A trigger mechanism to review public transport fare levels regularly, and the imposition of a 10% fare-revision cap have been proposed.

A price-cap formula will also be developed to work out the adjustment rate. It will involve operators' growth in productivity, operating costs, consumer price indices, the oil price index, as well as interest rates.

Secretary for Environment, Transport & Works Dr Sarah Liao said the proposal aims to develop a more objective and transparent process for public transport fare adjustments.

The proposed formula will be reviewed every few years to provide certainty to passengers and operators, as well as to encourage operators to improve efficiency and productivity.

Given the importance of maintaining the fare autonomy of the two railway corporations, the fare adjustment formula should serve as a guideline, being one of the factors for the corporations to consider in adjusting fares.

For franchised bus operators, the formula could serve as an additional reference factor for the Government to assess the rate of bus fare adjustments and make recommendations to the Chief Executive in Council.

Dr Liao stressed that a public transport fare adjustment mechanism is a key policy affecting public interest. The Government aims to urge operators to reduce fares and provide concessions, and at the same time to maintain the level-playing field and free economy.

She called on the public to voice opinions, saying the Government will take into account their views, and those of legislators and public transport operators before devising a long-term and widely accepted mechanism.

She pledged that the Government will continue urging operators to offer concessions, adding that there is room for cutting public transport fares.

The Government launched a study in the fourth quarter last year to review the current market and operating conditions, as well as to examine ways to develop a more objective and transparent process for public transport fare adjustment to address changes in the economy and potential market changes.

The study focussed on railways and franchised buses as they are the most patronised public transport modes in Hong Kong, altogether accounting for over 70% of total patronage.

It also explored two major forms of the fare adjustment mechanism - rate of return regimes and price-cap models.

Details of the proposal will be tabled at the Legislative Council for discussion on Friday, Dr Liao said, adding that the consultation timeframe depends on public acceptability of the proposal.

The KCRC announced that further concessions will be offered to West Rail passengers for at least a year, on top of the 10% discount as announced on May 23.

Meanwhile, the existing concession - a 20% discount for Octopus holders taking a second East Rail trip on the same day - will be extended to end of September next year.