THSR under fire for planned price hike
By Kathryn Chiu, The China PostTAIPEI, Taiwan -- Taiwan High Speed Rail (THSR) on Tuesday came under fire for its plan to hike ticket prices in October, with THSR insisting that it is necessary to act given huge accumulated loss.
August 14, 2013, 12:00 am TWN
The Consumer Protection Association of Taiwan (CPAT) and legislators from the Democratic Progressive Party (DPP) yesterday at a joint news conference lambasted THSR's proposal passed last week to raise ticket prices from October.
Legislators and CPAT demanded that the Ministry of Transportation and Communications (MOTC) order THSR to freeze, or even lower, ticket price as THSR has turned a profit for the first half of this year, while it is subsidized by government funds and a low-interest syndicate loan.
Under THSR's proposal, the price of a one-way ticket between Taipei and Tainan will see the largest price increase of 9.6 percent, rising to NT$1,480. Tickets from Tainan to Kaohsiung's Zuoying Station will see the smallest hike of 7.1 percent, increasing to NT$150.
Ticket prices between Taipei and Kaohsiung will be increased by 9.4 percent, raising the one-way ticket to NT$1,630, up NT$140.
DPP legislator Kuan Bi-ling (管碧玲) said that THSR had raised ticket prices each year from 2008 to 2012, totaling 12.62 percent, already making Taiwan's high speed rail service more expensive than that in South Korea.
DPP legislator Lee Kun-tse (李混澤) yesterday said in a press release that the average “loading factor” of Taiwan's high speed rail over the last six years falls between 54 percent and 57 percent, meaning half of the total seats for each train are empty.
The problem for THSR now is how to fill the empty seats without raising ticket prices, Lee said.
THSR yesterday maintained its position that raising ticket prices was necessary. THSR spokesman Jia Sian-de (賈先德) yesterday said THSR's net profit for the first half increased NT$300 million from the same period of 2012 due to an increased number of riders. But the adoption of International Financial Reporting Standards (IFRS) from this year will tremendously raise amortization pressure, which will erode current profit performance.
With construction costs and interest expenses connected to the construction of three stations and funds set aside to potentially acquire a 99-year operating lease, THSR posted an accumulated loss of NT$5.35 million over the period of railway's existence, Jia added.
IFRS began as an attempt to harmonize accounting across Europe Union. In Taiwan, listed companies and financial institutions supervised by the Financial Supervisory Commission (FSC), except for credit cooperatives, credit card companies and insurance intermediaries, are required to prepare financial statements in accordance with Taiwan-IFRS starting in Jan. 1 of this year.