[Exclusive] KTX-SRT Integration Tripartite Council Holds First Meeting Today... Organizational Structure and Employment Succession at Issue

Launched Just One Day After Trial Cross-Operations

The government is officially launching a tripartite consultative body of labor, management, and government to discuss the detailed issues of the planned integration of high-speed rail services. Just one day after the start of trial cross-operations between Seoul Station and Suseo Station, the government and stakeholders are sitting down together to sketch out a blueprint for integration. As only the overall direction of “integration” has been presented so far, and contentious issues such as the specific integration model, organizational structure, and employment succession remain difficult to reconcile, attention is focusing on the outcome of future discussions.

According to the railway industry, the first meeting of the tripartite consultative body will be held on the 26th near Cheonan-Asan Station in South Chungcheong Province. The meeting will be chaired by Kim Taebyeong, Director General for Railways at the Ministry of Land, Infrastructure and Transport, and will be attended by representatives of Korea Railroad Corporation (Korail) management and the Korean Railway Workers' Union, representatives of SR Co., Ltd. management and the SR Labor Union, and about six outside experts. The consultative body plans to hold one regular meeting per week going forward.

It is understood that around seven agenda items will be discussed at the meeting, including the method and direction of integrating the two operators. As this is the first meeting, the focus is expected to be on identifying key issues in broad terms and hearing expert opinions. A railway industry official said, “We have a timetable, but the core question is what form the single integrated organization will take,” adding, “Follow-up discussions can only proceed once this direction is decided, and nothing has been determined yet.”

Minister of Land, Infrastructure and Transport Kim Yoonduk has repeatedly stressed that this will be an “institution-to-institution integration, not a simple absorption,” but what specific organizational model this integrated entity refers to is still unclear. Whether SR will be maintained as an independent business unit or absorbed into a regional headquarters system is also expected to be a key topic at the consultative body. A transfer-of-business model for operations is being actively discussed, but in that case, labor agreements on employment succession and adjustments to working conditions become critical variables, leaving many hurdles to clear before completion within this year.

The “integration of the dual high-speed rail system” was one of President Lee Jaemyung’s presidential campaign pledges. In a work report from the Ministry of Land, Infrastructure and Transport in December last year, President Lee referred to the integration of the two operators and instructed, “Do not drag things out under the pretext of going through formal procedures; get it done quickly.” In the same month, the government announced a “roadmap for integrating the dual high-speed rail system,” setting the completion of institutional integration within this year as its goal.

Special-purpose public corporation vs. joint-stock company... A long way to go before true integration

A Super Rapid Train (SRT) unit at Seoul Station on the 25th. Ahead of the planned integration of the country's two major high-speed railways, Korea Train Express (KTX) and Super Rapid Train (SRT), a pilot cross-operation began that day deploying Korea Train Express trainsets to Suseo Station and Super Rapid Train trainsets to Seoul Station. Yonhap News

The integration is being pushed forward at an unprecedented speed. While the original target for completion had been three years later, the latest roadmap has drastically moved the schedule up to the end of 2026 or earlier. SR has stated, “The process is being accelerated rapidly following the change of administration,” and “There is an absolute lack of time to thoroughly review the side effects after integration.”

In addition to high-speed rail integration, the Ministry of Land, Infrastructure and Transport is simultaneously running a task force for restructuring Korail’s subsidiaries, dispersing its administrative capacity. The SR union said, “After the Director General for Railways changed, the process seemed to speed up, but now multiple task forces are overlapping, making it difficult on the ground to grasp what is going on,” adding, “Policy consistency is so lacking that what was said yesterday can change by today.”

There are also concerns that, in the rush to achieve physical consolidation, institutional preparations for “true integration” are being pushed to the back burner. Korail is a special-purpose public corporation that uses a seniority-based pay system, whereas SR is a joint-stock company that applies a job- and performance-based annual salary system (job-based and performance-based pay). Their working arrangements and welfare systems also differ. Within SR, there is considerable fear of discrimination in personnel decisions and promotions.

There are numerous precedents in which organizational integration has struggled during past public institution mergers. In 2009, Korea Land Corporation and Korea Housing Corporation were merged to launch Korea Land and Housing Corporation (LH), but it took 10 years for the unions originating from the two companies to be unified into a single union. In 2017, Seoul Metro and Seoul Metropolitan Rapid Transit Corporation were integrated to form Seoul Metro Corporation, yet internally, a dual structure still remains.

880 billion won in savings vs. 21 trillion won in debt pressure... Fare policy in the spotlight

On October 16 last year, members of the National Railway Workers' Union of the Korean Confederation of Trade Unions' Public Transport Workers' Union held a "Railway Workers' All-Out Resolution Rally" in front of the Presidential Office in Yongsan-gu, Seoul, demanding the integration of high-speed rail operators (Korea Train Express (KTX) and Super Rapid Train (SRT)), among other things. Korean Confederation of Trade Unions Public Transport Workers' Union

The end of the competitive structure brought about by integration is highly likely to lead to a decline in service quality and increased pressure to raise fares. Over the past 10 years, SR has maintained fares that are 10% lower than Korea Train Express (KTX), saving the public about 880 billion won in transportation costs. In addition, the introduction of seat power outlets that Korail had delayed citing technical limitations, real-time train location tracking on the “Korail Talk” reservation app, and the resumption of premium-class snack services were all achievements driven by competition with SR. There are concerns that, once a single integrated operator is created, these drivers of innovation could weaken.

In particular, given Korail’s situation of carrying 21 trillion won in accumulated debt, it is difficult to rule out the possibility that labor and management will jointly call for fare increases after integration. With KTX fares frozen since 2011, Korail has argued that a 17% increase is necessary due to cost burdens such as replacing aging trainsets. However, some analysts say that pressure to raise fares could be partially eased now that the amendment of the Framework Act on the Advancement of the Railroad Industry has provided a legal basis for the government to support part of the funding for replacing aging rolling stock.

Many observers point out, however, that support for rolling stock replacement costs merely eases the burden of new investment and is far from sufficient to resolve the already entrenched 21 trillion won in accumulated debt and the massive interest expenses that accompany it. In particular, operating costs continue to rise due to soaring traction power costs following recent electricity rate hikes and increasing labor costs, leading to the assessment that there are limits to covering operating losses with government subsidies alone. According to the SR union, if Korail were to lower its fares to the level of Super Rapid Train (SRT), it would incur an additional annual deficit of 200 billion to 250 billion won.

The disappearance of an alternative operator in the event of a strike is another challenge that must be addressed from the perspectives of safety and user convenience. Until now, even when the Korail union went on strike, SR continued operations, preventing a complete shutdown of high-speed rail services. Once the operators are integrated into a single entity, this buffer disappears. The government has stated that, to prevent inconvenience to citizens, it will consider measures such as raising the minimum mandatory service level and preparing manuals for securing emergency personnel, but no concrete alternatives have yet been presented.

The government plans to conduct trial multiple-unit operations linking KTX-Sancheon and Super Rapid Train (SRT) in the first half of this year and then expand to integrated operations in the second half, while unifying reservation and ticketing systems and fare structures within the year. If integration is completed within the year as outlined in the government’s roadmap, the two companies will be reunited 13 years after their separation in 2013, and the competitive high-speed rail regime introduced in 2016 will come to an end after 10 years.