New Korea Railroad Corporation (KORAIL) President Kim Tae-seung said at his first press briefing after taking office on the 14th that "we need to discuss a plan to raise KTX fares, which have been frozen for 15 years, with public consent."
Kim, a native of Gochang in North Jeolla, served as a senior researcher at the Korea Research Institute for Human Settlements (KRIHS) and as vice president of the Gyeonggi Research Institute. Under the Moon Jae-in administration, Kim was the lead researcher on a study that included a plan to merge KORAIL and SR, the operator of SRT. Kim took office in March as KORAIL president for a three-year term.
◇ KORAIL's accumulated deficit tops 20 trillion... "We need to discuss fare hikes"
Kim held a press briefing near the Honam Rolling Stock Maintenance Depot, the KTX and SRT maintenance base, and said, "KORAIL's financial structure is very fragile," adding, "At this rate, the trains will run, but we may face a crisis because we won't make money."
When asked by reporters whether KTX fare hikes would be discussed, Kim said, "KTX fares have not gone up once over the past 15 years, creating significant financial pressure," adding, "Consensus must be reached through a process of public consent and agreement with political circles and economic ministries." Kim added, "I think we should discuss it at an appropriate level at an agreed-upon time without overreaching."
KTX fares are set based on the government-notified cap on train fares through consultation between KORAIL and the government. KTX fares have been frozen for 15 years since a 3.3% increase in 2011. KORAIL's accumulated deficit exceeded 20 trillion won as of the end of last year.
◇ "We need 5 trillion to replace aging trains... we want the government to fund half"
Kim said 5 trillion won will be needed to replace aging KTX trains in the coming years, and that he hopes the government will cover about half. "The replacement period for KTX trains introduced in 2004 with 46 trainsets will come in the early 2030s," Kim said, adding, "It will cost 5 trillion won just for the replacement expense, which is hard to bear given KORAIL's financial structure."
Article 12 of the Korea Railroad Corporation (KORAIL) Act states that "if the state deems financial support necessary for the management safety of the corporation and the modernization of rolling stock and equipment, it may subsidize or support it." Kim said, "It would be good if the government could support about 50%," adding, "We are discussing with relevant ministries so it can be reflected in next year's budget."
Kim said the scope of routes eligible for public service obligation (PSO) compensation will be gradually expanded in consultation with the budget authorities. Under the Framework Act on the Development of the Railroad Industry, the government compensates KORAIL for part of the losses from discounts for seniors, people with disabilities and national merit honorees, as well as from operating deficit routes. However, the routes eligible for compensation and the compensation rate for fares on those routes are reflected in the budget each year through consultations between the government and KORAIL.
Currently, 10 of the 27 routes operated by KORAIL are eligible for compensation, including the Donghae Nambu Line, Yeongdong Line, Taebaek Line, Daegu Line, Gyeongbuk Line and Jeongseon Line. KORAIL receives fiscal support for about 70% of fares on those routes. Kim said, "All 27 routes should be eligible for PSO compensation."
Meanwhile, KORAIL will merge with SR in September and jointly operate high-speed rail. It comes 12 years after the Park Geun-hye administration launched SR in 2014, saying it would introduce competition in high-speed rail. The integrated high-speed rail brand has reportedly been set as KTX. Kim said, "Starting in August, the public will be able to book KTX and SRT on the same mobile application (app)." Kim added, "The number of seats from the Seoul metropolitan area to the provinces will increase, and the public will especially feel the increase in seats departing from and arriving at Suseo Station."