Govt-subsidised Hong Kong ferry firms cut fares due to excessive profits amid low oil prices
As a result of the low oil prices as of late, two government-subsidised ferry companies in Hong Kong are cutting fares by 10 percent from July as a way of sharing excessive profits with passengers.
Anthony Cheung Bing-leung, the transport and housing minister in Hong Kong, said on April 14, 2016, the discount could last for “several months”.
The South China Morning Post reported that the two government-subsidised operators are Hong Kong and Kowloon Ferry Holdings, and New World First Ferry, which operate routes connecting Hong Kong, Kowloon and the outlying islands.
Due to the falling oil prices and the operators’ increased non-fare revenues, Kowloon Ferry and First Ferry recorded profit margins of 21.4 percent and 9.8 percent respectively by the end of last year from mid-2014, when the government renewed their licences for three years until 2017.
Even after the discounted fares kick in from July, profit margins will still be 13.5 percent for Kowloon Ferry and 7.5 percent for First Ferry.
The discount can either cover the companies’ six subsidised island routes or all of the routes connecting Hong Kong and Kowloon.
The 10 percent fare reduction is considered substantial as both ferry firms had initially raised fares by around 6 percent after renewing their licences in mid-2014.
During a Legislative Council session, Cheug said: “We see the need for the operators to share their windfall profit with passengers.”
He added that such measures would continue if the companies continued making extra profits during the remainder of the licence period.
However, lower prices would apply to monthly tickets and weekday single journeys, but possibly not Sundays or public holidays.
Currently, Kowloon Ferry charges up to S$3.82 (HK$22) on weekdays and S$7.28 (HK$42) on Sundays and holidays, while First Ferry charges fares up to S$5.20 (HK$30) and S$7.46 (HK$43).
The minister said the government would also look at whether to extend the subsidy to the rest of the 14 licensed outlying island ferry routes.
Top photo via Simon_sees Flickr
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