KOTI - Korea Transport institute

Railway fare system reform for efficient high-speed rail use

High-speed rail (HSR) fares in Korea have remained unchanged after an increase in 2011, while the operational environment of HSR and railway has undergone numerous changes, including the introduction of semi-high-speed trains, the deployment of new rolling stock such as KTX-Cheongryong, and expansion of HSR railway networks. During these changes, passengers have consistently expressed dissatisfaction over having to pay the same HSR fare even though each HSR train provides different levels of HSR services such as travel time, and complaints about the lack of HSR tickets have also persisted. Against this background, this study aims to address major issues, including fare imbalances and service disparities, and to propose a revised fare system that aligns with current and future changes in rail operations and increases usage efficiency. 

Under the Railroad Service Act, the railway fares of Korea are classified into three categories: high-speed (KTX, SRT), semi-high-speed, and conventional railways, each with different fare rate structures depending on the train type. Currently, KTX applies a rate of KRW 163.31 per kilometer, while SRT fares are approximately 10% lower. The KTX fare system offers a variety of discounts based on seat type, transfer connections, and internet reservations, as well as discounts for youth, pregnant women, large families, people with disabilities, and seniors. SRT provides discounts similar to KTX and additionally offers a 0.2% fare discount per station stop, reflecting the differences in average speed between trains. 

In terms of service quality, there are significant variations in travel time and average speed, even for trains operating on the same route. For example, depending on the number of stops and track congestion, travel time between high-speed rail services can differ by more than 30 minutes, while the fare difference is as little as KRW 400. Furthermore, although train congestion levels vary by time and day, fare levels have remained uniform. On the Gyeongbu Line, the Seoul–Osong section often experiences congestion levels exceeding 90–100% during weekdays and weekend afternoons, while early mornings and evening times show less than 50% congestion. 

A survey of HSR users revealed that 66.9% chose high-speed rail rather than high-speed bus, private car, and conventional railways when they travel because of its speed compared to other modes of transportation. However, 42.4% of respondents chose “high fares” as the main reason for not using HSR. The survey also indicated that while users are generally satisfied with travel speed and fare levels, but limited train availability during preferred times is an area of major dissatisfaction. Notably, HSR users expressed a willingness to pay more for faster trains, especially for long-distance travel. The users’ preference for fast, expensive trains rather than slower, cheaper ones shows the failure of the current fare system to reflect differences in service quality. 

Based on the operational characteristics of and user behavior of HSR services, this study suggests three major issues in the current fare and pricing system. First is the gap in fare perception between HSR　operators and HSR users. HSR operators emphasize the need for an increase in the HSR fare due to operating deficits and rising costs, while users perceive fares as already too expensive. Second is the difference between service quality and fares, where differences in average train speed and travel time are not reflected in pricing. Third is the issue of congestion, where passenger loads often exceed 100%, making it difficult for users to purchase tickets in specific time slots and routes. Adding more trains is not feasible due to limited HSR railway capacity, which calls for strategic solutions. 

To address these issues, this study suggests a fare system based on service levels and the diversification of the pricing structure. A service-level-based fare system adjusts fares in proportion to the speed of the train—faster trains would have higher fares, and slower trains would receive discounts. This could be achieved through adjustments based on the number of station stops or the average train speed. For example, in a flexible pricing scheme reflecting the number of stops, passengers were willing to pay KRW 504 more per additional stop and KRW 528 less per stop removed, on average. Similarly, a dynamic pricing system can address the problem as well. A dynamic pricing system is where a scheduled speed charges more for faster trains and less for slower ones. Survey results indicate that 65% of respondents support this model, and a regression analysis shows that passengers are willing to pay an additional KRW 0.135 for each 1 km/h increase in average speed. 

Regarding fare diversification, a key recommendation is to adopt time-of-day-based dynamic pricing. On the Seoul–Osong section, congestion exceeds 100% between 10 a.m.–12 p.m. and 2 p.m.–6 p.m., leading to a lack of seats. A pricing model that offers discounts during off-peak hours could help distribute demand and encourage modal shifts. According to survey results, users expect an average discount of KRW 7,452 for using HSR during off-peak hours, equivalent to 36.7% of the total fare. This suggests that a higher discount rate, up to 35%, would be more effective than the current 5–25% offered by operators. 

Lastly, expanding transfer discount systems between HSR services or between HSR and conventional trains is proposed. By reducing the cost of transfers between various rail services, user convenience and system efficiency can be improved. Currently, transfer discounts apply primarily to KTX and conventional rail. However, these should be extended to include SRT, inter-HSR connections, and transfers between high-speed and semi-high-speed services.