Work on the new 61.1km line, which includes three new stations was 82% complete by the end of November 2015. The line includes a 50.3km tunnel, the world's third longest, which runs from Suseo to Jije and was completed in June 2015 after 41 months of construction. SR will initially operate services using Korail-owned 300km/h eight-car KTX- Honam trains and will go head-to-head with Korail beyond the new infrastructure on the Gyeongbu Line from Cheonan to Busan, and the Honam Line from Cheonan to Gwangju-Songjeong and Mokpo. SR tickets will cost 10% less than Korail's.
SR has also ordered its own fleet of 10 10-car KTX-Honam trains supplied by Hyundai Rotem in a Won 342.3bn ($US 294.6m) contract and these will enter service to coincide with the opening of the high-speed line extension from Gwangju-Songjeong to Mokpo in 2017.
Korail holds a 41% stake in SR, with a Korean teacher's pension fund holding 31.5%, the Industrial Bank of Korea 15%, and Korean Development Bank 12.5%. The new operator was set up in 2013 in accordance with revised government transport policy which emphasises increasing competition, and Korail president and CEO Dr Choi Yeon-Hye says Korail is preparing to adapt to the prospect of operating alongside a direct competitor.
"The aim of the new service is to create greater demand that will increase rail's national transport market share," Choi says. "It will aid efforts to offer flexible transport strategies and improvements to customer service based on accumulated operation know-how. Korail will also strengthen its collaboration with the government and SR to stabilise train operation on shared lines."
Competition from SR and the impending changes to Korail's operation model follows a financial turnaround for the railway.
After reporting a loss of $US 167m in 2013, Korail made a profit of $US 89.4m in 2014. It expects to record a further $US 100m profit in 2015 while its debt and debt ratio is expected to fall from $US 15.4bn and 410.9% in 2014 to $US 11.8bn and approximately 200% in 2015.
Choi credits Korail's improved financial performance to its ability to offer the Korean public a low-cost, highly efficient railway - KTX achieves punctuality of 99.9% - as well as a new culture of organisational effectiveness and management efficiency.
"It not only laid the framework for an operating profit achieved through enhanced management responsibility systems, including a Yield Management System and accounting separation, but also optimised financial policies for debt-reduction and asset management, including selling shares in the Airport Express," she says.
Choi adds that under her leadership Korail is embracing a culture of sustainable management and strong communication between its staff at all levels, and argues that recent collective bargaining agreements, an outcome-based assessment system and a wage-peak system have revolutionised its working culture to one based on ability rather than wealth or privilege. "We have enhanced the flexibility of personnel operation, which has helped Korail to secure the driving force behind its future developments and promoted trust from Korean citizens," Choi says.
Choi is now in her third year as head of Korail after taking over the role in October 2013. In January 2014 she launched what is the guiding policy of her leadership: Happiness for All. Choi describes the policy as a vision to improve people's happiness and to become the world's best railway by "creatively realising customer values and establishing a sustainable management system."
In terms of direct policy and investment, Choi says this is translating into a Won 4.5 trillion ($US 3.87bn) investment in improvements to rolling stock, railway facilities and safety management systems up to 2020. In addition a further Won 1.2 trillion will be spent on refurbishing outdated trains and stations, and improving stations and transfer facilities for passengers by 2020 to become what Choi describes as "an enterprise loved by the people."
Further investments are underway to enhance the service offered ahead of the 2018 Winter Olympic Games, which will be held in Pyeongchang, through a transport strategy backed by government and private enterprise, which Choi reports is on schedule.
Included in this plan is construction of a new high-speed line from Wonju to Gangneung, and reconstruction of the main line from Incheon Airport to West Wonju, including installing 60kg rails and upgrading the signalling system from ATS to ATS and ATP. In addition Korail placed a $US 490m order in 2014 for 150 KTX Sancheon cars for use by Olympic passengers.
"For the Olympics Korail endeavours to offer a safe and convenient one-stop rail service backed by a train operation plan tailored to the Olympic schedule," Choi says.
Korail's emphasis on improving safety, which enabled it to reduce its accident rate by 30% year-on-year in 2015, is reflected in the introduction of its Human Safety Centre.
By utilising safety management systems which rely on big data retrieved from rolling stock, operating systems, and rail infrastructure, as well as a regime of counselling for employees, improvements to safety policies and organisational culture, Korail has significantly reduced the sources of accidents and incidents of human error. Indeed from an error per million km rate of 0.995 in 2012, this has fallen to 0.781 in 2013, and 0.701 in 2014.
"Every member of Korail's staff acknowledges that rail accidents caused by small mistakes will damage our reputation and achievements," Choi says. "Therefore we have set the target to identify all potential risks to prevent accidents until all accidents have been eliminated."
A major priority for Korail in 2016 is to continue to enhance its public image by expanding its tourist-friendly services which will also open up new revenue streams. And in the face of competition from SR, Choi says it will have to become a more efficient operation by reducing its size. "Korail still has many issues to overcome to remain competitive and to ensure sustainable and stable growth both in competitive domestic and international markets," she says. "Continuing to operate with a surplus in the face of competition is one of the major challenges from the changing business environment we will encounter in 2016."
Northern link
Many of Korail's, and Choi's, achievements in 2015 relate to its efforts to restore a railway link to the north.
It hosted the 2015 Organisation for Cooperation between Railways (OSJD) Railway Summit in Seoul and 10th International Freight Conference from May 27-29, with more than 200 railway officials from 25 countries in attendance and where the Seoul Declaration, which calls for support for the Eurasian railway development and Inter-Korean railway, was unanimously adopted.
It also launched the Eurasia Express on July 14 in Seoul. This train subsequently travelled from Vladivostok and Beijing on a 14,400km journey to Berlin with the 200 Korean citizens onboard highlighting their desire for a peaceful reunification and a new era for the Eurasian continent. In October, Korail established the platform for unification and an exhibition promoting unification at Dorasan station, near the North Korean border.
"Korea is recognised as an isolated island and not part of the Eurasian continent because of its uniquely divided situation," Choi says. "In order to tackle these unusual circumstances, the company is placing multifaceted efforts towards the goal of reconnecting inter-Korean railways with trans-continental railways.
"In this vein, it became an affiliated member of the OSJD, held the 2015 OSJD Seoul Railway Summit and 10th International Freight Conference with great fanfare, and successfully completed Eurasia Express to promote exchanges and cooperation with the Eurasian continent. These contributions and accomplishments led to international support and consensus for Korea to make inroads into the Eurasian continent."
Korail joined OJSD as an affiliate member in March 2014 and continued cooperation with OSJD is a key element of Choi's strategy. She sees it as playing a critical role in realising her's and Korail's ambitions to build trust on the Korean Peninsula and a new era of peace in Northeast Asia.
It is then reasonable to expect that Choi will be doing her utmost to take further steps towards this ambitious goal in 2016, including greater involvement in the Rajin - Khasan project with North Korea and Russia.
"Like how the German railway served as a medium of unification, I believe that the reconnection of rail tracks between the south and north will become a starting point to reach reunification and as a means to overcome the division and enhance national homogeneity, reconciliation, and cooperation," she says.
