Chu Kong Shipping Enterprises (Group), the state-owned firm whose subsidiary won Hong Kong’s first water taxi tender last month, will acquire 60% of local ferry firm New World First Ferry (NWFF) from NWS Holdings for HK$232.8 million.
NWFF runs a fleet of island and harbour ferries, including routes across Victoria Harbour, island services to Cheung Chau and Mui Wo and an inter-island shuttle between Peng Chau, Mui Wo, Chi Ma Wan and Cheung Chau. The firm’s profits fell steeply to HK$30.3 million in 2019, adding to the woes of the loss-making Transport segment of current full owner NWS Holdings.
The new majority owner will enjoy only a brief period operating two of NWFF’s major routes: NWFF will reach the maximum allowed 10-year licence tenure for Central-Mui Wo and Central-Cheung Chau in March next year. Under the Ferry Services Ordinance, all six outlying ferry routes must be redistributed among existing operators or opened to new entrants at that time.
The government has been heavily subsiding the outlying island routes, and says operators have been “struggling to stay financially afloat”. The operators of the six major island routes would collectively make a loss of HK$700 million from 2021-2026 under current licence terms, says the government and, without the hefty subsidy, would need to raise ferry fares by around 40%. But with government subsidies, fare increases should be nearer to 5%.
The government recently announced it would launch a new HK$5.8 billion Vessel Subsidy Scheme (“VSS”) to replace the fleets of 11 ferry routes, including the six outlying island routes, and introduce greener vessels. The new ferries will be faster, lighter, and, although the majority will be diesel, they will be powered by IMO Tier III-compliant engines. The new ferries will also feature air-conditioned cabins, wheelchair accessible toilets and breastfeeding rooms.
Chu Kong Shipping Enterprises says the acquisition will “further complement the existing business of the Group and enhance the Group’s competitiveness in passenger transportation business.”