Korail plans fare hikes for rail services

By KTimes

Korea Railroad Corp. (Korail) plans to increase fares for its quasi-high-speed trains and Saemaeul-ho, or passenger train services, by 12 percent as part of a fare system revision. The decision comes as the company finds it increasingly difficult to sustain significant operating losses in its conventional rail services.

According to Korail’s passenger business division plan obtained by the Hankook Ilbo on Sunday, the company intends to raise conventional rail fares within the year. The proposed fare hikes are 12 percent for quasi-high-speed trains, 12 percent for Saemaeul-ho and 5 percent for Mugunghwa-ho. The increases have already been factored into Korail’s major business objectives, including a transportation revenue target of 3.2 trillion won ($2.4 billion), a 9.3 percent increase from last year.

Korail’s decision to adjust fares, even for what is often considered “the people’s transportation,” stems from its mounting losses in conventional rail operations, which reach several hundred billion won annually.

While the company has been using profits from KTX services to cover the deficits, the financial burden has continued to escalate. KTX, Saemaeul-ho and Mugunghwa-ho fares have remained unchanged for 14 years. Quasi-high-speed train fares have also been frozen since their initial introduction in 2016.

Even with the planned fare hikes, Korail’s passenger business division estimates this year’s operating deficit for conventional rail services will still reach 313.7 billion won. However, officials acknowledge this may be an optimistic projection.

Since the Ministry of Land, Infrastructure and Transport determines fare ceilings, the final increase is expected to be lower than Korail’s target. It also remains uncertain whether the government will approve even a modest fare hike.

Officially, Korail maintains that “specific fare increases or timelines have not been finalized.” However, internally, the company has already set fare hike targets for each rail service and begun efforts to build public support.

Although it has not yet submitted precise figures to the transport ministry, Korail has been preparing for fare adjustments since last year, including setting a KTX fare hike target, as the Hankook Ilbo previously reported on March 7.

As fare hike discussions gain momentum, critics are calling for Korail to prioritize internal efficiency improvements. Last month, the Board of Audit and Inspection reprimanded Korail for its lax management of mass ticket purchases and cancellations. One case revealed that five passengers purchased tickets worth 2.9 billion won over five years, only to cancel 99 percent of them.

There is also increasing pressure on the government to take action. Some argue that if fare hikes are not an option, the government should merge Korail with SR, the Super Rapid Train (SRT) operator. Advocates say returning the profitable SRT service to Korail could allow for fare reductions instead.

A 2022 government advisory panel found that overlapping costs between Korail and SR, including facility expenses, amounted to as much as 40.6 billion won annually. Critics point out that while KTX trains departing from Seoul Station often have vacant seats, SRT services from Suseo Station are consistently overbooked.

This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by a generative AI system and edited by The Korea Times.