Review of Regulation Effects on Metro Railway Success - Hong Kong Metro

Wai Yip Street

KowloonHong Kong

Andrew McCusker


Objective: Provide Advice on the Regulation of Fares to the HongKong Government - Leg Co.

The Chairman of the Hong Kong Mass Transit Corporation (MTRC) was concerned about proposed legislation that would increase the level of regulation that the local legislative body, LegCo, could apply to MTRC. An earlier review by financial experts confirmed that the proposed changes would increase the cost of financing railway development in Hong Kong. The Chairman asked the RTSC to assess the impact of higher regulation by considereing the effects of this approach elsewhere in the world.


Methodology / Analytics: Comparison of different world metros’ performance under widely varying regulatory regimes

The RTSC are the consultants  to CoMET, the benchmarking consortium of  eight of the world’s largest metro railways. This provided an excellent starting point for this analysis. The data was augmented and the sample size increased to include more Asian metros. The various regulatory regimes were assessed and evalutated on a scale of 1 to 10. Correlation analysis was then undertaken to provide insights.


Results: Identification of Best Practice for Metro Railway Regulation

The analysis confirmed the fairly obvious conclusion that successful, fast growing urban areas have reliable, cost effective urban railways. Less self evident, but with a higher level of confidence was the correlation of the success of those railways to low levels of regulation. Whenever regulation levels were higher, metro success was lower in reliability, unit cost and particularly financial performance measured in terms of system investment and the extent to which fares cover operating costs. These were presented to the MTRC Board and the responsible LegCo sub-committee. The result was that the legislative proposal to increase the level of regulation was defeated.