applied, with the remainder deferred.