The Korea Fair Trade Commission said on the 2nd it will approve the merger of the Korea Railroad Corporation (KORAIL) and the operator of the Suseo high-speed rail (SRT), SR Co. The structure folds SR into KORAIL. After launch, "Integrated KORAIL" plans to discount high-speed rail fares by 10% from existing KTX fares for three years and keep the mileage program that accrues 5% of the fare.
The Korea Fair Trade Commission (FTC) reviewed the merger of KORAIL and SRT and concluded that even if the two companies combine, the risk of restricted competition in the high-speed rail industry is low. It judged that a sharp price hike or a drop in service quality is unlikely. High-speed rail fares cannot exceed the levels designated and announced through consultations between the Minister of Land, Infrastructure and Transport and the Minister of Strategy and Finance, and any fare change requires acceptance of a filing with the Minister of Land, Infrastructure and Transport because acceptance of a filing by the minister is required. Also, changing business plans for supply seats, such as service sections and the number of runs, or revising rail business terms related to services requires approval by, or acceptance of a filing with, the Minister of Land, Infrastructure and Transport.
Integrated KORAIL, in consultation with the Korea Fair Trade Commission (FTC) and the Ministry of Land, Infrastructure and Transport, has drawn up a business plan to enhance consumer rights related to fares, seat supply, and services for three years after the merger. The plan has three main parts. First, considering that current SRT prices are 10% lower than KTX, Integrated KORAIL will cut high-speed rail fares on existing KTX routes by 10%. Second, the total seats across all routes will increase by more than 17,000 from the current 253,000 (weekend basis), and the number of runs will rise by more than 25 from 431 (weekend basis). Lastly, only KTX routes currently accrue 5% of fares as customer mileage, and this accrual program will be expanded to SRT routes.
Jeon Seong-bok, director general of the corporate merger review bureau at the Korea Fair Trade Commission (FTC), said, "The merger of the two companies is slated for completion in September," adding, "Given that the purpose of this merger is to improve public convenience and enhance the efficiency of rail operations, we will thoroughly review the implementation of the business plan over the next three years."