Govt promises review after doubling subsidies to private ferry operators

After doubling subsidies for private ferry operators, the government has promised a review of the viability of islands services – but has made it clear it will resist making any major changes.

In the new three-year licensing period, which started on July 1, the Transport Department will tip HK$412 million in public funds into the biggest ferry companies.

These so-called Special Helping Measures (SHM) are in addition to other government support, such as the waiving of fuel duty and footing the bill for pier maintenance. The department does not put a value on these, but says that without the SHM fares will have to rise by 30%.

The current SHM are up 115% from the HK$190 million subsidy in the previous period and will go to just two companies – New World First Ferry (NWFF), which runs the Mui Wo and Cheung Chau routes, and Hong Kong and Kowloon Ferry (HKKF), which services Peng Chau and Lamma.

The other six outlying island ferry operators will receive no cash at all. In a paper to Legco, the Transport Dept acknowledges that some of these are running at a loss, but offers no explanation as to why only the biggest and best-connected firms receive financial support.

The subsidy has grown substantially since introduced in the 2011-2014 period at just HK$112 million.

It applies to eight different areas of ferry operation, the biggest of which is for vessel maintenance, which accounts for nearly 60% of the HK$412 million. For the first time, it also includes a subsidy for depreciation, which the department says will go to the acquisition of two new vessels.

To put the latest SHM into perspective, they are nearly half as much again as the HK$280 million invested by NWFF, the biggest operator, in its fleet.

The escalating outlays reinforce the criticisms of the ferry system that it is fragmented and unprofitable and that the three-year licensing term discourages operators from investing in their fleets.

The Transport Dept says it will review the long-term financial viability of the current system in 2019, including the possible extension of licence periods.

But it says that the idea of the government procuring vessels and outsourcing the operations breaches policy of putting all public transport in the hands of private companies.

The Islands District Council last month passed a motion calling on the government to conduct the review this year. Assistant Transport Commissioner Irene Ho, who attended the meeting, saying it involved a lot of complicated issues.


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