Veolia climbs aboard to run HK tram group

By Justine Lau in Hong Kong
Published: April 7 2009 17:16

Veolia Transport of France agreed to buy half of Hong Kong’s tram system from Wharf, the local conglomerate, and to operate and manage the network, which has been running on the territory’s main island since 1904.
Veolia, part of Euronext-listed Veolia Environnement, said it spent “far less than €100m [$135m]” for the acquisition of Hong Kong Tramways, which is part of a strategic expansion in China. It won a contract to operate six bus networks last December in its first foray into the country.

The trams, known as the “ding ding” in Hong Kong, carry 240,000 passengers a day, and are popular among both locals and tourists because of their rich history and frequent services. The network, which charges a flat fare of HK$2 (26 US cents) per ride for adults, is especially popular among lower income groups – even though the trams stop every 250 metres.
Hong Kong Tramways, which runs the only fleet of double-deck tramcars in the world, is one of the city’s oldest public transportation systems, although it is not as long serving as the Star Ferry services, which started operations from Hong Kong island to Kowloon in 1880.
“The tram is a piece of heritage that we are fully aware of. We have no plans to change the current services,” said Bruno Charrage, managing director of Hong Kong Tramways. The company, which last raised fares 11 years ago, said it did not plan to increase prices.
Frankie Yick, a director of Wharf Transport, said the company planned to apply to build a new tourist line close to Hong Kong’s Victoria Harbour on a piece of reclaimed land between the Central and Wanchai districts. It hopes to use six different kinds of trams, recalling the designs that have run on the network over the years.
Mr Yick said that Hong Kong Tramways earned HK$150m (US$19m) from fares and HK$50m from advertising last year, when it made “a small profit”.
Cyrille du Peloux, chief executive of Veolia, said the company was keen to invest in Hong Kong Tramways because of its interest in China and its belief in trams. Veolia has rail, road and ferry operations in 28 countries, including 17 tramway systems in 10 countries. It held talks with Wharf for more than two years.
“There is a trend to come back to tramway these days. Trams are environmental friendly,” said Mr du Peloux.
Hong Kong Tramways will be equally owned by Wharf and Veolia. The French company has an option to buy out its partner’s stake, but it declined to say when its rights would expire.
Copyright The Financial Times Limited 2009