Notes from Korea: How Bus Reforms and Fare Integration Transformed Seoul’s Transit
This blog post is the second in a series of three about lessons California can learn from South Korea’s transit system, made possible by to the Wendy Tao Smart Cities Scholarship. VIew the first post here.
Buses in dedicated lanes in central Seoul, which began to be implemented at a large scale as part of the 2004 bus reforms.
While public transit in Seoul today is a fast, reliable, and highly integrated network of bus and metro lines, it wasn’t always this way. In the early 2000s, amidst increasing car ownership and steadily declining customer satisfaction and ridership, bus operators were facing a dire financial crisis.
Then, in 2004, the Seoul Metropolitan Government (SMG) implemented a set of bus and fare policy reforms that changed the trajectory of transit in the city of ten million. Within two years, SMG reorganized the bus network, overhauled operator incentives, and introduced a unified, distance-based fare structure for buses and the metro. These changes not only boosted ridership and revenue by over 10% immediately, but more importantly, ushered in a long-term “virtuous cycle” of rising investment and ridership that continues today.
Seoul’s bus network and fare policy reforms are now known as one of the most dramatic and clear cases for network management of routes, fares, and service. This post explains the reforms highlights some key lessons for California - including the importance of strategic stakeholder engagement and empowered regional leadership.
The problem: Declining service quality, increasing calls for operating subsidy
Though buses had been Seoul’s main form of public transport since the 1950s, ridership began declining in the mid-1980s. Over 100 private companies operated service independently. SMG determined fares and granted licenses, but played no role in setting routes, and there was little coordination between operators. As a result, “routes were highly circuitous, overlapping, and not well integrated with metro services or the routes of other bus companies,” according to Pucher, et. al. (whose excellent summary of the reforms greatly informed this blog post).
Bus ridership in Seoul declined steadily up until the 2004 reforms. Source
Throughout the 80s, 90s, and early 2000s bus speeds declined due to congestion, operating costs rose, and metro expansion drew riders away. With profits falling, many operators cut unprofitable routes or went bankrupt, weakening service and further lowering ridership. Operators demanded more subsidy even as the city’s finances were constrained.
A new mayor commits to a system overhaul, looking globally for solutions
In June 2002, newly elected Mayor Myung-Bak Lee, a former Hyundai CEO, pledged to overhaul Seoul’s struggling transit system. He tasked the Seoul Development Institute (SDI), the city’s ‘official think tank’ (to be discussed further in my next blog post), to study best practices globally and propose a set reforms aimed at improving efficiency.
In addition to transforming Seoul’s public transit, Mayor Lee also led the initiative to tear down a freeway and restore the Cheonggyecheon stream as a linear park in central Seoul - which opened in 2005. This project was also delivered in just two years.
SDI also set up numerous of committees of expert advisors and researchers to develop the core set of policy reform ideas. To build public support and engage key stakeholders, they convened the critical “Bus Reform Civic Committee”, which both provided input on policymaking and promoted the package of reforms once it was completed. Consisting four civic group members, eight expert or scholar members, three bus industry members, and five members from the city council and related organizations, the committee helped support a policy consensus around reforms that balanced the interests of the public and bus companies.
By July 1, 2004, just two years into Mayor Lee’s term, Seoul had implemented nearly all of SDI’s key recommendations, including:
Integrating bus and metro services and fare structures
Expanding bus-only lanes
Centralizing fare collection
Overhauling bus route planning and operator compensation
Network management reforms
The reforms introduced covered the basic elements of network management seen in other global regions with effective metropolitan transit systems, and included changes to policy, but also changes to governance, clarifying roles and responsibilities of transit operators, regional authorities, and other actors. A summary of the key policy and institutional changes are shown in the following table.
Source: Seoul Solution
A major governance shift saw SMG take over network planning and a new compensation structure for bus operators that rewarded operators based on performance, rather than ridership. A centralized fare pool distributed revenue based on service provided—similar to Zurich’s ZVV model.
The sprawling, fragmented bus network was reorganized into a logical, color-coded system: blue (citywide express), red (intercity express), green (local), and yellow (downtown circulator). ITS technology was introduced to manage operations in real time, improving headways and reliability.
The three T-Money cards I collected while in Seoul.
The reorganization of bus routes not only helped provide a more logical, coordinated network that improved access and reduced duplication, but because it was coordinated with the rollout of an integrated fare structure between buses and the metro system, the new network maximized intermodal connections. A common, distance-based fare structure for the entire bus and metro network was introduced, eliminating the financial penalty of transferring. Bus routes were oriented to feed into and complement metro lines rather than duplicating them, allowing for a more efficient use of infrastructure. Fares for most riders decreased due the integrated fare policy; today Seoul’s base fare is just ₩1400 (about US$1), for trips under 10 km, and an additional ₩100 for each additional 5 km traveled.
T-Money is a public-private partnership, including a significant share of investment from credit card companies and technology provider LG.
Introduction of the new common distance-based integrated fare structure and a new central fare collection system led to the establishment of T-Money, a special purpose payment service provider, in 2004. Unlike Clipper, the Bay Area’s common fare card system that was launched to create a common fare media but maintain legacy fare policies of over two dozen transit agencies, T-Money was launched with the explicit goal of integrating legacy fare structures into one unified structure. Also unlike Clipper, T-Money was set up as a public-private partnership, with 36% ownership by Seoul Metropolitan Government, and private companies, including credit card companies and technology providers, as other major shareholders.
Buses at Seoul’s central station transit hub, featuring a number of dedicated bus lanes.
Finally, an essential component of the 2004 bus reforms was rollout of bus priority infrastructure throughout Seoul, speeding up travel times. 36 km of BRT lanes were introduced by February 2005, growing to 98 km by end of 2006. Along with new low floor buses than enabled level boarding and new expanded platforms, bus speeds improved dramatically along some of Seoul’s most congested and high ridership corridors. These new facilities were focused on enabling seamless bus-to-bus, and bus-to-metro transfers.
The Impact: Higher Satisfaction, Ridership—And Subsidy
Seoul’s rapid rollout of comprehensive bus and fare policy changes led to dramatic results. Passenger dissatisfaction with buses dropped from 56% to 13% in just three months. By October 2004, 90% of riders were satisfied. Bus speeds increased by 33–100% on key corridors; car speeds improved too. BRT lanes carried six times more passengers than general lanes, and traffic injuries fell by a third.
Ridership rose up to 14% in the first year; fare revenue grew by 10%. Ironically, while a major driver of the reforms was the desire to reduce the reliance on public subsidy, the bus reorganization actually ended up significantly increasing the need for operating subsidy. Annual operating subsidies roughly tripled from the amount spent before the reforms, to about $270 million. However, due to the significantly improved quality of service and increased in public satisfaction, the public and government supported increasing operational subsidies. Pulcher et. al. also notes that the relative costs of these bus improvements were small compared to the cost of expanding the metro network, the main other strategy for improving transit.
Lessons for California
Seoul’s successful 2004 reforms have become world-renowned, and have become a model for many nations, particularly in Asia. UITP, the international association for Public Transport, honored Mayor Lee with a special award in 2005 for “extraordinary success at implementing so many transit reforms in such a short period of time, integrating innovative technologies with new infrastructure”.
I believe Seoul’s experience offers four key lessons for California:
A yellow (color-coded to denote downtown circulator) bus passing by a metro station in Seoul; the 2004 reforms that reorganized Seoul’s buses and introduced a common distance-based fare system with the Seoul metro transformed ridership.
Pursue Tried and Tested Integration-Focused Policies: The key practices introduced in Seoul — service-led planning, fare coordination, bus priority, and network management — are nearly identical to those practices seen to be successful in other regions and are proven to grow ridership. The fact that these same policies have been recommended by Bay Area’s Transit Transformation Action Plan, and look to be central to the California’s Transit Transformation Task Force, show that we are on the right track in California.
Structure Stakeholder Engagement Carefully: Seoul prioritized input from experts, civic groups, and elected officials in addition to negotiating with operators about reforms. This empowered the city to rebalance operator roles while avoiding capture by vested interests.
Efficiency Doesn’t Mean Less Subsidy: Seoul’s reforms made buses more effective but also led to increased subsidies - contrary to the initial stated goal of the reforms to reduce reliance on public subsidy. Just as Seoul eventually came around to seeing the need for increased public subsidy, California must accept that a successful, high-ridership transit system will still need substantial public funding—especially if it replaces more costly infrastructure investment. However public support for greater public funding is likely to increase with observable improvements to customer experience.
Empower Regional Leadership: At the end of the day, SMG had a clear mandate and set of powers to overhaul public transportation and had strong leadership and political will from Mayor Lee. Upon identifying the right policies, Seoul had an empowered network manager authority with a clear leader who could take action. In contrast, California and the Bay Area have to date struggled to assign clear mandates to public agencies for improving public transportation within regions and statewide.
In my third and final upcoming blog post, I’ll explore South Korea’s set of strong and complementary public institutions have enabled world-class transit delivery—and what that could mean for California.