Local governments in conflict over mass transit debt

By Lee Kyung-min

The Seoul Metropolitan Government (SMG) is in feud with the municipal governments of Incheon and Gyeonggi Province over how to settle a growing debt from a transfer discount system for users of subways and buses.

Under the system, introduced in 2004, users with mass transit cards in Seoul, Incheon and Gyeonggi Province can transfer from subway to bus, and vice versa, unlimited times for 1,050 won up to 10 kilometers, and 100 won for every additional kilometer.

The measure helped commuters save mass transit fees, but put the three local governments under mounting debts. They are sharing the deficit from the discount system.

According to SMG officials, the combined annual deficit of Seoul Metro and Seoul Metropolitan Rapid Transit Corp., the two subway operators of Seoul, was about 500 billion won ($448 million) last year. Bus firms in Seoul also suffered a loss of some 300 billion won.

The situation is worse for mass transit firms in Incheon and Gyeonggi.

Under the contract signed in 2004, 40 percent of deficit from the transfer discount system is covered by the SMG, while the Incheon Metropolitan Government and the Gyeonggi Provincial Government are responsible for the remainder.

The governments of Incheon and Gyeonggi are asking SMG to revise the contract, saying it is unfair. They claimed SMG should shoulder at least 50 percent of deficit because more people live in Seoul than did a decade ago.

The SMG has rejected their requests.

Since 2011, the governments of Incheon and Gyeonggi have refused to pay some of the money.

In March, the two subway operators in Seoul filed a suit against the two local governments, claiming they have failed to pay some 23.6 billion won ($21 million).

The court has ruled against the two governments. The cases are now being reviewed by an appeals court.

The governments are now threatening to boycott planned talks with the SMG about subway and bus fare increases, unless it agrees to take responsibility for a higher percentage of the debt.

The SMG initially planned to raise the basic fare by 200 won, to 1,250 won ($1.18), next year, saying a fare increase is inevitable because public transport operators in the capital have suffered losses for long time. It said it will try to resolve issues related to the transfer discount system with the governments of Incheon and Gyeonggi before increasing the fares.

“It’s meaningless to discuss a fare increase if the unfair contract remains,” said an official from the Incheon Metropolitan Government.