The MTR Corporation was established in 1975 as the Mass Transit Railway Corporation with a mission to construct and operate, under prudent commercial principles, an urban metro system to help meet Hong Kong's public transport requirements. The sole shareholder was the Hong Kong Government.
The Company was re-established as the MTR Corporation Limited in June 2000 after the Hong Kong Special Administrative Region Government sold 23% of its issued share capital to private investors in an Initial Public Offering. MTR Corporation shares were listed on the Stock Exchange of Hong Kong on 5 October 2000.
Fare Adjustment Mechanism (FAM)
FAM was originally proposed by the Environment Transport and Works Bureau on 11 April 2006. The aim of establishing the FAM is to monitor the pricing system of MTR. The system is designed to minimize the degree of price raise in inflation period and lower the price in deflation period. After the merger of KCR and MTR, FAM was approved by the shareholders of MTRC in October 2007. After that, the fares of MTRC are reviewed annually and determined by FAM, hence MTR lost its autonomy of its fare adjustment. FAM is applied to all rail services provided by MTR except Airport Express Line, Tung Chung Cable Car, intercity. The mechanism itself is reviewed every five years upon written request by MTRC or government.
The formula of FAM is shown below:
Overall fare adjustment rate = 0.5*∆CCPI + 0.5*∆Wage Index - Productivity Factor
