[sustran] Re: Determining MRT fares?

[Jain Alok]

Ramon,

First to answer your question on how rail fares are determined. In Hong
Kong, rail fares are determined using a hybrid of distance-based and zonal
fare approach with due cognisance to affordability and fares on competitive
modes. And there is no direct fare subsidy from the Government. Of course
rail companies here run an efficient operation keeping the costs low
(HK$17.39 per car-km operated and HK$4.62 per passenger carried). Indirect
subsidy by allowing property development along the railway line is provided
and used mainly to fund new extensions.

A question back to you. In the Asia Rail conference last month in HK, Paul
Daza, VP, Metro Rail Transit Corporation presented a paper on MRT III
project which was scheduled to open sometime in Dec. (he did mention exact
date but I don't remember). Was he referring to the same line you have
written about in your mail? He elaborated in detail the operating
arrangement of these Metro lines (which I thought was quite odd and unique)
that MRTC would build it and lease it back to Government who will then
operate it. MRTC would be responsible for only maintaining the system. All
the revenue would be collected by Government which in turn would pay a fixed
lease amount to MTRC insuring their returns for any changes in ridership.
Please correct me if my undertstanding is not right.

Alok Jain
Hong Kong
-----Original Message-----
From: Ramon Fernan III [mailto:heckler at quickweb.com.ph]
Sent: December 3, 1999 7:10 PM
To: sustran-discuss at jca.ax.apc.org
Subject: [sustran] Determining MRT fares?


Like Bangkok, Metro Manila will begin operations of its newest Metro 
rail line on Dec. 15. This is the second metro rail in the area and 
has been given the fancy name of Metro Star Express. As with the 
Skytrain, there has been debate about what fare to charge. It's a BOT 
project so the builder wanted to charge Php 44 (Php 40.8/US$1) from 
Quezon City where it starts to Makati where it currently ends. It is 
not clear whether fares would be distance based although there is 
talk to that effect. Anyway, the operator said that they needed to 
charge this much in order to get economic returns although malls are 
being built at the major stops from which the operator will earn 
income (in fact, at its inception, the malls were included precisely 
so that fares could be kept low and the operator could recoup its 
investment from their operation rather than the fare). The current 
LRT in Manila charges a flat fare of Php 10 but the gov't claims it 
is subsidizing riders at the rate of Php 60 each!

There was supposed to be a public hearing held by the gov't (DOTC) on 
the issue of the fare and apparently there was public clamor to make 
it affordable to working people (who earn a mandated minimum of about 
Php 195/day). The DOTC Secretary then went ahead and endorsed the 
Metro Rail operator's fare structure anyway. (So much for 
public hearings.) However, President Estrada has ordered the 
fare lowered to Php34 for the full distance "for an experimental 
period."

For comparison's sake, an aircon bus charges about Php 20 for the 
full distance although one has to sit in traffic. Taxi fare is about 
Php 100. So, how do these things get decided anyway? What's a fair 
fare? Isn't it true that metro rail fares everywhere are subsidized? 


Ramon Fernan III