Professor Erick Guerra
Background Case: Profitable MTR System in Hong Kong
24 March 2014
(In this research case, I want to know what the key factors of the profitable MTR system are. In another word, what conditions other cities in developing countries need in order to successfully replicate the MTR rail-property development model.)
In Hong Kong, public transit serves more than 90% of daily trips, and among them 40% are from the metro system, the Mass Transit Railway (MTR) (Wu, 2009). First built in late 1970s, MTR has a daily ridership of 5.6 million passengers and total revenue of HK$35.7 billion in 2012 (MTR, 2012). Until now, the system has 11 lines, 84 stations and a total route length of 218.2 km with an average fare of HK$7.1 per trip (MTR, 2012). It runs 7 days a week, from early 5 a.m. in the morning to 1a.m. the next day. The MTR has become an indispensable part of residences’ lives in Hong Kong.
Hong Kong is a famous international economic center with the 4th highest population density in the world (CIA, 2012). It consists of three main islands: Hong Kong Island, Kowloon and the New Territories. The rapid transit railway system connects business and residential centers in the three islands through harbor rails, which can be both run by train and vehicles. The system passes the area with high population density, like the Mong Kok Station in New Territories and the Central Station at Hong Kong Island (see Figure 1). On the land of New Territories and Kowloon, East Rail Line, West Rail Line and Ma on Shan Line are surface-street trams which provide both intra-island and inter-island services to Shenzhen in mainland China. The system also connects the main islands to the airport and Disneyland Resort on Lantau Island in the southwest through Airport Express and Disneyland Resort Line.
Figure 1 MTR lines through districts with different population density
Source: MTR, Wikipedia
1. Construction History
The initial incentive to build a mass transit system in Hong Kong was from the 1960s when population increased at a rapid speed as well as transportation pressure. British transportation consultants were invited by Hong Kong government to study the future transportation demand and make recommendations (HKMTIC, 2003). As Hong Kong was insufficient of land, all the system was designed underground. Hong Kong Mass Transit Railway Corporation (MTRC) was established in 1975 to supervise the construction process and future management of the first line: part of the Tsuen Wan Line and Kwun Tong Line today, which runs across the Hong Kong Island and Kowloon connecting the major residential and industrial districts from the Central Station to Kwun Tong Station. The Construction process of all MTR lines is in table 1.
Table 1. MTR Lines Construction Process
Name Operation Year
East Rail Line 1910
Kwun Tong Line 1980
Tsuen Wan Line 1982
Island Line 1985
Light Rail 1988
The Airport Express 1998
Tung Chung Line 1998
Tseung Kwan O Line...