To hike, or not to hike public transport fares

The Beijing municipal commission of development and reform is soliciting public opinion on whether fares for public transportation should be raised. For many Beijing residents, the 18-day (from July 3 to 20) exercise signals the end of the city's "low fare public transport system".

That more than 22,000 people have submitted over 37,000 suggestions in a week reflects the wide public concern over fare hikes and the complex nature of the issue.

Public transport fares in Beijing have been the lowest in the country since before the 2008 Olympic Games, when city authorities tried to encourage people to use public transport in order to ease traffic jams and reduce air pollution. Ordinary passengers using a public transport pass pay a meager 0.4 yuan ($0.06) for a bus ride while students pay even less - just 0.2 yuan - and the subway fare is a uniform 2 yuan. Public transport fares have remained unchanged in Beijing over the past seven years despite people's increasing incomes, rising inflation and constantly widening and lengthening of the city's public transport system.

The city's public transport system has been incurring losses for the past few years and filling its fiscal gap with the subsidies received from the municipal government. The truth is that, without the subsidies it would be impossible to run the transport system. According to Beijing municipal commission of development and reform figures, the operating income of Beijing subway in 2007 was 1.18 billion yuan against an expenditure of 1.34 billion yuan. In 2013, the operating income did increase nearly threefold - to 3.22 billion yuan - but then the expenditure rose more than fivefold - to 6.68 billion yuan.

The losses suffered by Beijing's bus service are even more serious. Its annual income dropped from 3.09 billion yuan in 2007 to 2.59 billion in 2013 while its expenditure jumped from 8.88 billion yuan to 17.62 billion yuan. In 2012 public transport accounted for an estimated 7.9 percent of Beijing's municipal fiscal expenditure in people's livelihood, much higher than that on medical and health services. Ma Boyi, spokesman for the transport administration bureau of Beijing municipal commission of public transport, recently told People's Daily that the losses incurred by the public transport system have become a huge obstacle on the road to sustainable development.

But providing fiscal subsidies to or implementing market-oriented reforms in Beijing's public transport system is a controversial issue. According to a China Youth Daily survey, 52.8 percent of the 2,282 respondents oppose any increase in public transport fares. Those who oppose such a move regard fiscal subsidies for public transportation as reasonable, with many even saying that subsidies are an indispensable part of vital public services.

Another problem that Beijing's public transport system faces is the uniform subway fare. The result is that, one person pays 2 yuan to travel 500 meters while another pays the same amount to travel up to 88 kilometers. A majority of metropolises, including London, Paris, Tokyo, Seoul and Singapore, use a metered pricing system in their subways. In fact, Beijing is the only city in China to use a uniform fare system. In Tianjin, for example, the minimum price of a subway ticket is 2 yuan, with the fare increasing (to a maximum of 5 yuan) according to the stops a passenger travels. In Shanghai, the subway fare for the first 6 km is 3 yuan, and increases by 1 yuan for every 10 km thereafter.

Another important reason why the Beijing transport authorities have initiated a fare reform is security in the metro. A Chinanews.com report says that 75 percent of the subway lines in Beijing carried passengers beyond their capacity during rush hours in 2013, greatly increasing the security risks.

In its internal document, the Working Plan to Further Strengthen Operational Security of Urban Rail Transport System, issued early this year, the Beijing municipal government has called for using the pricing leverage to divert subway passengers to other modes of public transport and reduce the risk of overcrowding. Wang Mengshu, a transportation expert and academic with the Chinese Academy of Engineering, told 21st Century Business Herald that the Beijing subway fare reform is aimed at reducing passenger flow to strengthen security rather than earning more revenue.

But the question is: What other modes of transport can the passengers use? As the media say, people use the metro to commute to and from work more out of compulsion and less by choice because they can avoid traffic jams. As long as the flow of road traffic doesn't improve drastically, it will not be easy to divert commuters from the subway to buses even if metro ticket prices are increased.