Kowloon Motor Bus (KMB) and its affiliate Long Win Bus (LWB) on Wednesday announced a pay rise of 3.5 percent for all staff, following two years of salary freezes.

The increase falls short of a 7 percent rise demanded by trade unions representing drivers.

In a statement, the companies said there had been a drop in passenger numbers, citing external factors such as an unstable Covid situation and the expansion of the railway network.

They also said high oil prices have led to soaring operational costs.

"All these factors have shown no signs of relief in the short term, leading to a challenging operational environment," the statement said.

"Having the operational situation, market environment, and results of the pay trend survey considered, as well as the dedication, professionalism and perseverance of our staff during this hardship, KMB and LWB have come up with this year's wage review plan."

A KMB spokesperson thanked the unions for their "proactive and practical communication on the wage review".

The two companies expressed gratitude to staff for their understanding given the challenging business environment.

The salary adjustment for operational and maintenance staff will be backdated to June 1, while the pay rise for clerical workers will come into effect on September 1.