The wave of subway fare hikes has arrived.

After the subway fare hikes in Kunming and Chongqing, it's Shanghai's turn. 

On September 7, Shanghai held a public hearing to optimize the rail transit fare mechanism in the city, where two subway fare hike plans were discussed: Plan 1: The starting fare remains 3 yuan, the starting riding distance is shortened from 6 km to 4 km, and the subsequent additional fare intervals are 4, 4, 4, 7, 7, 7, 10, 10, 10 km respectively, with an additional 1 yuan for every 15 km beyond 67 km. Plan 2: The starting fare is adjusted from 3 yuan to 4 yuan, the starting riding distance remains 6 km, the subsequent additional fare intervals are 6, 8, 8, 10, 10, 12, 12 km respectively, with an additional 1 yuan for every 14 km beyond 72 km.

Prior to this, the fare in Shanghai was 3 yuan for the first 6 kilometers, meaning that trips within 6 kilometers all cost 3 yuan, and an additional 1 yuan was charged for every 10 kilometers after 6 kilometers. This pricing mechanism has been in use since 2005. 

The first plan keeps the starting fare unchanged at 3 yuan, and charges an extra 1 yuan for every 4 kilometers after 4 kilometers and within 16 kilometers. According to Shanghai's estimation, under this plan, about 20% of passengers will have the same travel cost, about 25% of passengers will pay 1 yuan more per trip, about 39% of passengers will pay 2 yuan more per trip, and about 16% of passengers will pay 3 yuan more per trip. 

Under the second plan, the starting fare rises from 3 yuan to 4 yuan. The starting mileage remains unchanged at 6 kilometers, which means trips within 6 kilometers cost 4 yuan. The subsequent specific additional charging rules are also different from the original ones. Shanghai predicts that the impact of the second plan is that about 61% of passengers will pay 1 yuan more per trip, and about 39% of passengers will pay 2 yuan more per trip. 

In a word, no matter which plan is adopted, the fare will be raised. 

In fact, before Shanghai, Kunming and Chongqing had already taken the lead in raising subway fares last year. 

On April 15 last year, Kunming Metro reduced the mileage that can be traveled per unit price. The starting fare of 2 yuan remained unchanged. Previously, each additional 1 yuan allowed passengers to travel 5, 7, 9, 11 and 13 kilometers respectively, and after the adjustment, the mileage became 4, 5, 6, 7 and 8 kilometers respectively. 

In May last year, Chongqing Metro held a public hearing and put forward two plans. The first plan was finally officially implemented in July. The fare of Chongqing Rail Transit had remained unchanged for a long time, with the charging standard of 2 yuan for the first 6 kilometers and a cap of 7 yuan based on mileage. After the fare hike, the starting fare remains 2 yuan, but the starting mileage is shortened from 6km to 4km. The most important change is that the 7-yuan cap policy that has been used for nearly 20 years is canceled. 

Guangzhou is also preparing to end the fare mechanism that has been maintained for 20 years, and plans to hold a public hearing in December this year. The current fare mechanism in Guangzhou is 2 yuan for the first 4 kilometers, an additional 1 yuan for every 4 kilometers between 4 and 12 kilometers, an additional 1 yuan for every 6 kilometers between 12 and 24 kilometers, and an additional 1 yuan for every 8 kilometers beyond 24 kilometers. 

How the fare will be raised in the future will be determined by the plan put forward at the public hearing at the end of the year. 

The general trend is irresistible. Although no news of subway fare hikes has been heard from other cities at present, in the face of the common operational pressure problem, more and more cities will definitely announce fare hikes in the future. 

Operational Pressure

Public transport such as subways and buses are of public service nature. Although making profits is not their purpose, if they are under huge operational pressure and suffer severe losses, fare hikes will become an inevitable choice. 

The subway is a huge capital consumer. Not only does the construction cost often reach hundreds of millions or even billions of yuan per kilometer, but the maintenance cost is also quite high. It is no exaggeration to say that no city's subway can make profits relying solely on ticket revenue. Before 2021, many subway groups could make profits mainly driven by other businesses, such as advertising revenue and real estate business developed by subway operators. 

Among the 22 cities that published data in 2020, only 7 cities including Shenzhen, Wuhan, Nanchang, Jinan, Shenyang, Xiamen and Lanzhou had positive profits after deducting government subsidies, while the remaining 15 cities were all in loss.

Among the 24 cities that disclosed data in 2021, after deducting government subsidies, only Shenzhen, Wuhan, Nanchang, Jinan and Guangzhou had positive profits, and the remaining 19 cities were all in loss.

Among the 32 cities that disclosed data in 2022, only the subways of 5 cities including Wuhan, Shenzhen, Jinan, Shanghai and Changzhou had positive profits, and the remaining 27 cities were in loss.

In 2023 and 2024, on the surface, only Fuzhou's subway had a surplus after deducting government subsidies, but in fact, all subways were in loss. Because in addition to government subsidies, Fuzhou also obtained "ticket subsidy revenue".

According to the disclosure of Sohu City, based on the data of 2024, in addition to the "government subsidy" of 22 million yuan, Fuzhou Metro also obtained 3.444 billion yuan of "ticket subsidy revenue", which actually resulted in a loss of more than 3 billion yuan after careful calculation.

In the past few years, the reason why the subways of several cities such as Shenzhen and Wuhan could still make profits after deducting government subsidies is mainly that other businesses of the subway groups helped generate income. 

Take Shenzhen Metro, which used to be the profit leader, as an example. Among Shenzhen's total revenue of 16.4 billion yuan in 2021, 9.571 billion yuan was obtained from the integrated development of stations and cities, and the subway ticket revenue was only 3.918 billion yuan. If it only relied on ticket sales, it would have suffered huge losses. 

The same is true for Wuhan Metro. The 2022 annual report of Wuhan Metro shows that the ticket revenue in 2022 was 3.127 billion yuan, compared with the input cost of 5.412 billion yuan, the net profit was -2.285 billion yuan.

Let's look at Kunming and Chongqing, which have already raised fares, as well as Shanghai and Guangzhou, which are about to raise fares.

Kunming Metro was exposed to wage arrears in 2023. China News Weekly once disclosed: A staff member of Kunming Rail Transit Group responded that this situation exists, and the specific number of people needs to be verified because the group has many subsidiaries.

In 2022, after deducting subsidies of 992 million yuan, Kunming Rail Transit Group's profit was -913 million yuan, which means a loss of 913 million yuan in that year. In 2023, it received a subsidy of 2.38 billion yuan, and after deducting the subsidy, the net loss was 2.29 billion yuan. In 2024, after deducting the subsidy of 2.3 billion yuan, the loss was 2.213 billion yuan.

In terms of Chongqing, according to the data sorted out by "Data Studio": In 2023, the total revenue of Chongqing Rail Transit was more than 3 billion yuan, but the operating cost exceeded 11.1 billion yuan, and the net profit attributable to owners was negative; in 2024, the total revenue of Chongqing Rail Transit was 2.935 billion yuan, and the total operating cost was 7.273 billion yuan. Although it turned losses into profits, the net profit attributable to owners was only 11 million yuan.

In Shanghai, the losses in the past four years have been around 19 billion yuan, which is also maintained entirely by government subsidies. In Guangzhou, the loss gap is also widening. In 2023, after deducting subsidies, the loss was 320 million yuan. In 2024, after deducting subsidies, the loss was 719 million yuan.

The more losses there are after deducting subsidies, the more government subsidies need to be increased. Moreover, the subway lines in these central cities are still increasing every year, and the maintenance and operation costs are also rising. Under the background that the national land transfer revenue has dropped sharply, it has virtually increased the financial pressure on local governments.

This is the core reason why more and more urban subways are raising fares.

Difficulty in Approving New Metro Plans

In addition to raising subway fares, in order not to increase the local financial pressure, the authorities have taken another measure to raise the threshold for subway construction with the highest intensity. 

For example, the authorities will no longer accept the first round of subway plans for ordinary prefecture-level cities, which means that cities that do not have subways under construction now will not have subways in the future. 

In addition, the application threshold for central cities has been raised. A few years ago, the second phase of Harbin Metro was directly rejected due to debt problems. Last year, Luoyang revealed that its second-phase subway plan did not meet the application conditions, and Ningbo, a sub-provincial city and separately planned city, also revealed that it could not apply for a new round of subway plans for the time being because its subway operation intensity did not meet the standards. 

The 18th line of Shenzhen Metro was not approved this year. In addition, the mileage of the new round of subway applications disclosed by Guangzhou, Xi'an and Fuzhou is much smaller than before. 

Whether it is the subway fare hike in some cities or the fact that no new subway plan of any city has been approved in the past two years, there is a common factor behind it: local finances are tight.

At the same time, looking at these two things together, we can draw a very clear conclusion: The subway has entered the stock era.

This article is from the WeChat official account "Urban Finance", author: Urban Finance, 36Kr publishes this article with authorization.