The Unique Genius of Hong Kong's Public Transportation System
The use of a clever financing system has enabled the territory to provide world-class service—without breaking the bank.
Passengers walk out of MTR railway carriage featuring Disney characters in the Sunny Bay station in Hong Kong. (Paul Yeung/Reuters)
New Yorkers are famous for complaining about the city's subway: despite an ever-increasing rise in fares, service never seems to get any better. And even still, ticket-sales still only funds part of the New York City subway system; the city still relies on supplementary taxes and government grants to keep trains running, as fares only cover about 45 percent of the day-to-day operating costs. Capital costs (system expansions, upgrades, and repairs) are an entirely different question, and require more state and federal grants as well as capital market bonds. And New York’s system is not unique: as in other cities, New York struggles to pay existing expenses and must go into debt to pay for upgrades, that is, without raising prices.
Is this problem intractable? Not exactly. Take Hong Kong for example: The Mass Transit Railway (MTR) Corporation, which manages the subway and bus systems on Hong Kong Island and, since 2006, in the northern part of Kowloon, is considered the gold standard for transit management worldwide. In 2012, the MTR produced revenue of 36 billion Hong Kong Dollars (about U.S $5 billion)—turning a profit of $2 billion in the process. Most impressively, the farebox recovery ratio (the percentage of operational costs covered by fares) for the system was 185 percent, the world's highest. Worldwide, these numbers are practically unheard of—the next highest urban ratio, Singapore, is a mere 125 percent.
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