Seoul in feud with subway operator over fare hike
By Kim Rahn
The operator of Seoul’s subway line No. 9 is planning a fare hike of 500 won, while the Seoul Metropolitan Government says the rise is not only unacceptable, but also “technically impossible.”
Seoul Metro Line 9 Corp., a private entity, posted an announcement on its website on Saturday, saying it will increase the basic fare to 1,550 won from the current 1,050 won starting June 16.
The fare applies when passengers pay using a travel card; an additional 100 won is charged when paying in cash.
The operator said the hike is inevitable due to financial difficulties. Unlike subway lines No. 1 to 8, built and run by city government-affiliated corporations, line No. 9 was constructed by private firms.
Under a Built Operate Transfer (BOT) contract, the firms invested money in the construction of line No.9 and have the right to operate the line for 30 years. It will handover operations to the city afterward.
Major shareholders of the corporation include Hyundai Rotem, Macquarie Korea Infrastructure Fund, Shinhan Bank and POSCO ICT.
Since line No. 9 began service in 2009, the accumulated deficit has surpassed 180 billion won ($159 million) due mainly to the low fare, according to the corporation.
“As there are operational expenses and other costs, we are allowed to set our own fares within a limited range. But when the line opened, the city asked us to set the fare the same as lines 1-8 and we accepted,” the operator said in the announcement. “But the low fare has resulted in a huge deficit.”
“We’ve suggested several measures to Seoul City so that the fare increase would be as little as possible. But we failed to reach an agreement, so we have no choice but to raise the fare for passengers,” the company added.
Lee Jin-seop, an official of the corporation, said the operator had set each year’s fare before beginning the operation in 2009 according to the agreement with the city government.
“The city forced us to collect 900 won, the same fare as other subway lines at that time. We agreed to talk about it a year later after monitoring usage. We then proposed our plan but the city government hasn’t responded for over three years.”
The city government, however, said the two sides are discussing a fare rise but nothing is final. “The fare is not something the operator can raise independently. For the fare hike, discussions should take place and we have to agree,” Lee Byeong-han, a city official, said.
He said the company can relieve financial loss through ways other than a fare hike. “Instead of collecting more money from passengers, it is possible for the city to offer financial aid or other benefits, for example, extending the firm’s operation period,” he added.
The city official said technical problems also matter.
“To raise the fare, the payment system for all subways and buses should be changed because of the transfer discount. Without our cooperation the operator cannot increase fares.”
But the corporation official said they don’t need Seoul City’s approval and the system change is also something the city should do according to the contract.
“Our company is already on the verge of bankruptcy. We told the city government that if the 500-won rise is too much, it should suggest an adequate increase ratio and give us financial support. But there have been no alternatives presented,” he said.