[VIEWPOINT]There Can Be No Winners in a Bus Strike

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[VIEWPOINT]There Can Be No Winners in a Bus Strike

The national government has poured huge amounts of money into construction of subway lines to reduce traffic congestion. Con-trary to expectation, however, the share of the subway in Seoul's transportation network has not increased much; some professionals even claim that the number of subway passengers has decreased.

It is generally believed that the opening of additional subway service has reduced bus ridership while doing little to cut automobile use, which is the main reason for traffic congestion. As a result bus companies are planning to reduce their operations by 30 percent, and their labor unions are demanding a 12.7 percent pay increase. If some arbitration is not immediately worked out, we may end up with chaos in public transportation.

City buses run by private companies provide a public benefit as the main transportation means for ordinary citizens, but they have had less funding support from government than foreign bus companies have. When there were few means of public transportation, the bus industry was considered a goose that laid golden eggs because there were so many potential bus passengers. But with the beginning of subway construction in the mid-1970s and the spread of mass automobile ownership, the demand for buses decreased significantly.

According to Seoul metropolitan government statistics, for the past five years the number of bus passengers among people using various transportation means has decreased by 8.4 percent. If this trend continues, we have to worry about the simultaneous demise of bus companies. In past years the government used to accept bus companies' requests for fare increases for the purpose of improving the quality of service. But the fare increases only produced greater burdens on average citizens.

We can point to the bus companies' insensitivity to changes in the management environment as a main cause of this repetitive cycle. But I think the root of the problem mainly stems from the lopsided understanding of government assistance to bus companies. The central government thinks local governments should take care of the problem, since buses operate in cities. But nurturing city bus transportation involves many factors.

First, there is the relationship between the numbers of bus and subway passengers. If we can increase bus ridership, it will lead to an increase in subway ridership, reversing a decline.

Second, improving the bus service would obviate the need for further reckless subway construction. It costs 80 billion won ($61 million) to build one kilometer of subway line. But the cost for restructuring Seoul's bus industry by 2004 would be only 45.3 billion won, according to the Seoul Metropolitan government.

Third, the central government should support money-losing bus companies in cities and regions that have no subway lines. In other words it should try to balance its assistance, since the subway lines were built out of national tax.

Many people think the central government should not support city buses because they are run by private companies. Of course if, like foreign countries, the government did not impose regulations on the bus companies, it could stick to market principles and tell bus companies to take care of their own losses. But there are clear reasons for the central government to support the operators, when the government imposes strict regulations on them, such as not allowing flexibility in bus operations or leaving fare increases at their discretion.

Recently the central government raised the price of light oil, deepening the funding crisis facing bus companies. As the number of bus passengers has dropped steeply, while the number of buses has not been reduced much in 10 years, the bus operators asked to cut their bus services, mainly on the routes where they were losing money. If we consider that private companies exist for maximizing profits, their requests look natural. Therefore, the central government should gradually take over the routes given up by private companies in an effort to restructure the bus industry. And it can support the operating deficit of the routes by offering subsidies in the form of a public auction.

The public transportation fare structure cannot instantly reflect changes in consumer prices as they happen. And they cannot reflect actual costs because public transportation is mainly for ordinary citizens. If the fares are increased to cover the costs, severe traffic congestion may result from diversion of passengers to cars and taxis. In order to minimize these side effects, it is desirable that the central government support the deficit caused by "social fares" to public transportation.

Policy authorities differ on ways to solve the city bus problems. I expect they can come up with a proper solution by overcoming their self-centered interests. Bus companies and labor unions, too, should look beyond their noses and keep in mind that the power of strikes or service cuts, like the power of nuclear bombs, is first of all destructive. To achieve one's objectives it may be necessary to possess power, but rarely is it desirable to use it.


The writer is a senior research fellow at Korea Transport Institute.

by Hwang Sang-kyu

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