Summary of the Core Content
This news article reveals the essence of the recent hearing on the first fare increase in Shanghai’s subway system in 21 years: an average increase of 1 yuan per trip seems almost inevitable. This is not an isolated action by Shanghai but a sign that the national subway industry has reached a turning point. For decades, domestic subways have operated on a model of “low fares to benefit the public and high subsidies to cover losses.” Now, with passenger numbers at their peak and substantial construction debts, local finances can no longer sustain the heavy burden of these subsidies. However, raising fares is merely a band-aid solution. The real solution is for subway companies to break away from the traditional mindset of relying solely on ticket sales and learn from the Hong Kong MTR’s approach by tapping into the commercial potential both inside and outside stations, converting the massive daily passenger flow into revenue. This will help balance the travel costs of ordinary citizens with the long-term sustainability of the subway system, avoiding a situation where subsidies become unaffordable, maintenance becomes impossible, and the service quality declines.
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Detailed Analysis
1. The fare increase is not unique to Shanghai; many cities have already implemented hidden price hikes
Many people consider Shanghai’s first fare increase in 21 years to be a major news event, but the trend has actually been underway for some time. Last year, after the fare increase hearing in Chongqing, commuters there spent an additional 24 yuan per month on subways. In Kunming, the distance for which a 1-yuan ticket was valid was reduced, effectively raising fares indirectly. Cities that dare not raise fares directly are using more subtle methods to cut costs. For example, Guangzhou has eliminated the long-standing discount of 40% for 15 trips; now, only those who spend 80 yuan or more per month receive the discount, and those who spend over 200 yuan get a 50% discount. As a result, most commuters receive less of a discount than before. Foshan has gone even further by ending service half an hour earlier, saving millions in electricity and labor costs annually. Shanghai’s fare increase has attracted attention because the fares have remained unchanged for 20 years, with the last adjustment in 2005 when there were few subway lines and overcrowding was a serious issue. The current increase is aimed at encouraging people to avoid peak hours, which is a completely different context from the current financial pressures.
2. The losses incurred by subways are ultimately borne by taxpayers, and low fares hide inequality
Many people don’t realize that last year, Shanghai’s subway operations cost 27.89 billion yuan, while ticket sales only generated 9.2 billion yuan, resulting in a loss of 18.7 billion yuan. This loss was largely covered by local subsidies, with Shanghai providing 17.58 billion yuan in subsidies alone. Where does the money for these subsidies come from? It comes from the taxes paid by all taxpayers. This creates a paradox: people living in far suburbs who commute by electric bike or car have to pay taxes to subsidize those who commute by subway in the city center. The original intention of low fares was to benefit the general public, but now it has become unfair, with non-commuters subsidizing commuters. The gap is only widening: Shanghai plans to build more than a dozen new subway lines, with a total investment of over 400 billion yuan, and the annual interest on construction loans alone amounts to tens of billions. Relying on continued tax payments to fill this gap is unsustainable for local finances.
3. Not raising fares for 20 years was not a good thing; fares have been effectively reduced in real terms and no longer keep up with costs
People often complain about sudden fare increases, but if you do the math, the average salary in Shanghai in 2005 was just over 2,000 yuan, while it is now well over 10,000 yuan. Electricity, labor, and maintenance costs have all increased significantly, yet subway fares have remained around 3 yuan per kilometer, making the actual cost per trip lower than 20 years ago. In contrast, Hong Kong and Singapore do not stick to fixed fares for decades but adjust them slightly each year based on inflation and average salaries, with small increases that are hardly noticeable to passengers. Our failure to raise fares for 20 years has shifted the entire cost burden onto the finances, forcing a change that was inevitable.
4. A 1-yuan increase won’t solve subway losses; alternative revenue sources are the real solution
Raising fares by 1 yuan won’t cover the subway’s losses. Shanghai’s annual passenger volume is over 3 billion, and even a 1-yuan increase would only generate an additional 3 billion yuan in revenue, leaving a deficit of 15 billion yuan. The world’s most profitable subway system, the Hong Kong MTR, still lost 250 million Hong Kong dollars last year from ticket sales alone. However, the MTR generates substantial profits from other sources: property development on top of the subway (13.2 billion yuan), station-based shops and advertising (3.6 billion yuan), and property management (3.8 billion yuan), with ticket sales accounting for less than 20% of total revenue. In contrast, mainland subway companies have been limited to ticket sales and have only recently started exploring new revenue streams, such as using subway capacity for delivery services and installing solar power plants on rooftops. The goal is to make better use of the massive passenger flow to create additional revenue.
5. Fare increases are not just about raising money; they can also improve passenger experience
While people may think of fare increases as simply taking more money, they are actually the first step in a broader reform of the subway industry. Previously, subway companies relied on government subsidies and had no incentive to improve services. Now, to generate more revenue, they will need to improve the passenger experience, such as allowing people to buy breakfast or pick up deliveries at stations, reducing logistics costs, and finding ways to fund the construction of new lines in remote areas. Relying solely on subsidies will lead to a situation where the subway system deteriorates and new lines are never built, ultimately harming ordinary citizens.