Rail transit systems are great assets to metropolitan areas, for they provide efficient, reliable, convenient, and environmentally friendly transit services. In many modem cities, rail transit is not financially sustainable; however, in Hong Kong, the situation is different. It is believed that the extremely high population density provides a suitable environment for the rail transit system to be financially sustainable. In this study, a preliminary analysis on the demand and supply of the rail transit service was undertaken to shed light on the threshold density below which the rail service cannot be sustainable without subsidy, considering its operations vis-Avis the competing modes' fares and services. We investigated to the Mass Transit Rail (MTR) line in the new town Tseung Kwan O (TKO) in Hong Kong. We collected data including the population density and distribution in TKO, and the travel characteristics for home-based trips in 2003. The result showed that the operation schedule of the MTR TKO line can be financially self-sustainable under the requirement of high population density (at least 90% of the present density in TKO). This result is preliminary as we did not have access to all the information required for this study, but the general trend seems to be comparable with the real situation. The result also showed that the profit was very sensitive to the competing modes' fares and services.