MTR's Fare Formula To Be Linked To Property Profits

The Executive Council on Tuesday approved a decision to link the MTR's fare formula directly to the railway company's property profits, which means the more it earns, the smaller the fare hikes will be.

Currently, fare changes are calculated by a formula, which takes into account factors such as the inflation rate and a wage index of transport workers. The formula also includes a “productivity factor” that is subtracted from the calculated amount.

Under the latest change that will take effect in June, the "productivity factor" will be linked to the MTR's post-tax property profit. The subtraction level will be set at 0.6-0.8 percent depending on the profit earned.

Transport minister Lam Sai-hung called the revised formula a "breakthrough", adding that authorities had made the adjustment after considering the huge demand for MTR properties.

"We have heard noises loud and clear from the general public that the profit of MTRCL, in particular those derived from property development has been huge, and that is why we would like to link the Hong Kong property development profit to the formula," he said.

Lam said the company will also offer a one-off fare reduction of 1.2 per cent, and defer the implementation of 1.85 percent of this year's fare adjustment rate to next year.

At the same time, the maximum amount the MTRC has to pay back to passengers for every service disruption will be raised from HK$25 million to HK$40 million. If the disruption happens during rush hours, the penalty will be raised by a further 20 percent.

Last year, the railway giant recorded a net profit of HK$10.4 billion from property development, 12 percent up from 2021. MTR fares have been frozen three times in the past six years, with only one reduction in 2021.