GTX-A Suseo-Dongtan section expected to leak tens of billions of won a month after opening, why?

[한국금융신문 장호성 기자] The Suseo-Dongtan section of the Seoul Metropolitan Rapid Transit (GTX) Line A, which will celebrate its one-month opening next Tuesday, is at risk of loss due to unexpected sluggish performance.

With the number of users falling below 40% of the original estimate, the government was burdened with compensating for the project operator’s losses because it was a privately funded project. As the loss compensation cost alone is expected to reach tens of billions of dollars, criticism is being raised that GTX-A, which was expected to be a ‘transportation revolution’, is only eating up taxpayers’ money.

The Ministry of Land, Infrastructure and Transport initially predicted weekday demand for the Suseo-Dongtan section to be 21,523 people and weekend demand to be 16,788 people. However, in the 15 days since opening, the average daily number of users was 7,898 on weekdays and 11,338 on weekends and other holidays, accounting for only 36.7% and 67.5% of the expected demand, respectively.

Analysis suggests that the low number of users on weekdays is largely due to the fact that it is not connected to Samseong Station. Residents of Hwaseong Dongtan New Town who commute to the Gangnam area using the GTX-A usually prefer to use subway line 2, including Gangnam, Yeoksam, and Seolleung, but currently they have to transfer at Suseo Station.

In particular, since the GTX is a deep train, you have to go down to the 4th basement floor or lower, and at Dongtan Station, you have to go down to the 6th floor to ride the GTX-A train. Considering the crowded rush hour, the travel time outside the station is likely to feel even longer. Some point out that it is not easy to distribute demand as the SRT is already running on the same section and there are many metropolitan buses running between Dongtan and Suseo.

In the regular audit of the National Railroad Authority by the Board of Audit and Inspection in 2021, it was estimated that the demand for getting on and off at Samseong Station would reach 30% of the GTX-A Samseong-Dongtan section.

A slump in the number of GTX-A users may lead to operating losses, and the government will have to bear those losses.

The ‘GTX-A Private Investment Project Implementation Agreement’ signed by the Ministry of Land, Infrastructure and Transport with SG Rail in December 2018 means that the Ministry of Land, Infrastructure and Transport grants Samsung Station to SG Rail, the project developer, from the opening of Unjeong-Seoul Station (end of this year) to the opening of Samsung Station (2028). It stipulates that the reduction in operating profit due to non-opening must be paid. There is an estimate in the industry that the loss suffered by SG Rail due to the non-opening of Samsung Station will be around 50 billion won per year.

Of course, there are some who believe that it is premature to discuss operating losses or compensation when the entire section has not been opened. A real estate expert who wished to remain anonymous said, “The biggest advantage of the GTX is that it can be transferred to other lines, including the Seoul subway, but currently, the GTX does not even reach the center of Seoul, so that advantage cannot be fully utilized.” He said, “It is not too late to discuss the true economic value of GTX after the remaining sections, including Samsung Station, are opened.”

Reporter Jang Ho-seong, Korea Financial Times [email protected]