By approving an unnecessary high-speed rail ticket price hike, the Ministry of Transportation and Communications is benefitting Taiwan High Speed Rail Corp (THSRC) at the expense of the public interest, the Consumers’ Foundation said yesterday.
The THSRC board of directors has passed a proposal to raise ticket prices, with the cost of round-trip tickets between Taipei and Greater Kaohsiung expected to rise by NT$280 in October.
The increase is said to be based on the terms of the build-operate-transfer (BOT) contract with the ministry, which agreed in April to adjust the basic rate of high-speed rail travel to NT$4.009 per passenger per kilometer.
However, the foundation said the contract also grants the company scope for another 20 percent price increase, which would result in a new travel rate of NT4.8108 per passenger per kilometer.
The consumer watchdog questioned the legitimacy of the terms of the contract, which allows THSRC to adjust its basic rate when the Consumer Price Index is greater than 3 percent, and with the provision for another 20 percent increase when a new rate is set.
“Why is our government guaranteeing a company a right to raise its sale price according to the Consumer Price Index? Is the government guaranteeing a salary raise or tax reduction when the index is greater than 3 percent? And we’ve never heard of any company being granted scope for price increases,” foundation secretary-general Lei Li-fen (雷立芬) said.
Lei added that THSRC has made a profit in the past two years, with its net income last year reaching NT$3.57 billion.
“It is virtually monopolizing the market by being the only high-speed railway in the country and having no comparable competitor for travel between Taipei and Kaohsiung with the end of flights between Taipei and Kaohsiung last year. Is there really an urgent need to raise the ticket price now?” Lei asked.
Mark Chang (張智剛), chairman of the foundation, added that given that the government has shares in THSRC and is represented on its board, “we can hold it accountable for failing to stop the price hike and not helping people save money.”
Chang advised the company to improve its service quality and increase its passenger capacity to boost revenue, rather than raising ticket prices.
“There is an 80 percent difference between passenger capacity during peak hours and off-peak hours, which shows that there is clearly a need for THSRC to fill the gap, if it hopes for more revenue,” Chang said.