The tram would remain the cheapest form of public transport on Hong Kong Island even after a 15% fare hike

Hong Kong’s iconic tram is at risk of failing if a fare hike is not approved, according to documents submitted to LegCo by the Transport and Housing Bureau (THB) this week.

According to THB, Hong Kong Tramways (HKT) proposes to raise adult and child fares 15.4% to $3 and $1.5 respectively while cancelling its 4-day $34 Tourist Ticket altogether. Elderly fares would rise ten cents to $1.3 under the proposals.

The fare hike would be the first since 2018 and is, THB says, essential for a “sustainable” business operation.

The current adult fare of $2.6 is 38% lower than the cheapest bus route serving the northern shore of Hong Kong Island.

The paper submitted by THB for lawmaker discussion reveals the firm operates its 168 trams with just 510 employees.

Fares account for half of the firm’s revenues and have declined somewhat in recent years, with fare revenue down 12% on 2019 and passenger numbers down around 15%.

The LegCo paper blames HKT’s declining customer base on the $2 fares offered to elderly across buses and MTR.

“With the extension of the $2 Scheme to cover passengers aged between 60 and 64 from February 2022 it is expected that more passengers in this age group will choose other transport modes, thereby driving down HKT’s patronage,” says the brief.

Meanwhile costs have risen 10.5%, rising from $206.9 million in 2018 to $228.5 million in 2021.

THB says staff costs account for around 70% of its expense, with 10% on repair and maintenance and 20% on electricity, depreciation and miscellaneous expenses. As such, THB says, HKT has limited scope to cut costs, while its advertising revenue is already maximised.

“Even after taking into account subsidies […], it is estimated HKT will have difficulty sustaining its business,” warns THB in its LegCo brief.

Hong Kong Tramways has shown some innovative advertising campaigns, including creating a special colour for the tram and giving free rides on Keung To’s birthday

Despite THB’s pessimism on HKT’s advertising potential, the company has shown some innovative approaches to stretching the value of its advertising space. Last year the firm unveiled a partnership with colour matching giant Pantone, creating a new colour HK Tram Green with the Pantone Color Institute.

And trams have also managed to stay relevant with younger audiences, winning the high-profile “birthday tram” deal for Mirror star Keung To, paid for by Mirror fan clubs.

In July 2021, HKT’s boss Cyril Aubin offered everyone in Hong Kong a “free week” of tram rides onto celebrate Hong Kong’s Olympic success: that free week has, as yet, failed to materialise, with the firm said to be looking for a sponsor for the deal.

LegCo’s Transport Panel will discuss the fare issue on Friday 20 May, after which THB will seek the views of the Transport Advisory Committee before making recommendations to the Chief Executive in Council.