Overview Increasing traffic congestion became a problem for Seoul in the late 20th century, which imposed tremendous economic and social costs for the capital city of the Republic of Korea. In response, the Seoul Metropolitan Government in 2004 enacted several large-scale public transportation service improvements to strengthen the public transportation ecosystem so that it may serve as a viable alternative to individual passenger cars. As part of its efforts to improve the modal share of public buses, the Seoul Metropolitan Government introduced the semi-public bus operations system to overhaul the problematic bus services. The city government assumed overall management of the previously wholly private sector-run bus routes. The system also introduced a series of regulatory incentives and subsidy schemes for private bus operators to improve service provision and the working conditions in the public bus industry. This case study was adapted from Bus Service for Citizens: Quasi-Public Bus System, part of a series of briefs on Public Transportation published by the Seoul Urban Solutions Agency. Challenges Seoul’s public bus service had been suffering from a long list of chronic issues. Increasing car ownership and expansion of the subway network both offered more convenient alternatives to bus service; falling number of bus passengers pushed bus operators to excessive competition to secure more profitable bus routes; less profitable bus routes were underserved and poorly maintained; and poor working conditions in the bus industry. Even on profitable routes, buses were often overloaded and driven recklessly due to pressure for financial performance in a deteriorating industry. These factors drove even more passengers away from using the bus services. Modal share of public buses declined to 26.7% by 2002 from 30.7% in 1996. In addition, bus services in the city were generally unreliable and rarely punctual due to the increasing traffic congestion. Context As a side effect of Seoul’s rapid economic and urban growth in the late 20th century, car ownership expanded considerably. By the early 2000s, 72% of road traffic was composed of private passenger vehicles. Subsequently, traffic congestion became a chronic issue in Seoul, costing the city approximately $4.5 billion in social and economic losses. Within this environment, the bus services in Seoul operated under a licensing system where private bus companies applied for, and were granted licenses to operate bus routes. Once granted, routing decisions and route operations fell under the complete purview of the bus company, which resulted in inefficient routing redundancies and the inability of the city government to intervene directly in bus operations. Solutions The Seoul Metropolitan Government implemented the semi-public bus operating system as an essential policy element of its 2004 public transportation reform. New Management System for Seoul's Bus Service SMG = Seoul Metropolitan Government. The new system consisted of two main components: route and service management structure, and revenue pooling and subsidy scheme Route and service management structure The Seoul Metropolitan Government assumed full responsibility for the overall management of bus routes and operations. The city government centrally allocates bus routes operated by bus companies, and establishes and adjusts all routes as necessary. This addressed the disparity between profit-driven competition and the real transport needs of the public. Instead of competing for profitable routes and more passengers, bus operators now service routes designated to them by the city government. Revenue pooling and subsidy scheme The Seoul Metropolitan Government implemented a new business model for the public bus system, consisting of a revenue pooling mechanism and subsidy scheme for bus operators. Under this model, the city government pools fare revenues from all bus routes for joint management and redistribution among bus companies—surplus revenue from busier and more profitable routes would subsidize bus operators who service less popular but essential routes. Bus operators could focus on delivering safer and more convenient bus services with a financial guarantee that their costs will be covered even if operating losses are incurred from servicing less busy routes. The Seoul Metropolitan Government also instituted an enhanced evaluation system to assess service quality to determine subsidy rates, further incentivizing an increased focus on service safety and convenience. It also provided additional financial support and regulatory incentives for bus operators to invest in employee training, welfare provision, and customer service innovation to improve working conditions within the industry and strengthen service provision. Results The semi-public bus system, coupled with other transportation policy measures, led to significant improvements in the quality of Seoul's bus service: service satisfaction rose by 32%; rate of on-time arrival increased by 4.6%; traffic accidents involving a public bus fell by 24% in the year after the reform; and bus speed increased 30% on average with less people taking their private cars. As Seoul's bus service became more pleasant, reliable and safer, more citizens turned to using the buses again. Bus ridership increased by over 9.4%, resulting in a 10.3% revenue growth. With the subsidized operation bringing stability to the bus operators' finances, bus drivers—who had been receiving 37% less in wage than intercity bus drivers—were given higher wages and enhanced employment stability with less pressure to cram in passengers. Numbers and facts 32% increase in service satisfaction 10.3% increase in revenue growth 9.4% increase in bus ridership 4.6% increase in on-time arrival 30% average increase in bus speed Lessons The radical reforms were not without opposition. The overhaul of the bus service management structure in Seoul required continuous engagement with, and consensus building among a wide range of stakeholder groups with often contradictory goals. Stakeholder Management and Consensus Building To provide a multilateral decision-making process and build consensus, the Seoul Metropolitan Government formed the Bus Reform Civic Committee to engage the various stakeholders. The committee currently consists of 50 members drawn from among civil organizations, city council, transport experts and academics, bus operators, ex-officio Seoul Metropolitan Government officials, and other stakeholders. They discuss and decide on all aspects of Seoul's bus service such as policy matters, bus fare, service routes, infrastructure, subsidy, revenue management, and evaluation. Resources Seoul Urban Solutions Agency. Bus Service for Citizens: Quasi-Public Bus System. Seoul. Seoul Metropolitan Government. Semi-Public Bus System. Urban SDG Knowledge Platform. Seoul. Ask the Experts Seoul Urban Solutions Agency The Seoul Urban Solutions Agency (SUSA) was established by the Seoul Metropolitan Government to share its urban development experiences with other cities seeking to become sustainable and smart urban domains. Through a wide network of partnerships with the public and private sectors within and outside the Republic of Korea, SUSA works to connect and leverage its wide range of knowledge and resources to assist in solving the development challenges of its partner cities. Leave your question or comment in the section below: View the discussion thread.