Is the 'Sillim Line' Really Making Gwanaksan More Accessible? ... Seoul Expands Light Rail but Only Piling Up Debt [New Transportation Refugee Report] ⑥

Only Ui-Sinseol and Sillim Lines in Operation
Hundreds of Billions in Annual Losses
Critical Failure in Initial Demand Forecasting
Wirye and Dongbuk Lines Under Construction; Others Remain in Planning

Editor's NoteSeoul, ranked 16th in the world for transportation accessibility, also faces significant disparities in access to transportation convenience. While the rapid expansion of the transportation network has aimed for regional balance, it has resulted in overcrowding in some areas and blind spots in others. Despite 75 years of public transportation history and the advent of artificial intelligence (AI) traffic systems, transportation poverty persists. These transportation gaps lead to imbalances in quality of life. Asia Economy has examined the reality of the situation and explored possible solutions.

The light rail transit (LRT) projects are facing difficulties. Due to failures in demand forecasting, deficits have snowballed, and no construction companies are stepping forward to participate, leaving the projects stalled at the starting line.

According to the Ministry of Land, Infrastructure and Transport and other sources on July 14, the Seoul Metropolitan Government planned to operate a total of 11 LRT lines by 2030 under the second phase of the Seoul Urban Rail Network Construction Plan. However, only two lines are currently in operation: the Ui-Sinseol Line, which opened in 2017, and the Sillim Line, which opened in 2022. Aside from the Wirye Line and the Dongbuk Line, which have begun construction, the remaining seven lines (Gangbuk-Horizontal Line, Mokdong Line, Myeonmok Line, Nangok Line, Seobu Line, Wirye-Sinsa Line, and Ui-Sinseol Extension) are mostly still in the planning stage.

Among these, the Gangbuk-Horizontal Line and Mokdong Line failed to pass the preliminary feasibility study conducted by the Ministry of Economy and Finance last year. The Nangok Line is currently undergoing the preliminary feasibility process, but there are predictions that it is unlikely to pass due to insufficient profitability. Although the Myeonmok Line passed the preliminary feasibility threshold, it has not been able to move forward because no project operator has been found.

The situation is not much different for the Seobu Line. This line, connecting Sinsa Station to Yeouido and Seoul National University Station, seemed to be gaining traction after more than 20 years of stagnation when the Doosan Construction consortium was designated as the operator in 2021. However, due to rising construction costs and deteriorating business prospects, some companies in the consortium withdrew, leaving the project indefinitely delayed.

No construction companies willing to participate... Construction costs rising and no revenue guarantee measures

Construction companies are reluctant to participate in LRT projects because it is difficult to achieve profitability. The fact that the currently operating Ui-Sinseol Line and Sillim Line have accumulated deficits for several years makes this easy to understand.

The Ui-Sinseol Line recorded a deficit of 10.2 billion won in its first year of operation in 2017. Since then, it has posted annual losses of more than 10 billion won. The accumulated deficit is reported to exceed 200 billion won. The Ui-Sinseol Line project was initially pursued as a Build-Transfer-Operate (BTO) private investment project, but due to poor profitability, it was converted to a Minimum Cost Compensation (BTO-MCC) model in 2021, with the Seoul Metropolitan Government now covering more than 20 billion won in operating costs each year. During this process, the original operator fell into a state of capital erosion, and a new operator had to be found.

The main cause of the deficit was a critical failure in initial demand forecasting. When the Ui-Sinseol Line opened, daily ridership was projected at 130,000 passengers, but as of last year, the average daily ridership was only 75,000, about 58% of the forecast. In addition, the free ride rate reached 36.2%, more than three times the predicted 11.6%.

The Sillim Line is facing a similar situation. Although it was opened with an expected daily ridership of 130,000, the actual number of passengers after opening has been only 50,000 to 60,000 per day. Namseoul Light Rail, the operator of the Sillim Line, posted a net loss of 16 billion won in its first year of operation. On top of this, recent increases in material and labor costs have driven up construction expenses, leading to criticism that construction companies are facing a triple risk: low demand, rising construction costs, and the absence of revenue guarantee mechanisms.

Measures needed to reduce deficits and improve efficiency... Transportation exclusion issues must be addressed

However, residents of areas proposed for LRT projects are appealing for the projects to be viewed as a matter of their right to survival. Gwanak District has launched a district-wide petition to pass the preliminary feasibility study for the Nangok Line. They have also proposed self-help measures such as reducing the number of stations and cutting overlapping bus routes to improve economic feasibility. Song Doho, a member of the Seoul Metropolitan Council's Transportation Committee, said, "The willingness of residents (in the planned Nangok Line area) to accept fewer stations and route adjustments is evidence of their desperation," and added, "If the preliminary feasibility criteria remain fixated on economic efficiency, transportation-excluded areas like the Nangok Line will inevitably be structurally excluded."

Experts also point out that, given that LRT projects are unlikely to yield high profits from the outset, the approach should focus on 'reducing structural deficits and maximizing efficiency.' For example, extending LRT lines to allow transfers to other lines could increase connectivity and thus boost ridership.

Choi Jinseok, Senior Research Fellow at the Korea Transport Institute, said, "Extending lines can lead to improved profitability," citing the Shinbundang Line as an example. The Shinbundang Line has been extended in phases: Phase 1 (Gangnam to Jeongja, 2011), Phase 2 (Jeongja to Gwanggyo, 2016), and Phase 3 (Yongsan to Sinsa, 2022), with ridership steadily increasing. Although Phase 1 recorded a net loss of 39.6 billion won in 2022, it turned a profit from the first half of 2023.

Choi added, "While the Shinbundang Line is a private investment project and operates at high speeds, which differs somewhat from LRT, it is a good example of improving profitability through extended operations," and suggested, "LRT projects should also consider more flexible preliminary feasibility criteria, assuming line extensions."