Korea’s railways face a bright future

Korail, Korea’s national train operator, has achieved a remarkable turnaround in its financial performance, while Korea Rail Network Authority is pushing ahead with a huge investment programme to expand the rail network, as David Briginshaw reports from Seoul.

LAST year Korail became a profitable organisation for the first time since the separation of train operation from infrastructure in 2004. Korail has transformed a deficit of Won 526 billion ($US 514 million) in 2006 into a profit of Won 133.3 billion, and this was achieved five years ahead of schedule.

There are three main reasons for this considerable achievement. Revenue increased by Won 140 billion, thanks mainly to the continuing success of KTX, Korea’s high-speed rail service linking Seoul with Busan and Mokpo. Korail managed to achieve what Mr Choi Han-Joo, Korail’s senior executive director, describes as “a real reduction in costs.” Staff costs, for example, were reduced by between Won 150 billion and 160 billion. The most important contributors to Korail’s financial turnaround were the proceeds from the development of stations and the sale of land around Yongsan station in Seoul.

But, as Choi points out, the improvement in Korail’s performance was all the more remarkable because the amount it had to pay in infrastructure charges went up considerably last year, from Won 510 billion in 2006 to Won 660 billion.

Choi is confident that the 2007 result was not just a flash in the pan. “In 2006, the government and Korail set out a plan to improve the performance of the railway,” he says. On the cost reduction side, Korail will reduce the workforce from 30,000 today to 25,000 by 2011. It also plans to close unprofitable passenger stations and freight terminals, and to automate many other stations by installing ticket machines. “A further Won 9 trillion will come from station development and selling land between 2007 and 2015,” says Choi. Korail plans to set up a property construction company to help it achieve this goal.

KTX continues to go from strength to strength. On April 3 last year, the third anniversary of the launch of the service between Seoul and Busan, KTX carried its 100 millionth passenger. Last year, KTX averaged 100,000 passengers/day, but in May this year it reached a record of 160,000 passengers/day.

To cope with the continuing growth in traffic, Korail will take delivery next year of the first six of 19 10-car KTX II trains from Hyundai Rotem. KTX II is the first all-Korean high-speed train and will replace the 18-car KTX trains on the services from Seoul to Gwangju and Mokpo. KTX II will also be used to launch a new service from Seoul to Suncheon and Yeosu where electrification and upgrading is nearing completion.

According to Mr Ahn Nag-Kyoun, executive director of Korea Rail Network Authority’s (KR) Railway Facilities Division, construction of the final section of the Seoul - Busan line from Daegu via Gyeongju to Busan is 65% complete and will open at the end of 2010. This will cut the Seoul - Busan journey time by about 30 minutes to 2h 10min, which should help to boost traffic even more.

Construction should start next year of the Honan high-speed line from Jochiwon via Iksan and Gwangju to Mokpo. “The Mokpo line should be ready by 2014, a year earlier than originally planned,” says Ahn. Mokpo will then be around 2 hours from Seoul instead of 3h 15min today. KR plans to invest Won 63 trillion up to 2020 to upgrade and expand the Korean rail network. This means bringing key sections up to modern standards by realigning some sections, track doubling, and electrification. The Iksan - Suncheon - Yeosu line is being upgraded to allow the maximum speed to be increased from 120 to 180km/h. Yeosu will host an international Expo in 2012, so it is vital to have a commercial train service to Seoul in operation by then - the 444km trip currently takes about 5h 10min by the fastest trains.

The Samnangjin - Jinju line is also being upgraded (track doubling and electrification) to allow KTX to be introduced on the line in 2012 running at a maximum speed of 180km/h. KR plans to extend the electrification west from Jinju to Suncheon by 2014.

A number of new conventional lines are to be built either to plug gaps in the network or to prepare for the full opening of the inter-Korean border. The rail link on the east coast between North Korea and the South Korean town of Jeojin reopened in May last year, but the line from Jeojin to the south of Sokcho was closed during the Korean War and then dismantled. So thought is now being given to building a new line from Jeojin via Sokcho to Gangneung to link up with the existing railway, and another new line from there to Wonju. However, as Ahn points out: “this is a political project, and there is no decision to proceed yet.”

Work has started on another section of new line along the east coast from Samcheok to Pohang. This single-track line will be used mainly for freight traffic. Further south, a new port has been built to relieve congestion at Busan’s existing port, so KR is building a new rail link which it hopes to complete next year.

Korea is constructing a new capital city at Sejong, but the city is not rail served so KR is conducting a feasibility study for a new east-west line from Jochiwon via Sejong to Boryeong.

Should the inter-Korean border open fully for the free flow of railfreight traffic, railfreight will become far more important to Korail than it is today, as this opens up the possibility of sending freight from Japan via Korea, and via China or Russia to Europe.

In the meantime, Korail is pushing ahead with plans to run two passenger trains from Seoul to the Beijing Olympics next month. But, as IRJ goes to press, it is still far from clear whether Korail will gain approval from their North Korean counterparts for this highly symbolic service.