Euljiro 3-ga Station on Subway Line 2 and 3 will be renamed with a substation name of “Shinhan Card Station” from this March. The sale price of the substation name of Euljiro 3-ga Station was 874 million won, the highest price among the contracts so far.
/Photography by Yoo Joon-sang
Seoul Metro, a public corporation operating the subway of Seoul, has been carrying out a “Substation name sales business” to recover its piling-up deficit. From this March, Euljiro 3-ga Station on Subway Line 2 and 3 will be called “Shinhan Card Station,” and Shin Yongsan Station on Line 4 will be called “Amore Pacific Station.” The sale price of the substation name of Euljiro 3-ga Station was 874 million won, the highest price among the contracts so far. Citizens’ reactions to this business are divided. Some say it is okay if it can help reduce Seoul Metro’s deficit even a little. However, some criticize that it is inappropriate to use the subway, a public property, to promote private institutions.
Substation names are decided through various criteria
You might have heard about the news that some major subway stations are being renamed after a specific company or brand name, but this has been exaggerated. In fact, in addition to the current station name, the names of institutions such as companies, schools, and hospitals are just being included. The contracted substation name is added by the side or below the existing station name. For example, Donggguk Univ. Station also used to have a substation name, “Shilla Duty-Free,” which is not being used now as the contract expired. Currently, there are 33 subway stations with substation names throughout Seoul. Seoul Metro expects to generate an average annual profit of about 2.5 billion won from this business.
Then, under what process the owner of the substation name is being selected? First, each urban railway corporation measures the lowest price of substation name in consideration of the floating population and the environment around the station. Next, institutions interested in it will participate in bidding, and the highest price bidder is selected as the substation name user. Finally, the substation name is included on entrances, platforms, route maps, and in-train announcements. It is a principle to have only one substation name per station and the contract is renewed or terminated every three years.
Interest in the substation name has grown because it can advertise an institution or a brand taking the identity of that region. However, a substation name is not just given to anybody who pays a lot of money. There is a judging committee, so it must pass a suitability review. In order to improve the convenience of passengers, institutions located within a 1km radius around the station with high public recognition are selected by priority. In addition, no matter how high the bid is, it is a principle not to give purchasing qualifications to institutions that may hinder publicity or cause social problems.
The deficit is continuously increasing
Seoul Metro continues to suffer from a deficit of over 1 trillion won per year. From 2017 to 2019, Seoul Metro showed a deficit of around 500 billion won. Furthermore, in 2020, due to COVID-19, there was a decrease in the number of public transportation users with the spread of telecommuting and non-face-to-face education. As a result, it recorded a net loss of over 1 trillion, 1.1137 trillion won, for the first time ever. The net loss of 2021 is also expected to surpass 1 trillion won. Moreover, none of Korea’s local urban railway corporations have a surplus.
Currently, the basic fare for public transportation in Seoul is 1,250 won for subways and 1,200 won for buses for adults, which has been frozen for seven years since 2015. As of 2019, before the pandemic, Seoul Metro announced that the transportation cost per passenger was 1,400 won. Considering the free transportation service for the elderly, the average fare is reduced to 946 won, which means that it suffers a loss of about 500 won per passenger. In addition, losses are increasing as passengers decrease due to COVID-19.
It is not easy to promote a policy of increasing public transportation fares from the perspective of the head of the local governments, who must be aware of the election. In 2020, there was news that the Seoul Metropolitan Council was discussing about raising the basic public transportation fare from 200 to 300 won. However, the Seoul Metropolitan Government said there is no specific plan to increase the fare, saying that stability in the lives of ordinary people is the most important thing, with the economy of ordinary people continuing to be difficult due to the prolonged COVID-19 situation.
As part of the current welfare policy, the elderly aged over 65, the disabled, and those of national merit can use the urban railway free of charge. However, it is a huge burden because each urban railway operating corporation and local government are bearing the cost. The elderly population in Korea was only 4% in 1984, when the free transportation service policy for the elderly was first implemented. However, as of 2021, it increased to 16% and is expected to increase to 34% by 2040. As Korea moves towards an aging society, losses from free transportation will continue to grow.
Seoul Metro has been reducing the number of people working at stations in order to reduce labor costs. It is also considering reducing late-night operations (1:00 A.M. to midnight), which were suspended for COVID-19 prevention, even after the end of COVID-19 to reduce the cost.
The profit made from the substation name sales business is not an amount that will have a significant impact on the losses. However, it is one of the efforts to reduce losses even just a little. After all, it will be the citizens who will suffer from the financial difficulties of the urban railroad corporations. Now we can use public transportation for low fares. However, it will have a considerable impact on the operation of Seoul subway in the future if there are no measures such as state funding to improve the deficit. Systematic supplements will be needed so that citizens can comfortably use public transformation continuously.
Yoo Joon-sang firstname.lastname@example.org
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