Reading Passage 1
Hong Kong’s World-Beating Subway System – the MTR
Everywhere around the world, in many major urban centres, subway systems are struggling to cover costs, to invest capital in maintenance systems and expensive upgrades, and to attract passengers. Metro systems go cap-in-hand to central and municipal governments seeking funds and guarantees of continued existence, while plans of development and extension of lines and services are often shelved. In New York, for example, fares cover only 45% of operating costs, which means transport taxes and government grants are required to keep the trains operating, and the transit system must go into debt if it considers upgrades or expansion, and, worryingly, often just to keep trains rolling with repairs and maintenance. However, one system, in one major metropolitan centre, has bucked the trend, and is operating not only at a profit, but at a standard so high that other cities can only look on with envy. Hong Kong’s ‘farebox recovery ratio’ – the percentage of operating costs covered by fares – is at an astonishingly high level of 185%. The next highest urban ratio, that of Singapore, is healthy, but, next to Hong Kong, it has a ways to go, at 125%.
Hong Kong’s Mass Transit Railway Corporation, which manages the MTR and the bus system, is acknowledged to have set the benchmark for transit management worldwide, and in 2012 the MTR generated revenue of 36 billion Hong Kong dollars – roughly USD5 billion – and that included a profit of HKD2 billion. How do they do it, and with a system that is so advanced that it is a model for many other cities, when so many other mass transit systems struggle? The answer is not an easy formula, but a complex arrangement of business acumen, wise investment, tough management and innovative concepts.
The history of Hong Kong’s MTR is relatively short when compared with London or Paris or other large urban centres. In the 1960s, the then-Hong Kong government commissioned a study on finding solutions to the worrying road congestion which accompanied Hong Kong’s growing economic status as a regional, and increasingly global, industrial and commercial hub. Construction began on rapid transit after the study was tabled in 1967, and the first line, running from Shek Kip Mei Stationto Kwun Tong Station, began carrying passengers in 1979, and in 1980 the first harbour crossing was undertaken to Chater Station, now called Central Station. The system was an instant success, and trains were immediately upgraded to six carriages to accommodate the increased passenger numbers, and the plans for extension, which had been drawn up along with the original proposals, were soon actioned with further construction undertaken. In the early 1980s, further plans for construction were put in place, and then begun, for tunnels to be built connecting mainland Kowloon with Hong Kong Island. With the planned move of Hong Kong’s International airport, Kai Tak International, to Lantau Island, it was recognized that mass transit was necessary for the movement of people to make the airport viable, and this was best achieved by rail. Both the new Chek Lap Kok International Airport, and the new Lantau Airport Railway, opened in July, 1998.
Hong Kong’s MTR’s success has been carefully built on a series of successful business innovations which have all contributed to the remarkable return on investment, the successful integration of the transport system into the day-to-day functioning of the city, and the long-term involvement of the system in the projected growth of the district. Examples of this are the low fares, the multiple-fare system, the use of the Octopus Card and its ultra-modern ‘wave-and-go’ technology, modern rolling stock (carriages and engines), and high-level, and highly publicized, on-time achievement rates. The MTR has consistently reached a 99.9% on-time rate, one of the highest for major metropolitan centres, and this concept is taken so seriously that the corporation is penalized if it fails to meet pre-determined targets. Other areas that the MTR has targeted to encourage patronage have included the promotion of Art projects, including live performances and art exhibitions, by students and emerging and established artists, and open galleries. Modernisation goals have seen the introduction of PSDs, Platform Screen Doors, to control air conditioning, and for platform security, and visual identity systems for logos, signage and delivery systems for service vehicles, and for passenger information.
However, the area of greatest commercial growth has been in what has been termed ‘Value Capture’. The MTR has recognized that it is part of an urban environment, with its own unique dynamic window, its requirements, opportunities and growth possibilities. Being part of one of the world’s most densely-populated urban environments, and being a relatively new transit system, with a modern outlook, has given the MTR the chance to capitalize on a constantly changing, and growing, transportation environment which is increasingly recognized as essential in a functioning urban location. ‘Value Capture’ has been most noticeably recognized in the concept of the MTR working with separate business entities, such as shopping malls, as part of an integrated business entity, that is, metro lines have been designed to work with, and be placed in conjunction with, shopping malls, office towers and business properties, some of which the MTR even owns. In other words, the MTR has a direct interest in not only controlling the means of how passengers travel, but also recognizing the destinations to which they travel. Further, many of the MTR’s stations located within Hong Kong central itself have multi-storey shopping complexes, again, a draw, and a means of transport, for consumers and passengers.
It is interesting to note that the rules have changed, and Hong Kong’s MTR is one of the game changers. From being an urban transit system, the corporation has moved beyond a metropolitan environment to embrace a global business plan, and beyond. The urban rail corporation is now running Australia’s Melbourne rail system, Sweden’s Stockholm rail system, it has controlling interests in lines on the London Underground, and its planning department is contracted to design and run light rail systems in mainland China. Property management is another key development area, as it was recognized earlier that carrying passengers is only one aspect of a transit system—the other being the recognition of the destination, which helps determine the placement of lines, and purposes. Carrying nine million passengers daily, just below Tokyo’s record-setting tallies, Hong Kong’s Mass Transit Railway is a model for the present, and with continued good business direction, for the future as well.