Seoul pushes 13.5 billion won subsidy for Han River ferry, facing scrutiny

Seoul is once again seeking to subsidize the financially troubled Han River ferry service, proposing 13.5 billion won over two years. The city council had previously rejected a similar plan in April, but Seoul has resubmitted a modified version that critics say maintains the fundamental issue of using public funds to cover operating losses.

The new proposal, submitted to the city council on May 26, aims to cover an estimated 8.287 billion won in 2027 and 5.255 billion won in 2028, entirely from the city's budget. These funds would retroactively cover losses already incurred in 2024 and 2025, which already exceed 8.3 billion won.

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This plan significantly reduces the scope of support compared to the previous one, respecting the council's review opinions.

The key change in the revised proposal involves the calculation of operating losses. Previously based on the minimum crew required by the Seafarers Act, the new plan expands the scope of personnel costs by including minimum crew as defined by the Ship Officers Act and additional safety personnel agreed upon with the city. This adjustment inflates the operating loss figure, thereby increasing the potential subsidy.

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It is a detailed adjustment of safety-related personnel costs required for legal crew and additional safety personnel, in line with actual operating conditions.

While the revised plan removes the subsidy for free shuttle bus operations, a significant difference from the rejected April proposal, the core mechanism of covering operating deficits with public subsidies remains intact. The operator, Han River Ferry Co., is structured with the Seoul Housing & Communities Corporation holding a 51% stake and private operator e-Cruise holding 49%. This means public funds would indirectly benefit the private operator, despite accumulated operating losses of 10.4 billion won and net losses of 16 billion won.

Furthermore, projections for ancillary revenue, such as advertising, are being questioned. The city's cost estimate suggests profitability by 2028 is contingent on achieving monthly advertising revenue targets of 1 to 1.4 billion won from 2027 onwards. Seoul officials defended the proposal, stating it significantly reduces the scope of support compared to the previous plan and adjusts personnel costs to reflect actual operating conditions, citing a city ordinance passed in 2024 as grounds for the subsidy.

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The support for operating losses is being pursued based on the city council's resolution of an ordinance enacted in 2024.