Abstract:
Hong Kong has a world-class mass transit system and using the railway as the backbone of the public transport system is a stated government policy. With over 39.6% of daily commuters using the railway, rail fares have become a sensitive issue. Prior to 2007, Hong Kong has two railway operators, the Mass Transit Railway Corporation and the Kowloon-Canton Railway Corporation. The two corporations were merged in 2007 and the adoption of a more objective and transparent Fare Adjustment Mechanism (FAM) was one of the several parameters set down by the Government of Hong Kong for the rail merger negotiation back in 2004. For public transport regulators around the world, it is of interest to understand the basis for an objective fare adjustment mechanism and why despite the ‘objectivity’ there continues to be issues of concern and criticisms.