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KCRC sees little gain in railway merger plans 2.
Doonesbury by Gary Trudeau
1. KCRC sees little gain in railway merger plans
Staff
reporters, The Standard 25 October 2002 The
Kowloon-Canton Railway Corporation (KCRC) has expressed reservations about the
proposed rail merger with the Mass Transit Railway Corporation (MTRC) as it expects
to gain little from the exercise, according to market sources. The
KCRC - which is expected to generate healthy profits from its newly constructed
railway lines - is worried that it will receive less fare income after the merger. The
KCRC also believes the merged rail corporation may face increased pressure to
raise fares due to unstable property revenue generated by the MTRC and shareholders'
higher expectations on returns. It
fears that fare income reaped by the new company will decrease, as at least 400,000
passengers will capitalise on lower fares offered by the new company. The
KCRC's board of directors had reached a consensus that ``the merger of two railways
was unfavourable for KCRC'', according to a report in the Ming Pao newspaper. It
is also understood that the government has begun a feasibility study on the rail
merger based on three options. The
study, by the Environment, Transport and Works Bureau, will look at a complete
merger, a partial merger or enhanced co-operation between the two railways by
unifying fares and journey transfer discounts. Sources
said the government was wary of the partial merger option as it would have to
buy all infrastructure assets from the two corporations and form a new company
to run it all. The
two railways are believed to be talking over the option of enhancing business
co-operation, on the basis that both parties would continue to maintain their
respective current incomes. Senior
government officials are expected to make a decision on the options by the end
of next month. Meanwhile,
sources said the government was considering inviting MTRC chairman Jack So to
chair the new rail company after the merger. He was earmarked for his outstanding
performance in managing the MTRC, the sources said. So
said yesterday he had not been notified about any appointment. It
has been reported that So has expressed his intention to step down from his present
position after KCRC chairman Michael Tien was hotly tipped to head the merged
railway. But
So said yesterday that he had no plan to resign. He reiterated that he was in
discussions with the government about renewal of his contract which will expire
next year. So
earlier told the Legislative Council that he backed the merger of the two railways,
saying the move would be in the best interests of both public and staff. The
merged company will have a net asset value of more than HK$110 billion with substantial
property developments atop its stations. So
said the merger would also cut costs, save passengers time and energy switching
lines and facilitate the government's launch of the second batch of railway stock.
2. Doonesbury by Gary Trudeau
SCMP, 25 October 2002 
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