Airport railway a wasteIt’s been more than a year since the Airport Railroad link to the Incheon International Airport started operating and the railway is wasting taxpayers’ money. For every 15 expected passengers per day, there is only one taking the train. In the first year since the railroad opened, the average number of daily passengers was a mere 13,700, 6.6 percent of the expected 207,421 persons.
As a result, last year’s revenues were just 7.1 billion won ($7 million), much less than the estimated target of 115.1 billion won. As the Airport Railroad, a public asset, was built and managed by a private company at the request of the government, when revenues fall under 90 percent of an estimated target the difference must be compensated with taxpayers’ money. This year, the compensation reaches 103 billion won, because estimated demand was overblown or measured carelessly.
Things are unlikely to improve. According to Korea Transport Institute data, in 2010, even when the extension line to Seoul Station is completed, only 270,000 passengers are expected to use the railway, much smaller than the first estimate of 490,000.
In other words, even when the entire railway is completed, it is unlikely to make money. Nearly 5 trillion won of taxpayers’ money is expected to be poured into this project until 2040 when the private company’s contract ends.
And that is not all. The Incheon International Airport Expressway, a highway linking Cheonan and Nonsan, an expressway connecting Daegu and Busan and the Mount Umyeon Tunnel in Seoul are also wasting state money because of overestimated demand.
It is easy to start public projects with private companies and capital because public bodies don’t have to pay up front. Politicians use this as a way to show their benevolence. However, once completed, it is impossible to stop the project, even if there is no demand. As a result, such infrastructure keeps wasting taxpayers’ money.
As building social infrastructure is extremely expensive, thorough and objective estimates of demand is required. If a project is pursued for political reasons without considering economic factors, it is best not to start it, whether it is a private company or the government who carries out the project.
If a project is absolutely necessary for our country, state funds should be used from the beginning. The government also should take over those public businesses that private companies have been running at deficit. The government should manage them with state funds in order to increase management transparency.