MTR’s proposed fare increase of 2.55% is on ice for at least a year after a decline in household monthly earnings for the fourth quarter of last year triggered the “Affordability Cap” in the Fare Adjustment Mechanism.
MTR is allowed to raise fares according to a complex formula based largely on inflation and a transport wage index. With inflation and transport wages up for December 2019, the firm could hike prices 2.55%.
But under government rules and the Affordability Cap mechanism, MTR is not allowed to raise fares more than the increase in average household earnings for the previous quarter: since monthly household income dropped 2.48% in the last quarter, the fares must effectively be frozen.
However, while suspended, MTR’s raise is not forgotten: the firm can recoup the adjustment in the coming years. “After discussion with the government, we will simplify the arrangement by recouping the fare adjustments in the subsequent two years: 1.28% to be recouped in 2021/22 and 1.27% to be recouped in 2022/23,” the firm says.
To support passengers, MTR says it will increase its “Octopus Trip Rebate” from 3.0% to 3.3% at the end of June, while extending that scheme until 1 January 2021.
As such, MTR says the actual Octopus fares paid by passengers will have remained unchanged for two consecutive years since January 2019. The “Early Bird Discount Promotion”, popular with early commuters, is extended for a year until 31 May 2021.
MTR says the promotions and rebates are worth around HK$800 million in total, including over HK$700 million in fare promotion packages.
The firm will also continue to offer over HK$2.6 billion in ongoing fare concessions to the elderly, children, eligible students and people with disabilities, over the year to 31 May 2021.
“MTR is rooted in Hong Kong and has been walking together with Hong Kong people for over 40 years. Both MTR and Hong Kong people are hard hit by the pandemic but in spite of our difficulties, we are rolling out different measures and arrangements to alleviate the situation as much as we can,” said Jeny Yeung Mei-chun, Commercial Director of MTR Corporation.