NWS Holdings (0659), the infrastructure and service flagship of New World Development (0017), said that it has applied to raise bus fares by 12 percent as passenger numbers have been declining following the MTR Corp Ltd's (0066) expansion of its services.
Although fuel costs have dropped through hedging, revenue has fallen significantly after MTRC's extension of its Kwun Tong Line services and the opening of its South Island Line, NWS said. It also blamed a spike in operating costs.
NWS Holdings chief executive Tsang Yam-pui said Citybus and New World First Bus have applied to the Transport Department to raise fares by 12 percent, with effect from January 2018.
The adverse impact of the falling number of riders has been mitigated as NWS Transport Group became a wholly owned unit of NWS Holdings. As a result, revenue of NWS Holdings' transport business grew 13 percent to HK$222.3 million.
"According to the Fare Adjustment Mechanism, NWS Holdings can apply to authorities for a fare increase of up to 18.9 percent. Therefore, the newly suggested fare is reasonable and restrained," Tsang said.
He believes the fare hike application will be favorably considered since Citybus and New World First Bus have kept their fares unchanged for nine years. He added that the fare hike sought by NWS Holdings is unlikely to have a significant adverse impact on riders.
NWS Holdings' net profit for the year to June rose 14.6 percent year-on- year to HK$5.63 billion. Its board recommended a final dividend of 39 HK cents per share and a special final dividend of 72 HK cents per share.
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