Consolidation of 5 KORAIL subsidiaries into 3... Convenience store discounts and expanded KTX-Sancheon baggage space

[Financial News] The five subsidiaries of Korea Railroad Corporation (KORAIL) will be reorganized into a system of three specialized companies in the fields of customer service, distribution and logistics, and maintenance. In conjunction with the integration, services experienced by passengers will also be improved, such as increasing discount promotions at station convenience stores and converting some KTX-Sancheon vending machines into luggage spaces.
According to the Ministry of Land, Infrastructure and Transport (MOLIT) and KORAIL on the 23rd, the subsidiary merger process will be completed on this day, and operations will begin under a three-company system. The name of the integrated entity is scheduled to be finalized by the end of the year following employee feedback and expert consultation.
KORAIL Networks and KORAIL Tourism Development will merge into a specialized customer service company tentatively named 'KORAIL Tourism Networks.' This will establish a system that supports the entire process of railway usage by connecting services previously provided separately by each organization, ranging from station and train usage to connecting transportation and tourism.
KORAIL Retail and KORAIL Logis will be merged under the tentative name 'KORAIL Distribution & Logistics.' The plan is to enhance expertise in railway-based distribution and logistics businesses by combining the distribution networks and logistics infrastructure of the two organizations.
Although KORAIL TECH was excluded from the merger, its functions will be reorganized. It will apply AI-based equipment to cleaning and facility maintenance and strengthen its role as a specialized maintenance company by coordinating operations with KORAIL.
This integration plan was prepared following discussions by the subsidiary restructuring task force (TF) launched last December. MOLIT held a series of meetings with labor unions from February 19 to March 17 of this year and held five tripartite consultative meetings.
The merger plan was finalized following deliberation and resolution by the Public Institutions Management Committee on June 30.
MOLIT and KORAIL also announced 10 "services that the public can experience" to be implemented following the integration of subsidiaries. In the area of passenger convenience, the initiatives included improvements to station convenience stores, AI cleaning, expansion of connecting transportation, one-stop customer information services, and increased luggage space on trains.
In the safety sector, railway support functions in the event of a disaster, maintenance and worker safety, and railway crossing safety will be strengthened. Overlapping functions and non-core businesses will be adjusted, and support for the overseas expansion of small and medium-sized enterprises and local companies will also be expanded.
KORAIL Distribution & Logistics is expanding discount promotions, such as buy one get one free and buy two get one free, at 'Storyway' convenience stores located within train stations. By utilizing KORAIL Logis's domestic and international logistics networks, the company plans to directly trade some imported goods with overseas manufacturers and suppliers, and use the cost savings from reduced distribution stages to enhance price competitiveness and improve customer service.
Advanced equipment is also being deployed for cleaning stations and regular trains. KORAIL TECH is introducing AI-based equipment for station cleaning and conducting special cleaning of aging regular train restrooms by disassembling the facilities and sterilizing and disinfecting them using steam equipment.
Some vending machines with low usage rates on KTX-Sancheon trains will be converted into luggage storage spaces. KORAIL Tourism Networks, in collaboration with KORAIL, plans to survey usage patterns for each vending machine by the end of the year to select the machines for conversion and proceed with construction sequentially.
Connectivity between railways and other modes of transportation will also be strengthened. Parking fee reductions and linking car sharing, car rentals, city and intercity buses, and demand-responsive transportation (DRT) with tourism products will be implemented.
Starting in late October, a 30% discount on parking fees will be applied to all customers using KORAIL Tourism Networks' railway tourism products. A mid-to-long-term roadmap for expanding connecting transportation is planned to be established by the end of the year.
The functional adjustment between KORAIL and its subsidiaries will proceed in stages. A roadmap for the functional adjustment will be prepared by the first half of 2027, and outsourcing contracts are scheduled to be finalized by the end of the same year following consultations with relevant agencies. This is based on the premise that there will be no employee transfers between the agencies as a result of the integration.
Employees will be affiliated with the integrated corporation in accordance with the principle of employment succession. MOLIT and KORAIL plan to continue consultations with the labor union to reduce wage and welfare disparities between agencies and improve the work system.
Even after the merger, a tripartite consultative body will be operated to discuss issues regarding wages, personnel, working conditions, and functional adjustments. Improvement plans for organizational culture, work methods, and the working environment will be prepared by the end of the year, reflecting employee opinions and the results of the organizational diagnosis.
Kim Tae-byeong, Director General of the Railway Bureau at MOLIT, stated, "This consolidation of subsidiaries is not merely intended to reduce the number of companies, but rather to clarify the roles of each subsidiary and enhance expertise in their respective fields to improve passenger convenience and strengthen safety."

[email protected] Choi Ga-young Reporter