HK Tramways increases fare to counter revenue decline from ads and passengers

Hong Kong Tramways is set to increase its fare on trams by 15.4% in July due to its diminishing profit margin. Hong Kong Tramways’ revenue is mainly comprised of passenger fare and non-fare box revenue from advertising. Passenger fares accounted for some 50% of Hong Kong Tramways’ total revenue in recent years. 

Hong Kong Tramways' advertising revenue has been decreasing over the years too, from HK$120.7 million in 2018 to HK$107.6 million in 2021. According to Hong Kong Tramways, the potential to further increase advertising and other non-fare box revenue was limited, as all tram bodies in general carried advertisements and most tram stop shelters with commercial potential were utilised.

Under the new pricing scheme, passengers aged 12 or above will pay HK$3 from 11 July 2022 onwards, up from the current HK$2.6. At the same time, fares for children aged 3 to 11 will increase from HK$1.3 to HK$1.5. The monthly ticket will be priced at HK$260 after the fare adjustment, up from HK$220. A government spokesman said that the Hong Kong government should ensure that Hong Kong Tramways would have the sound financial capability in providing economical, efficient and quality tram services at reasonable fares.

"It has a unique historical significance and has always been received by the local community and visitors, and has represented the collective memory of Hong Kong citizens. Furthermore, Hong Kong Tramways has implemented various improvement projects and introduced innovative measures to enhance tram services to provide a safer and more comfortable experience for passengers, while preserving its historical value. Having considered all relevant factors, the government considered the fare increase necessary for maintaining Hong Kong Tramways' stable operation, and the proposed increase level by Hong Kong Tramways is acceptable," the spokesman said.

The government added that Hong Kong Tramways' profit margin plunged from 18% in 2018 to -1.3% in 2021. "Given its prevailing financial situation, the fare adjustment is necessary for maintaining its financial sustainability," the spokesman said. Commenting on the fare rise, Peter Shiu, the Liberal lawmaker representing the wholesale and retail functional constituency of Legco said: “It’s hard for retailers to gain sales under the pandemic, leading to fewer advertisements, so raising the adult's fare to HK$3 is acceptable.”

Shiu also noticed that the tram operator has been incorporating noise-reducing elements on tram tracks, which might also result in a rise in operating costs.

According to a fare increase application document submitted to the Legislative Council Panel on Transport, Hong Kong Tramways has about 510 employees, operating 168 trams and running seven lines. It has been providing satisfactory service to passengers over the years too. From 2018 to 2021, the number of complaints received per million passenger journeys by the Transport Department against Hong Kong Tramwayd per year remained at a low level from 1.2 to 2.3. The trams carried about 50,000 passenger trips per day, and been facing competition from other means of public transport. Additionally, the current adult fare at HK$2.60 is 38% lower than the cheapest bus route serving the northern shore of Hong Kong Island too.

As one of Hong Kong's most iconic public transport, organisations in the city sometimes sponsored free tram rides to engage the public. For example, it had a new collaboration for its charity programme called “Free Ride Day,” with the fan club of Hong Kong idol Keung To, KeungShow HKFanClub.

The fan club sponsored a free tram ride day on 30 April, which served as a gift to Keung, whose birthday falls on the same day. According to a press statement, this gesture also aimed to spread messages of love and positivity to the Hong Kong community. Keung’s fan club additionally sponsored the Free Ride Day in alignment with the idol’s own charitable work. The Free Ride Day was touted as the first-of-its-kind, having been initiated and sponsored by a local community group – Keung’s fans. Hong Kong Tramways also devoted its own resources and manpower alongside Keung’s fan club for the event, which included organising a fan-chant charity event, which the company hoped to bring the city some joy amidst the pandemic.

In a previous interview with MARKETING-INTERACTIVE, Nixon Cheung, head of commercial and brand at Hong Kong Tramways said after a century of existence, the brand wanted to remain an icon of the city that would make Hong Kongers proud. Cheung shared that the company had also tied up with the Hong Kong Philharmonic Orchestra, and the renowned musician Chiu Tsang Hei, to re-arrange a music piece by using the very signature “Ding Ding” sound.

"We see this as an amazing way to make our brand’s famous sound even more memorable, and to cope with our lifestyle image as perceived by many,” he said. Cheung added that the brand took great pride in its history and the image it has been creating since 1904, and truly believed that while it may be “old in age”, it remains “young at heart”.

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