28th March 2023 – (Hong Kong) Hong Kong’s MTR Corporation has announced the end of its three-year freeze on fare increases. The government’s statistics department revealed that the nominal wage index for the transportation industry rose 3.6% YoY in December 2022. According to the latest fare adjustment formula, the increase is expected to be 2.3%, slightly lower than the government’s earlier estimate of 2.45%. As an example, the current adult Octopus fare for a single journey from Tai Po Market to Admiralty is HK$18.9, estimated to increase by 4 cents to HK$19.3.
Last week, the MTR Corporation announced the results of its review of fare adjustment mechanism. The revised formula now uses two reference points, including the December 2022 Composite Consumer Price Index and the nominal wage index for the transportation industry. After dividing each by two and subtracting the productivity factor, the two numbers are added. However, the calculation of the productivity factor has been revised. Instead of calculating the annual growth rate of the MTR’s operational revenue, it is now based on the level of property development profits in Hong Kong, ranging from 0.6% to 0.8%. Since last year’s profit exceeded HK$10 billion, this year’s decrease is the upper limit of 0.8%.
Using the above formula, the December 2022 Composite Consumer Price Index was 2%, and the nominal wage index for the transportation industry was 3.6%. After subtracting 0.8%, the result is 2%. Taking into account the 0.5% deferred fare increase transferred from last year and the 2.85% deferred fare increase from previous years due to the fare ceiling mechanism, including a 1.2% special deduction for offsetting, the remaining 1.65% will be dealt with next year. In addition, the MTR “adds” 0.2% of this year’s fare increase to next year’s calculation. Therefore, this year’s actual fare increase will be 2.3%.
The news of the fare increase has sparked criticism from commuters, who have been hit hard by the pandemic’s economic impact. With many struggling to make ends meet, the increase in public transportation costs will undoubtedly cause financial pressure for many. However, the MTR Corporation has defended the decision, stating that the fare increase is necessary to cover rising operational costs and support ongoing investments in upgrading the rail network.