Hot Topics: What’s a fair fare? Here’s why Hong Kong’s Star Ferry and bus companies have asked to raise prices

Hong Kong’s Star Ferry service last month asked to double fares on two routes across Victoria Harbour. This is happening as its passenger numbers and income fall and it faces tough competition from other transport operators.

The fare application was revealed in a paper submitted by the Transport and Logistics Bureau to the legislature on November 21. Among other increases, the company wants to raise adult upper-deck fares on the Central-Tsim Sha Tsui route from HK$3.20 to HK$6.40 on weekdays and from HK$4.20 to HK$8.40 on weekends and holidays.

The ferry service also said it wanted to stop its 20-year tradition of free trips for elderly people.

In 2021, the ferry service increased fares by an average of 16.5 per cent. Still, the operator’s income dropped by about 47 per cent compared with 2018. There were an average of 10,700 trips a day in March – this is just 20 per cent of the levels recorded in March 2018.

In recent months, the city has relaxed its tough travel restrictions, but it is still unclear if visitors – which the company relies on – will return to the city. The paper submitted to the government was not hopeful that Star Ferry’s passenger numbers would increase in the future. The government explained that the company faced competition from other public transport services, as well as changes in people’s work and travel patterns.

The company’s operating costs are also expected to rise because of increased staff costs, vessel maintenance expenses and higher fuel prices.

Legislator Ben Chan Han-pan is from the Democratic Alliance for the Betterment and Progress of Hong Kong. Chan added that the proposed increases could hurt rather than help the service.

“I worry the fare increase may lead to a decrease in patronage as it will have a similar price to the railway company and the loss might outweigh the gain,” he said. He added the adult railway ticket price from Wan Chai or Central to Tsim Sha Tsui was around HK$10 and the ferry’s proposed fare increase should be no more than HK$2.

Staff writer

Question prompts:

• List THREE reasons Star Ferry gave for the proposed fare hike.

• To what extent do you agree with Chan that the proposed increases could hurt rather than help the service? Explain using Context and your own knowledge.

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• Why might the Star Ferry company agree with the official on the right side of the cartoon?

• What is meant by the word “uptick” in the cartoon? How has the Star Ferry company responded to the “uptick of incoming visitors” to Hong Kong?

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• Various lawmakers urge the government to curb Star Ferry’s proposed fee rise, saying the latest proposals would further threaten the ferry’s survival

• Deputy transport secretary Amy Wong says that the government will weigh up public acceptance and lawmaker feedback before deciding on final price rises

Hong Kong’s Star Ferry has gone overboard with a proposal to double its fares, transport authorities have said, promising the final increase would account for the company’s financial difficulties and the public’s willingness to absorb another price rise.

Deputy Secretary for Transport and Logistics Amy Wong Pui-man made the pledge last month to lawmakers, who called the requested price increase “shockingly high” and urged the government to look into how the company’s piers could be rejuvenated to boost their business.

“What we gather from the lawmakers is that Star Ferry has a valid reason to ask for fare increases, but asking to double fares is way too much,” Wong told the transport panel members.

“We also think that the proposed fare rises are high, and we’ll balance different factors, such as public acceptance, before deciding on the final fare rises.”

Wong said the government would come up with a revised proposal for the Executive Council’s approval after taking into account lawmakers’ opinions and consulting the Transport Advisory Committee.

Various lawmakers have called on the government to curb the price rises, saying the latest proposals are likely to drive away the public and threaten the ferry’s survival. But they all agreed the Star Ferry was an iconic tourist attraction, and the government needed to think of ways to diversify its revenue.

“It seems that the Star Ferry is now drinking poison to quench a thirst by asking for the high fare rise to ease its financial difficulties,” said legislator Chan Hok-fung of the Democratic Alliance for the Betterment and Progress of Hong Kong. “But there will be a higher chance that it will push itself to a dead end as passengers will look for alternative transport means.”

Tourism lawmaker Perry Yiu Pak-leung agreed: “Even if Star Ferry doubles its fares, it is difficult to be sustainable. The government should develop Star Ferry as a cultural tourism attraction to boost the firm’s vibrant growth.”

Staff writer

Question prompts:

• Are Star Ferry’s new proposed fares justified compared to its previous price increases? Explain using Glossary, Context and News.

• Using your own knowledge, provide TWO suggestions to Star Ferry about how it can capitalise on its status as a cultural tourism attraction to diversify its revenue.

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• Franchised bus operators have submitted fare increase applications to raise charges by 10 to 20 per cent

• Transport authorities say a variety of factors will be considered, including operating costs, estimated profits, fare affordability and service standards

The Star Ferry fare changes are among a flurry of transport price increases on the cards for Hongkongers. The Transport and Logistics Bureau last month said the city’s franchised bus firms applied for the fare rise earlier this year, with the increases sought ranging from 10 per cent to 20 per cent.

Operators cited higher operating costs and falling passenger numbers amid the Covid-19 pandemic.

The applicants were KMB, the city’s largest bus operator, its sister company Long Win Bus, Citybus and New World First Bus. A spokeswoman for Citybus and New World First Bus said they were grappling with inflationary pressure on their operating expenses, such as a 10 per cent increase in fuel costs and a pay rise of 4.5 per cent for staff.

“We also believe there is an underlying need to review the current public transport fare levels to ensure financial sustainability of the franchised bus services, such that we can continue to provide high-quality, essential bus services to the public,” she said.

The bureau said several factors would be taken into account, including the bus firms’ operating costs, estimated returns and profits, fare affordability and service quality and quantity.

Quentin Cheng Hin-kei, a spokesman for commuter concern group the Public Transport Research Team, said the timing of the applications was unfortunate, but it was understandable the firms sought hefty fare increases due to the huge losses they suffered during the pandemic.

“Usually bus firms need to wait for a long period of time before they can introduce fare rises ... But the applications have been made at the wrong time when everybody is still being hard hit by the pandemic, especially the lower income groups,” he said.

Cheng suggested the government introduce some one-off relief aid to bus firms in exchange for a lower fare rise. “If the bus firms are allowed to drastically increase fares, people will flock to the MTR instead which will create another vicious cycle for the transport industry,” he said.

Staff writer

Question prompts:

• Use Context, News, Glossary and Issue to explain TWO similarities and TWO differences between the predicaments that the Star Ferry and the bus companies are in.

• Would Cheng’s suggestion be applicable to the Star Ferry? Explain.

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Context:

• List THREE reasons Star Ferry gave for the proposed fare hike. fall in passenger numbers and income due to the pandemic; tough competition from other transport operators; changes in the work and travel patterns of the public; increased staff costs; vessel maintenance expenses; higher fuel prices (any three)

• To what extent do you agree with Chan that the proposed increases could hurt rather than help the service? Explain using Context and your own knowledge. I agree with Chan that the price increase would end up making Star Ferry less competitive compared to other transport services in terms of prices, and existing passengers might opt for other forms of transport that are much more convenient. (accept other reasonable answers)

Cartoon:

• Why might the Star Ferry company agree with the official on the right side of the cartoon? The Star Ferry relies on tourists and its passenger numbers are still too low to sustain its business operations.

• What is meant by the word “uptick” in the cartoon? How has the Star Ferry company responded to the “uptick of incoming visitors” to Hong Kong? The word “uptick” means a small increase. Since there are not enough visitors to bring up Star Ferry’s passengers, the company has responded by proposing increased fares.

News:

• Are Star Ferry’s new proposed fares justified compared to its previous price increases? Explain using Glossary, Context and News. Yes to a certain extent, because Star Ferry is facing a double whammy of increased operating costs and falling revenue. Without government intervention, the company’s only option is to increase fares. (accept other reasonable answers)

• Using your own knowledge, provide TWO suggestions to Star Ferry about how it can capitalise on its status as a cultural tourism attraction to diversify its revenue. organise special themed tours for tourists / collaborate with the Hong Kong Tourism Board to produce a documentary about the history and cultural heritage of the Star Ferry to raise awareness about the company’s services / partner with local companies to host specific holiday celebrations (accept other reasonable answers)

Issue:

• Use Context, News, Glossary and Issue to explain TWO similarities and TWO differences between the predicaments that the Star Ferry and the bus companies are in. Both services have been affected by the pandemic, which has led to falling passenger numbers and higher operating costs. The companies have also continued to be in the red despite raising fares recently. One difference between them is that the bus operator’s proposed fare increases are about 10 to 20 per cent, whereas the Star Ferry has proposed doubling its prices. Another difference is that the Star Ferry will apply to join the established HK$2 flat fare scheme for the elderly and disabled, which buses already use.

• Would Cheng’s suggestion be applicable to the Star Ferry? Explain. His suggestion may work in the short term as it would help to cushion Star Ferry’s operating costs. But in the long run, it would not be as effective because the company relies on tourists, and it is unclear when they will return to the city. Star Ferry needs to find other alternatives to maintain the sustainability of its services.