Korea raises subway, bus fares after 8 years of freeze to reduce losses

[Photo by Yonhap]

The Seoul Metropolitan Government has decided to raise bus fares by 300 won ($0.23) and subway fares 150 won, seven months after announcing the plans as fares have not been increased for eight years and annual losses have exceeded 1 trillion won.

According to the plan that has been approved by the city’s price control committee on Wednesday, the basic fare for the Seoul subway will be 1,400 won, up 150 won from the current card fare starting October 7. The extra charge according to the distance will remain unchanged.

The bus fare hike, meanwhile, will take effect earlier on August 12. Fares of city buses will increase by 300 won to 1,500 won, town shuttle buses by 300 won to 1,200 won, and inter-city buses by 700 won to 3,000 won.

The Seoul government’s decision to raise fares despite concerns over rising inflation has likely taken place as there has been fewer and lower fare hikes when losses from operating subways and buses have been growing every year.

The Seoul Metropolitan Subway posted losses worth 1.2 trillion won last year, and buses operating in the city have logged a combined operating loss of 850 billion won.

The public transportation losses per passenger have continued to increase, reaching 755 won for the subway and 658 won for city buses in 2021.

Yet, subway and bus fares have not been raised for more than eight years since 2015. Subway fares had been raised by 100 won every one to three years from 500 won in 1998. However, they were kept unchanged for five years from 2007 to 2012 as the financial crisis broke out in 2008.

The fare hike is expected to reduce the subway and bus operating losses by at least 20 percent. The annual losses of the subway are expected to fall to 924.3 billion won by 2024 after the 150 won increase takes effect, according to the Seoul Metropolitan Government.

In 2025, losses are projected at 329 billion won, down from the projected figure of 1.2 trillion won before applying the hike. Buses, which have been losing nearly 800 billion won every year, are projected to record losses of 499.6 billion won in 2025, which is 256.1 billion won less than the projected 755.7 billion won without the hike.

While the fare hike has the advantage of reducing the financial burden on local governments in operating public transportation, there are concerns that it can drive up inflation as other local governments in addition to Seoul are likely to follow suit.

Incheon is planning to raise subway fares from October and is making concrete plans to raise fares by 250 won for city buses and 350 won for inter-city buses.

Busan Metropolitan City has submitted three public transportation fare hike proposals to the Busan Metropolitan Council, which include increasing the city bus fare for adults by 400 won and fares for city railroad and Busan-Gimhae Light Rail Transit by 300 to 400 won each.