The Citizens' Coalition for Economic Justice (CCEJ) said on the 11th that Seoul's semipublic bus system has deteriorated into a "money pit" after 20 years and must be completely redesigned.
The semipublic bus system leaves bus operations to the private sector (bus companies), while local governments handle route planning and management and cover operating losses with public funds.
According to CCEJ, from 2004, when Seoul adopted the semipublic bus system, to 2022, total fiscal support over 18 years reached 6.3 trillion won. In particular, the scale of fiscal support has surged from 200 billion–300 billion won annually to 456.1 billion won in 2021 and 891.5 billion won in 2023.
CCEJ assessed that the cause lies in a structure that fully compensates operating costs based on a standard operating cost, regardless of transport revenue. This means bus companies have weak incentives to cut expense.
CCEJ also pointed out that private equity funds, after acquiring semipublic bus companies, have increased dividends or left earnings as internal reserves. The amount of dividends rose from 22.2 billion won in 2015 to 58.1 billion won in 2023. During the same period, the average payout ratio (the share of net income paid as dividends) was 56.98%, more than 20 percentage points higher than the average for domestic corporations over the same period. Retained earnings awaiting appropriation also nearly doubled, from 282.1 billion won in 2015 to 522.4 billion won in 2023.
CCEJ said, "The core problem is that even though fiscal support has more than tripled since 2019, bus companies' profits and dividends have hit record levels," adding, "In the end, subsidies and fare hikes flowed to dividends and internal reserves rather than service improvements."
To resolve the problems in Seoul's semipublic bus system, CCEJ urged authorities to verify the standard operating cost through external evaluations and audits and to disclose all stages of budgeting, execution, and settlement of account.
It also demanded the following: review granting route adjustment authority and partial public operation of vehicles and introduce an aggregates bidding system or cost settlement per kilometer of operation; switch from a per-vehicle basis to a per-kilometer standard cost and, linked with the Bus Information System (BIS), disclose route-by-route expense and revenue in real time; and enact a separate Bus Act distinct from the Passenger Transport Service Act to clarify the authority framework.