Replacement of Aging KTX Trains to Be Funded by Public Finances... First Phase Alone Expected to Exceed 840 Billion Won

Amendment to Framework Act on Railway Industry Passes National Assembly Committee
State Subsidies Expected to Cover 30% of Costs for Replacing Aging Trains

The likelihood of government financial support has increased in the process of replacing high-speed trains that have reached the end of their service life. The high-speed trains introduced in 2004 will begin to reach the end of their expected lifespan starting in 2033, making it necessary to begin preparations such as introducing new trains and follow-up vehicles as early as the year after next.

Initially, both Korea Railroad Corporation (KORAIL) and the Ministry of Land, Infrastructure and Transport considered securing funds by raising KTX fares, which are used by a large number of passengers. However, government agencies responsible for price management have maintained a negative stance on fare increases, citing concerns that raising KTX fares could fuel inflation. After conducting a preliminary feasibility study for the replacement of the trains, it is expected that, once the legal basis is established, several hundred billion won in government support will be provided.

Seoul Station KTX Train. Photo by Yonhap News

KTX Trains to Reach End of Expected Lifespan Around 2033... Replacement Procedures Must Begin the Year After Next

According to explanations from KORAIL and related ministries, on September 25, the National Assembly's Land, Infrastructure and Transport Committee passed an amendment to the Framework Act on the Development of the Railway Industry, which includes provisions for providing state funds to replace aging railway vehicles. The issue attracted significant attention, with more than 50 lawmakers, including members from both the ruling and opposition parties on the committee, sponsoring the bill. It is expected that the bill will also pass smoothly through the Legislation and Judiciary Committee and the plenary session.

Previously, Article 8 of the law provided grounds for the state or local governments to support the railway industry. The recent amendment specifies that "to ensure the safety of railway users, the government may subsidize part of the necessary funds when a railway operator replaces aging vehicles as prescribed by the Ministry of Land, Infrastructure and Transport," thereby clarifying the need for government involvement in the replacement of the initial KTX trains.

The high-speed trains represented by KTX were introduced around 2004. With an expected lifespan of 30 years, the replacement period will arrive in about 7 to 8 years. Since the process requires prior coordination of funding and several years of ordering and testing, full-scale replacement procedures must begin by 2027. In other words, this is not a distant issue.

Although the specific scale of financial support has not been mentioned, if state subsidies are provided at a level similar to those for urban railways, about 30% of the replacement cost is expected to be covered. KORAIL currently estimates the cost of replacing the initial high-speed trains at 5.1 trillion won. According to an estimate by the National Assembly Budget Office, the first order for replacing the first-generation KTX-1 trains will consist of 28 trainsets (448 cars), with a total project cost estimated at 2.8139 trillion won.

This means that 844.2 billion won, or 30% of the total, should be subsidized by the state. KORAIL previously contracted with Hyundai Rotem to purchase trains at about 5.5 billion won per car, but a recent study showed the cost to be about 7.1 billion won per car. Averaging these figures, the estimated cost per car is about 6.28 billion won. The National Assembly Budget Office explained, "The estimated cost may vary depending on the annual procurement volume, changes in contract prices for high-speed train cars, and the national subsidy rate. Additionally, costs associated with train replacement are expected to continue even after the estimation period."

A KTX train is waiting for passengers at Seoul Station. Photo by Kang Jinhyung aymsdream@

KORAIL Turns to Public Finances After Fare Increase Blocked

Previously, KORAIL requested that the high-speed train replacement project be subject to a preliminary feasibility study, and the government accepted. While it is common to conduct such studies for infrastructure construction, this is the first time it has been applied to train replacement. KORAIL has repeatedly emphasized that, with rail fares frozen for 14 years and no prospects for fare increases, the replacement of high-speed trains could face setbacks. Given the harsh operating conditions of high-speed trains, even with diligent maintenance, trains that exceed their expected lifespan are bound to raise safety concerns.

With the current administration prioritizing balanced regional development and recognizing mobility as a fundamental right, subsequent procedures such as the Ministry of Economy and Finance's feasibility study and legislative amendments are expected to proceed smoothly. President Lee Jaemyung has also emphasized the role of public finances in overall state affairs, making it likely that this issue will be addressed in the same context. However, the plan to raise KTX fares to secure funds for replacing aging trains is expected to be difficult to pursue for the time being. Separately, the ongoing integration of high-speed train operators, which aims to reduce costs, will further weaken the justification for fare increases if the integration proceeds in earnest.

Lim Jongsu, a senior committee member of the National Assembly's Land, Infrastructure and Transport Committee, stated, "Given that this is a necessary task for improving railway safety and service, and considering that the government bears some responsibility for KORAIL's weak financial structure, the intent of the amendment is reasonable." He added, "While the immediate challenge is the cost of replacing KTX-1, in the long term, the national fiscal burden arising from supporting replacement costs for KTX-Sancheon, SRT, and others must also be comprehensively considered."

This content was produced with the assistance of AI translation services.