The base fare for the Seoul Metropolitan Subway will increase by 150 won, from 1,400 won to 1,550 won, in June.
With the resolution of the difficult fare deliberation by the Gyeonggi Provincial Council, the Seoul Metropolitan Government's goal of implementing the increase within the first half of the year has become achievable.
According to a Yonhap News Agency report on the 20th, the Gyeonggi Provincial Council recently passed a proposal to increase railway fares by 150 won, titled 'Opinion Hearing on the Adjustment of Urban Railway Fare Range by the Provincial Council.'
Soon, once the Gyeonggi Consumer Policy Committee reviews it, all necessary administrative procedures for the fare increase will be completed.
Gyeonggi Province also agrees on the necessity of the fare increase, so the Consumer Policy Committee is expected to pass it without significant issues.
Afterward, T-money, the company operating the fare system, will spend approximately two months developing the system to apply the changed fares.
Seoul, which holds the decision-making power due to having the most subway lines, plans to expedite system preparations once the administrative procedures are finalized, aiming to raise fares in June.
The exact date of the increase will be determined at a policy consultation meeting between Seoul City, Gyeonggi Province, Incheon City, and KORAIL (Korea Railroad Corporation) at the end of this month.
Considering the social impact of public utility price increases and the system preparation period, the increase is likely to occur at the end of June, after the presidential election.
Initially, there were concerns that the fare increase might be delayed until the second half of the year due to the aftermath of the snap presidential election.
However, it is reported that the city has determined that the increase can no longer be postponed, given the severe deficit of the Seoul Metro, the subway operator, and the fact that the increase was originally planned for March.
Previously, Seoul City raised the base subway fare by 150 won (from 1,250 won to 1,400 won) starting October 7, 2023, and announced an additional 150 won increase for 2024.
However, the actual increase did not occur due to the government's price stabilization policy, and it has become possible to raise the fare this year, after a one-year delay.
An increase in subway fares is urgently needed to alleviate the financial difficulties of Seoul Metro, which has accumulated a deficit of nearly 19 trillion won.
As of the end of last year, Seoul Metro's net loss for the year was 724.1 billion won, a 40% increase from the previous year, and the accumulated deficit reached 18.9 trillion won.
The company's debt amounts to 7.3474 trillion won, resulting in daily interest payments of over 300 million won. This situation is attributed to the stagnant subway fares while operating costs such as electricity bills have risen sharply.
However, Seoul City and Seoul Metro consistently argue that fundamental deficit reduction requires not only fare increases but also government subsidies for losses incurred from free rides.
The city asserts that free rides were introduced by presidential directive and apply to all citizens nationwide regardless of their residence, thus constituting a national affair subject to PSO (Public Service Obligation) support.
In particular, they argue that the same principle should be applied as to KORAIL, which currently receives compensation for about 70% of its free ride costs.
On the other hand, the government maintains that subway operation is clearly a matter for local governments and does not agree to PSO support.
During a related forum last month, Seoul Metro stated, "As of last year, the number of free riders was about 17% of the total, at 7.51 million people per day, and the resulting loss amounted to 400 billion won annually. The increase in unfunded free ride losses leads to structural deficits and problems such as missing opportunities for safety investments."
Now, I will search for additional information online regarding the Seoul Metropolitan Subway's financial situation, fare policies in other major cities, and the debate over government subsidies for public transportation. After gathering this information, I will compile it into a more comprehensive news article. Seoul Subway Fare Hike Imminent Amid Mounting Financial Strain
The Seoul Metropolitan Subway system is set to raise its base fare by 150 won, increasing it from 1,400 won to 1,550 won in June, marking a necessary but potentially unpopular move to address the operator's burgeoning financial woes. This decision comes after the Gyeonggi Provincial Council finalized its deliberation on the fare adjustment, paving the way for the Seoul Metropolitan Government (SMG) to implement the long-anticipated increase within the first half of the year.
The Gyeonggi Provincial Council's recent approval of the 'Opinion Hearing on the Adjustment of Urban Railway Fare Range by the Provincial Council,' which includes the 150 won fare hike, was a crucial step in the process. With Gyeonggi Province also acknowledging the need for the fare adjustment, the subsequent review by the Gyeonggi Consumer Policy Committee is expected to be a formality. Once this administrative hurdle is cleared, T-money, the entity managing the subway's fare collection system, will require approximately two months to update its infrastructure to accommodate the new pricing.
Seoul City, which oversees the majority of the metropolitan subway lines and holds significant sway in such decisions, is poised to accelerate its system preparations once the administrative procedures are complete. The target remains a June implementation, with the precise date to be determined in a joint policy consultation involving Seoul, Gyeonggi, Incheon, and the state-run Korea Railroad Corporation (KORAIL) later this month. Given the potential public impact of increased utility costs and the logistical requirements of the system update, the fare hike is most likely to take effect towards the end of June, after the upcoming presidential election.
Initial speculation suggested that the snap presidential election might lead to a postponement of the fare increase until the latter half of the year. However, the dire financial situation of Seoul Metro, the subway's operating body, has compelled the city to move forward. The operator had initially planned to raise fares in March, underscoring the urgency of the situation.
This upcoming increase follows a 150 won hike implemented on October 7, 2023, which raised the base fare from 1,250 won to 1,400 won. At that time, the SMG had indicated a further 150 won increase for 2024. However, in line with the central government's efforts to stabilize prices, this second phase of the increase was deferred until now.
A System Under Strain: The Weight of Accumulated Deficits
The fare increase is largely attributed to the critical financial condition of Seoul Metro, which is grappling with a staggering accumulated deficit approaching 19 trillion won. By the end of the previous year, the company's net loss had surged by 40% year-on-year to 724.1 billion won, exacerbating the already massive cumulative deficit of 18.9 trillion won. The company's debt burden stands at 7.3474 trillion won, resulting in daily interest payments exceeding 300 million won. This fiscal crisis has been brewing due to stagnant fares failing to keep pace with rapidly escalating operating costs, including electricity and labor.
While the fare increase is seen as a necessary step to mitigate these losses, both Seoul City and Seoul Metro maintain that a more fundamental solution requires financial support from the central government to offset the costs associated with free riders. The city argues that the free ride policy, which benefits senior citizens aged 65 and over, disabled individuals, and national merit recipients, was mandated by presidential decree and applies uniformly across the nation, thus classifying it as a national responsibility deserving of Public Service Obligation (PSO) subsidies. They point to the precedent set with KORAIL, which receives compensation for approximately 70% of its free rider costs, advocating for the same principle to be applied to the metropolitan subway systems.
However, the central government has consistently rejected this argument, asserting that the operation of subways falls under the purview of local authorities and therefore does not qualify for PSO support. This long-standing disagreement has persisted despite the growing financial strain on subway operators.
During a public forum last month, Seoul Metro highlighted the significant financial impact of the free ride program, stating that approximately 17% of all subway passengers, totaling 7.51 million trips daily, ride for free. This translates to an annual loss of around 400 billion won. The operator warned that the continued increase in unfunded free ride losses would lead to structural deficits and compromise essential safety investments and infrastructure maintenance.
Comparing Global Fare Policies and Subsidy Models
The debate surrounding fare increases and government subsidies for public transportation is not unique to Seoul. Major cities worldwide employ various strategies to balance the financial sustainability of their transit systems with the need to provide affordable public services.
In New York City, the Metropolitan Transportation Authority (MTA) has a history of regular fare increases to manage its operating costs and invest in infrastructure. Recent years have seen incremental increases in subway and bus fares, as well as tolls on bridges and tunnels. While the MTA receives some government funding, fare revenue remains a significant component of its budget.
London's Transport for London (TfL) also relies on a combination of fare revenue and government subsidies to operate its extensive underground and bus network. Fare levels are subject to periodic review, and the system benefits from a degree of central government support.
In contrast, some European cities have adopted more heavily subsidized public transportation models, with lower fares or even fare-free systems in certain cases. These models often rely on significant public funding through taxes and other sources.
The issue of free ridership for specific demographic groups also varies internationally. While some cities offer discounted or free travel for seniors or disabled individuals, the extent of these programs and the level of government compensation provided to operators differ significantly.
The Path Forward: Balancing Financial Needs and Public Affordability
The impending fare increase in Seoul underscores the delicate balance between ensuring the financial viability of the subway system and maintaining affordable transportation for the public. While the 150 won hike is a relatively modest increase, it will nonetheless impact daily commuters.
Seoul City's persistent calls for central government subsidies to offset the costs of the mandated free ride program highlight a fundamental challenge in funding public transportation. As South Korea's population ages, the number of eligible free riders is expected to increase, further exacerbating the financial burden on subway operators unless a sustainable funding mechanism is established. Recent surveys in Seoul indicate a growing public support for raising the eligibility age for free subway rides, reflecting a broader awareness of the financial implications of the current policy.
The debate over who should bear the financial responsibility for these social welfare policies – local governments or the central government – remains a key point of contention. Without a resolution, subway operators like Seoul Metro will continue to face significant financial pressures, potentially impacting service quality and necessary infrastructure upgrades.
In conclusion, the upcoming subway fare increase in Seoul is a necessary measure to address the severe financial challenges facing the city's vital transportation network. However, it also highlights the urgent need for a broader discussion and a sustainable funding model that addresses the long-term costs associated with public service obligations and ensures the continued efficiency and affordability of the Seoul Metropolitan Subway for all its users. The outcome of the ongoing negotiations between the city government and the central government will be crucial in shaping the future of public transportation funding in the capital region.
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