+ BACKGROUND, CHALLENGES AND OBJECTIVES
Background
The population of Seoul skyrocketed from 2 million to approximately 10 million over from the 1960s to the 1980s. The influx of population into Seoul as the economic hub of the country was expected based on the government-driven economic development plan. As part of the plan, the city sought for establishing convenient and efficient subway system. However, the plan was to take approximately 30 to 40 years to be fully utilised as the main mean of public transportation. Seoul therefore implemented surface car in the early 2000s to promptly respond to its booming population and demand for public transportation system. Since the 1950s when the use of vehicles significantly increased, buses had ben the main mean of public transportation. For the expansion of bus services, Seoul had increased road facilities and constructions, which backfired as narrower roads encouraged citizens to purchase more automobiles. In the meantime, rapid growth of household incomes also contributed to more automobiles hence traffic congestion. The problem prolonged to the 2000s, when 72% of the city traffic was caused mostly by personal automobiles with 79% of them with a single passenger, the driver.
Public Transportation Development in Seoul
In early 2000s with the booming number of automobiles, the role of public transportation system was significantly undermined. The decrease in demand for public transportation resulted in increased competitions in the bus service industry to offer lower cost for the passengers, resulting in deteriorated quality of service offered by the bus companies. Simply put, lack of competitive road services induced both slower travel time on roads and also poor quality of bus service. As a result, the modal share of buses declined from 30.7% in 1996 to 26.7% in 2002. In this vicious circle, the bus companies consequently increased fare, while maintaining the poor service quality.
Challenges
In 2002 when a new mayor was elected, SMG immediately conducted an extensive public transportation reform plan. Two main facets listed on the plan were: 1) contribution to the integrated public transportation network, and 2) structural change of bus industry from the industry being dominated by private companies to quasi-public bus operation system. Quasi-public bus operation system was essential to effectively implement the reform to integrate bus and subway systems. As government interventions in the private sector were not welcomed by the bus companies, providing the companies with subsidies and undergoing extensive reforms were crucial for the project.
Against this backdrop, the integrated fare system of public transportation was first introduced. In 2004, a determinate element was initiated within the great frame of initiative called the Public Transportation Reform. Although public traffic card had been used since 1996, there were problems concerning fare including capacity of data and excess charges (22.4 trillion won annually).
Objectives
The aims for fare integration system with a new smart card system were mainly divided into the following four aspects:
1) Minimisation of transfer fare
- Integrated fare system between buses and subways would shorten transfer time and offer cheaper fare for the passengers
2) Increased usage of buses by enhancing transfer efficiency
3) Reduced traffic congestion
4) Safer operation of public transportation by removing the incentive based on the passenger number; the fare would be charged based on distance travelled.
+ ACTIONS AND IMPLEMENTATION
1. Introduction of the Distance-based Fare System
In the past, where a passenger used more than one form of public transportation services (i.e., bus-subway on two or more bus lines, or subway and bus on two lines, and other various combinations), the passenger had to pay the fare of each public transportation service, and the fare was fixed regardless of the travelled distance. With the new integrated fare system, the total fare is calculated proportionate to the travel distance, regardless of the number or transportation modes used. Simply put, transfer between any public transportation systems is free, and the passenger is only required to pay the fare for the distance travelled. Compared to the previous system, the new system is devised to charge less, hence benefit the passengers with reduced fare up to 30%.
2. Joint Transportation Agreement
With the new system, operation of the buses and management of the system would be separated. To achieve this, the SMG and the Bus Operation Business Cooperative concluded an agreement for the joint management of profits on 4 February 2004. This agreement included terms on the guarantee of a set profit based on the standard transportation prime cost, which was a reasonable reward on surplus vehicles based on the reformed system. The agreement also provided the companies benefits including financial support for loss, guarantee of the existing business license (for 57 of them), etc.
3. Smart Card System
The plan was initiated under a joint investment by the city and a private corporation through bidding. LG CNS Consortium was selected as the company for 35% of the share. On 6 October 2003, a corporate body, Korea Smart Card Co., Ltd., was jointly established by the SMG and LG CNS Consortium to commence the development of the traffic card and the traffic card terminals. Thereafter, Korea Smart Card Co., Ltd. calculated the expected profit from the new system, based on many variables including bus routes.
4. Subsidies
5. Consulting Services
+ OUTCOMES AND IMPACTS
The results of the integrated modal fare system can be summarised into:
1) Reduced public transportation fare
2) Increased efficiency in operation due to reduced pay time
3) Enhanced connectivity between public transportation means
4) Increased number of public transportation passengers
5) Increased passenger satisfaction
+ REPLICABILITY AND SCALABILITY
Policy Sharing Cases
1. (Wellington & Auckland, Newzealand) Public Transportation Card System and Fare Service Establishment
Project Period: October 2007 ~ October 2017
Project Cost: USD 12,775,330
Role of SMG: System implementation and supporting the market entry of Korea Smart Card to overseas projects
2. (Bangkok, Thailand) Integrated Public Transportation Fare System Establishment
Project Period: December 2012 ~ December 2016
Project Cost: USD 4,846,669
Role of SMG: Provided policy advises for integrated public transportation fare system establishment
3. (Kuala lumpur, Malaysia) Consulting for Integrated Transportation Fare System Establishment
Project Period: December 2014 ~ December 2017
Project Cost: USD 9,692,484
Role of SMG: Provided IT policy consulting based on various experiences in implementing the SMG IT policy and supported the business entry of companies to overseas market
+ BUDGET AMOUNT
In 2003, 17.1% (USD 1,683,650,864) of the total budget (USD 6,016,659,282) except for the expenses supporting other agencies was allocated for the roads and transportation sector. Among those, USD 51,129,818 was invested for public transportation and routes reform. USD 81,524,147 was invested for transfer discount subsidies.
